Labour manifesto on energy policy and climate change
Energy in the UK is going green whether you vote red, blue, yellow or other. The main questions are how green and how fast? Read on for Selectra’s analysis of what the Labour Party manifesto means for energy customers.
The Labour Party manifesto paints a picture of rapid and significant change in the nation’s energy market, both in terms of decarbonization and in how it is owned.
While the Conservative Party is aiming for a net-zero carbon emissions economy by 2050, the Labour Party is aiming to achieve the same by the 2030s.
So, a Jeremy Corbyn-led government could see the biggest transformation in the sector since the privatizations of the 1980s if the party delivers on its promises.
What will the Labour Party do about energy bills?
The Warm Homes For All scheme promises to tackle fuel poverty, cut energy bills, save lives, create jobs and fight the climate emergency by making almost all of the UK’s 27 million homes more energy efficient.
Energy use in the built environment contributes around 40% of the UK’s total carbon footprint (although the Labour manifesto claims the figure is 56% without citing any sources for this higher figure) so increasing energy efficiency in this sector could be a significant contribution to reducing damaging emissions.
The manifesto promises this nation-wide project will reduce the average household energy bill by £417 annually by 2030. The party does not reveal the cost of this upgrade in the manifesto, but elsewhere it has budgeted the rollout at £250bn, or an average of £9,300 per home. Labour said £60bn of this cost would be paid for by government and the remainder by savings on energy bills.
For new homes, regulations would be brought into force to ensure all new builds would be zero-carbon from the planning stages.
Technologies such as heat pumps, solar hot water and hydrogen boilers will be installed to heat homes. Waste heat from industry and other sources will be used to warm flats and houses through the construction of District Heat Networks, communal heating systems already in use in other countries.
The party also promises that the Winter Fuel Payment for pensioners will be maintained.
What does Labour say about renewables?
Under the Labour Party’s 30 by 2030 plan, the UK should be on the path to a net-zero carbon energy system by the 2030s. The manifesto promises that almost 90% of electricity and 50% of heat will be supplied by renewable or low-carbon sources by 2030.
The manifesto also pledges that a Labour government would build 7,000 new wind turbines off the UK coast. This would achieve an offshore wind capacity of 52GW by the end of the decade compared to the Conservative Party plan for an increase to 40GW by 2030.
The 52GW plan is five times current capacity and the equivalent of 38 new coal-fired power stations. Unlike the Tories however, Labour also want to restart the onshore wind turbine construction industry and propose putting up 2,000 new onshore wind turbines, which are a much more economical investment than their offshore counterparts.
The Conservative manifesto mentions investing in other renewable energy sources in a vague way, but Labour is more expansive in its pledges.
A big push on solar is promised in the form of 22,000 football pitches worth of solar panels. We don’t think that is a very helpful description, so we worked it out in numbers used by real people and it equates to 157 square kilometers or 62 square miles in conventional measurement systems. If you really want to visualize it, that’s more than the whole of the Bristol Urban Area covered in solar panels.
Tidal energy systems will be researched and built and the party will put more money into making hydrogen cheaper to produce.
What about the fossil fuel industry?
A big shock for the industry’s Big Six is in store if Labour gets the keys to Number 10.
Promising to remove “barriers to renewable energy connecting to the grid” and tackle the “billions of pounds of bill-payers’ money being siphoned off in dividends to wealthy shareholders” Labour pledges to put the country’s energy system under public ownership with utilities run by workers and customers instead of by civil servants or CEOs. The public will get a return on any funds invested by government in energy projects.
The party says that private network companies have “failed to upgrade the grid at the speed and scale needed” and it imagines that publicly-owned networks would do the job of connecting renewable and low carbon energy to the grid much more efficiently.
To that end, the infrastructure that makes up the national grid is to be put under the control of a new UK National Energy Agency.
The UK electricity distribution network, which carries electricity from the grid to customers and is currently run by six groups which own 14 licensed distribution network operators in different regions, will be replaced with 14 Regional Energy Agencies. These REAs would also have a statutory duty to reduce fuel poverty along with implementing carbon reduction policies.
