The Labour Party aims to place a state-backed energy company at the heart of the UK’s energy system since the privatization in 1990. One of Keir Starmer’s most ambitious commitments is Great British Energy (GB Energy), which aims to decarbonize electricity supply by 2030 with an investment of £8 billion. Rather than directly supplying electricity to households, the company is positioned as a state investment vehicle that seeks to finance and build low-carbon infrastructure. This model is interpreted as a significant shift in a country that has been governed by the Conservative Party for many years, highlighting the deeply transformative nature of the change.[i]
As part of the plan, £3.3 billion has been allocated to local authorities and communities to establish small-scale clean energy projects. An additional £5 billion will be invested in projects and supply chains that may be less attractive to private investors. It is noted that GB Energy’s initial steps in the sector will involve co-investing with existing private sector companies, but over time, it aims to finance and operate its own projects. This could include large energy projects such as nuclear reactors. The country’s hosting of multinational energy companies may particularly lead to an economic conflict between the public and private sectors.[ii]
It is stated in the road map that GB Energy will not undertake the task of directly providing electricity to households. Labor plans to reduce household energy bills by reducing GB Energy’s reliance on Britain’s gas power stations. However, the decision to preserve gas power plants as a strategic reserve is a complex issue. It is a weak argument to defend on security grounds; because the gas to be supplied to these power plants will probably not come from domestic sources and the cost of purchasing the necessary gas may leave the United Kingdom vulnerable to external price fluctuations.
Starmer has committed to making Britain a “clean energy superpower,” stating that this will enhance living standards. The promise of GB Energy to create a nearly zero-carbon electricity system by 2030 could result in an average annual savings of £300 per household. This indicates the potential of GB Energy to create a cheaper energy system in the long term.[iii]
The UK’s most significant clean energy projects have been built by state-owned companies. Mathew Lawrence, Director of the think tank Common Wealth, argues that publicly owned energy companies can achieve better progress compared to profit-driven private companies. A public energy company can reduce initial costs in large projects, sustain them against unexpected cost increases, and invest according to energy needs and climate goals.
GB Energy is expected to contribute to Britain’s green energy progress by focusing on risky areas such as fluctuating offshore wind, green hydrogen, and tidal energy. According to sector managers, there are opportunities to make a difference in small-scale projects like community energy. In this context, GB Energy could bring significant change to local energy initiatives.[iv]
However, there are likely challenges facing the green transition in the UK. The transportation sector is responsible for a significant portion of greenhouse gas emissions in the country. Therefore, transportation policy plays a critical role in the energy policy landscape. The Labour Party has committed to investing £1.8 billion for the improvement of ports and £1.5 billion for establishing new gigafactories in the automotive industry.[v] Expenditures for improvements may place a burden on the public and directly on residential consumers. Development through subsidies needs to be approached with caution.
Particularly when examining the history of energy crises in the UK, it has become chronic that price fluctuations occurred in January 2021 after the Brexit transition, and the system could not be stabilized. Additionally, the serious integration of green energy investments during the EU period led to low energy production, especially in 2021 and 2022, directly affecting household consumption bills. Regarding energy security, the interconnected system failure in France in October 2021, prior to the Russia-Ukraine War, is cited as a concrete example of infrastructure deficiencies, causing widespread outages across the UK.[vi] The introduction of a price floor has inevitably placed a significant burden on government subsidy programs.
Furthermore, the uncontrolled increase in population and migration rates in the UK disrupts the balance between supply and demand, leading to chronic problems in the government’s complete transition to “green” energy. Particularly, Starmer’s implementation of a public-centric policy could cause energy subsidies to negatively impact public companies. Additionally, the energy trading system with EU integration has yet to fully recover following Brexit.
[i] “Can Labour’s GB Energy plan future-proof UK’s power generation sector?”, The Guardian, https://www.theguardian.com/politics/article/2024/jun/06/could-labour-gb-energy-plan-future-proof-power-generation-uk, (Access Date: 27.09.2024).
[ii] Ibid.
[iii] “Is Labour’s 2030 green energy goal realistic and how would it affect bills?”, BBC, https://www.bbc.com/news/articles/cmjjy17284vo, (Access Date: 27.09.2024).
[iv] Ibid.
[v] “Will Labour’s policies achieve energy security?”, University of Birmingham, https://www.birmingham.ac.uk/news/2024/will-labours-policies-achieve-energy-security, (Access Date: 27.09.2024).
[vi] “A brief history of the UK energy crisis – and what to expect next”, SEFE, https://www.sefe-energy.co.uk/insights-resources/a-brief-history-of-the-uk-energy-crisis-and-what-to-expect-next/, (Access Date: 27.09.2024).
