Labour pains

Rewire

Labour has no clear roadmap beyond 2030 but it is looking increasingly likely that more than “a strategic reserve of gas power stations to guarantee security of supply” will be needed after 2030 to heat the millions of homes that have not yet been upgraded, to fuel the millions of ICE vehicles still on the road and to fuel the 90 per cent of aircraft still powered by kerosene. 

If by then the declining oil and gas fields in the North Sea are not producing enough to meet demand in the UK, this demand will have to be met from abroad.

Labour declares that: “The national grid has become the single biggest obstacle to the deployment of cheap, clean power generation and the electrification of industry.” 

There is some truth in this. It is a scandal that wind power has to be curtailed often, at a cost of hundreds of millions of pounds, just because the electricity it generates cannot be transmitted from the Highlands of Scotland to areas where it is needed in England (see the report Gone with the wind? from Carbon Tracker). 

Yet the national grid is also absolutely key to achieving zero carbon electricity by 2030. It is not enough to say: “Labour will work with industry to upgrade our national transmission infrastructure and rewire Britain.” 

Emissions

The national grid and electric utilities have to be mandated as necessary, to increase their investment in the electricity network and to improve their performance in making connections and interconnections within the UK. Public ownership should at least be on the table, particularly since the national grid is a natural monopoly.

Another major gap in Labour’s approach is on land-use planning. The manifesto pledges stronger planning obligations to ensure that new housing developments provide more affordable homes but has nothing to say about ensuring that the planning system as a whole supports climate-friendly development.

The Supreme Court has recently ruled that indirect as well as direct emissions must be taken into account for the purpose of Environmental Impact Assessment of proposed fossil fuel projects, and the new government has accepted this ruling.

However, the National Policy Planning Framework (NPPF) now needs to be reformed so as to require planning applications for ALL new developments to show the likely effects of those developments on greenhouse gas emissions at every stage of the process.

There should also be a presumption that such applications be refused if the likely emissions exceed the relevant Paris-compliant budget. 

Poverty

Without this reform there is a risk, albeit a low one, that applications for new coal mines and new oil and gas production licences could still be approved – the manifesto pledges only to issue no new licences to explore new oil and gas fields.

There is also a larger risk that planning applications for new renewable energy generation and transmission and distribution will be refused to such an extent that the target of zero carbon electricity by 2030 is missed. 

The government needs to do much more to convince local people that these developments, particularly of onshore wind farms, solar arrays and electricity networks, are of crucial national importance, for the benefit of everyone. 

The success of the government’s emphasis on community energy generation depends largely on the willing cooperation of communities themselves. In its earlier Local Power Plan, Labour stated that it would at least “require local authorities to proactively” identify areas suitable for renewable generation. More of such mandating of local authorities would help to avoid missing the 2030 target. 

The Warm Homes Plan, with funding of £6.6 billion over the next parliament, is likely to upgrade five million homes. This falls well short of Labour’s previous ambition to retrofit all UK homes, and is insufficient either to eliminate fuel poverty or to be on track to reach net zero by 2050.

Solar

In comparison, the proposed National Wealth Fund of £7.3 billion over the next parliament looks like only a suite of incentives to the business lobby, which seems unlikely to bring about much reduction in emissions before 2030. 

No doubt jobs will be created as a result, in the manufacture of steel, batteries, green hydrogen and in industry generally, but the manifesto seems to assume that relevant planning permissions will be granted for these projects. 

Also, it takes no account of the increase in electricity use that will inevitably follow – an increase that will make it more difficult to achieve the 2030 target. Nor is it clear how the Fund is going to help low-income families.

It is also important to note that replacing gas boilers by heat pumps and gas hobs by induction hobs increases the demand for electricity, making it more difficult to decarbonise electricity by 2030. Again this highlights the priority that needs to be given to the latter.

Currently, the only surefire way forward both to reduce energy bills and ease the burden on the national grid is to install solar panels on every building – and this just happens to be the policy of the Campaign to Protect Rural England.