Energy suppliers British Gas, EDF Energy, EON, Npower, Scottish Power, and SSE, somewhat infamously known as the Big Six will be nationalized. The fallout, positive or negative, from such a move is difficult to predict at this stage.
What’s more, a windfall tax to help mitigate the climate emergency is to be imposed on oil companies that “knowingly damaged our climate."
The Labour Party manifesto says that jobs and skills in the offshore oil and gas industry will be “safeguarded” while workers in the energy industry will be guaranteed retraining and a new position equivalent to their previous one, although it's hard to see how the first promise can be achieved with a target of net-zero emissions by the 2030s.
What else is in the Labour manifesto?
The manifesto also mentions nuclear energy and, while not renewable, it is cleaner when it comes to emissions. The Conservative manifesto did promise investment in nuclear power infrastructure, but surprisingly it is Labour which talks about it in terms of the UK’s energy security.
Renewables are great at producing energy that is used as soon as it is available, but one remaining advantage of fossil fuel systems is that they can be ramped up to cope with an increase in demand or scaled back when the grid has a sufficient supply. Labour says it will “balance the grid” by investing in increased power storage solutions, interconnectors and other technologies.
Distributed and community energy projects have popped up all over the country over the last decade and the manifesto says the party will continue to expand this sector.
Although the Conservative Party says it will maintain its moratorium on fracking until it can be shown to be safe, Labour offers voters an immediate and permanent ban on the controversial extraction method.
Electric Vehicles (EVs) and their infrastructure are also high on Labour’s energy agenda.
The manifesto envisions three new “gigafactories”, that is Tesla-style factories which manufacture vehicle batteries and assemble EVs. The Tories pledged just one gigafactory following Tesla’s decision to build its next one in Germany instead of the UK due to the Brexit saga.
Labour will remove the excise duty surcharge on EVs over £40,000 and promises to invest in electric vehicle charging infrastructure as well as in community projects to boost electric car-sharing. Public transport will also be moved towards zero-emissions targets.
As part of its Green Industrial Revolution policy the party will set a target of 3% of GDP to be invested in research and development by 2030. Heavy industries like steel production will be helped move towards cleaner processes and investment in carbon capture and storage technologies is also promised.
Labour plans a “Green Transformation Fund” worth £250bn over the next decade to pay for the UK’s transition to a cleaner, greener society by the 2030s.
How do the Labour Party’s plans measure up?
The moves to decarbonize the economy by the 2030s are roughly in line with the minimum the increasingly panicky voices from the halls of science are asking for. So, on that the policy is heading in the right direction.
On the other hand, the privatization of the Big Six seems like somewhat of an extreme over-reaction given the other tools a Labour government would have at its disposal.
The energy price cap is already in place and the market could easily be made fairer for consumers through that mechanism. Existing grants and discount schemes which help those in or at risk of fuel poverty, such as the Warm Home Discount could be extended or consolidated. What’s more, this policy sees Labour picking a fight it might not be legally able to win as much of the energy supply business is subject to long-standing international treaties.
Likewise, its idea for a retrospective windfall tax on the energy industry is a complicated proposal. The North Sea oil and gas fields have been exploited by various companies, domestic and international, over the decades, so pinning down corporations no longer in the UK market and asking for climate change damages might be a bit like tilting at windmills.
Then, there is the question of just how Labour will pay for all this.
In the case of nationalization of the grid, distribution networks and suppliers you might expect the price tag to be a massive blow to the taxpayer.
However, once in government Labour could issue debt to raise funds to purchase the energy companies and their resources. These would then be considered public assets which could be sold again should the need arise. As long as the companies are well-run under nationalization they can add value to the nation’s coffers in the long term.
While it’s safe to say the Conservative Party’s energy plans are well, rather conservative, to call Labour’s energy policy ambitious might well be an understatement. If it manages to win over the electorate and take the reins of government, on some fronts the fight will have barely begun.