Expansion

Community renewable energy, which is favoured in Labour’s manifesto, holds promise for the future, and can include not only rooftop solar but also onshore wind turbines, solar arrays, district heating and combined heat and power schemes. It is not clear, however, how much renewable electricity such schemes can generate by 2030, even under a more favourable planning system. 

On infrastructure generally, the proposed National Infrastructure and Service Transformation Authority has no clear mission but only: “We need to forge ahead with new roads, railways, reservoirs, and other nationally significant infrastructure.”

It is at least arguable that we do not need new roads, especially the Stonehenge tunnel (costing over £3 billion), the Lower Thames Crossing (£9 billion) and the Silvertown Tunnel (£2.2 billion). 

Such extravagance helps to highlight continuing government priorities, with more being invested in three new damaging road schemes than in the Warm Homes Plan and National Wealth Fund added together. However, a reform of the NPPF could remedy this problem in due course, as new road projects add significantly to greenhouse gas emissions.

It is also disappointing that the manifesto makes no clear commitment to public transport except perhaps in the pledge to bring the railways into public ownership, and contains no measures to stop the expansion of aviation. When it comes to mitigating climate change, therefore, transport appears to continue to be the Achilles heel of UK governments.

Subsidised

The manifesto sets a goal of 1.5 million new homes over the next parliament. This is similar to the previous government’s goal of 300,000 homes a year, but this goal was never actually achieved. Moving towards such a goal is likely to result in increased electricity consumption, again making it more difficult to hit the 2030 target.

Finally, Labour promises to create a publicly-owned energy company, Great British Energy (GBE), and to capitalise it at a cost of £8.3 billion over the next parliament. This has potential to reduce the cost of capital for renewable energy generation and therefore to contribute substantially to reaching the 2030 target. 

However, it is not yet clear how it will work. A previous Labour policy paper published in March proposed that GBE would “own, manage and operate energy generation projects”. 

This could mean that it is being set up in competition with private energy companies, in which case it seems likely to make little difference to the energy market unless its bid price is lower. 

If its bid price is lower than other companies, however, then it risks putting those other companies out of business and is also likely to be operating at a loss that will have to be subsidised by the taxpayer.

Investment

Alternatively, therefore, rather than competing with other companies, the manifesto suggests that GBE will work in partnership “with energy companies, local authorities and cooperatives to install thousands of clean power projects, through a combination of onshore wind, solar, and hydropower projects”. 

It is not clear, however, how such an inevitably complex network of partnerships is to be developed, on any scale – local, regional or national. Labour’s Local Power Plan as updated in their March paper doesn’t even mention the obstacles presented by the current planning system. 

GBE needs to address questions such as the following: Is the system of contracts for difference that currently operates for new offshore wind-powered electricity to be extended to onshore wind and solar? 

Will the three to one leverage of private to public investment pledged in the proposed National Wealth Fund be applied also to these new clean power projects? 

Will investment be offered to community energy generation projects on more favourable terms, and if so, how favourable? And how likely is it that this level of public investment would attract private investment that is sufficient to ensure both a healthy return for the private companies and zero carbon electricity by 2030?

Key conclusions

The increased use of electricity in the future – for EVs, heat pumps, batteries, steel making, green hydrogen, and industry generally militates against the decarbonisation of electricity.

Contrary to Labour’s claims, the cost of capital for renewable energy projects is not likely to diminish as the grid becomes increasingly decarbonised, and this process will tend to exert upward pressure on energy bills. Labour can choose either to increase public investment in renewable energy massively so as to reduce the cost of capital or to subsidise energy consumers even more massively or both.

Labour should not mislead the public by claiming that the creation of GBE will result in lower energy bills for householders. Apart from government subsidy, the surest way to reduce energy bills is to make homes more energy efficient. £6.6 billion is not enough to achieve either this goal or that of 100% green electricity by 2030.

The national grid must be mandated to improve electricity transmission and distribution to meet the 2030 goal. If it is not on course to meet the goal, consideration should be given to bringing it back into public ownership.

Labour is a long way from providing a convincing account of how the UK will hit the target of zero carbon electricity by 2030. 

This Author

Professor Peter Somerville is emeritus professor of social policy at the College of Social Science, University of Lincoln.