In a crowded Liverpool auditorium, Labor leader Keir Starmer stood at a plinth emblazoned with the words “A Fairer, Greener Future”. It was the central theme of this year’s party conference and is evident in Starmer’s landmark policy announcement: the creation of a new public energy company, Great British Energy.
The company would be effective a start-up growing British renewable energy. So while Great British Energy does not represent a nationalization of the electricity sector (or any energy company), it would represent a new and different type of organization positioned to fund new projects while working to remove the hurdles that new wind – and solar projects.
This follows demands from various organizations for a new way of generating and delivering electricity. For many, the scale of the action required to reach net zero and tackle energy poverty is at odds with the current model of operation, which focuses on paying shareholders and avoiding riskier investments.
Like EDF in France or Vattenfall in Sweden, Great British Energy would be state-owned. But it would be independent, making its own investment decisions and working closely with private energy companies.
With government support, the new company can make riskier investments. Be it in larger projects or in new, innovative technologies such as tidal energy. Instead of paying shareholders, the profits this company makes can be reinvested in new projects, or to lower bills or insulate homes.
Great British Energy is part of a broader approach proposed by Labor including energy efficiency measures and an £8 billion national wealth fund to help decarbonise industry.
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The public supports public energy
Despite some concerns about how these policies might be sold on the doorstep, there is public support. Polls in May 2022 showed that 60% of UK voters are in favor of bringing energy companies into public ownership – and these patterns of support have remained relatively constant.
Popular campaigns have called for the sector to be nationalised. Others have highlighted how the current system prioritises shareholders over tackling energy poverty.
When Labor proposed a similar policy in the 2019 election, it was treated as stupid by much of the media. But Russia’s invasion of Ukraine and its aggressive use of disruptions to its natural gas exports to Europe as a political weapon have transformed energy policies in Europe.
Those who called for the expansion of renewable energies earlier emphasized that they are greener and cheaper than fossil fuels. The events of 2022 have now also made renewables the foundation of energy security.
Who makes decisions and who benefits from them?
While this policy promises a different kind of energy company, the fact that it’s state-owned doesn’t make any organization inherently “good.” For example, EDF was caught spying on Greenpeace in France. Elsewhere, Vattenfall has sold its coal-fired power plants rather than replacing them with renewable energy, merely shifting emissions to someone else’s balance sheet.
Addressing these issues requires thinking about who makes decisions. The proposed national wealth fund would involve co-investments with private companies. But who would be involved in steering these investments and who could benefit from them?
Hydrogen energy was mentioned in several speeches at the Labor conference and industry lobbyists are said to have been active and held meetings. However, recent work has shown that any move towards using hydrogen to heat homes is unlikely to be profitable.
Elsewhere at the conference, climate activists reportedly accused Drax, the UK’s biggest emitter, of environmental racism removed from a meeting to net zero and green jobs.
A national energy company also has to deal with where new renewable energy projects are being built, which tend to take up large areas, and who might suffer the impact. Compensation payments in the UK have rewarded unfair land tenure patterns and the monopolization of land by the rich and powerful.
In the UK, a small number of landowners will benefit financially from the development of onshore wind energy, while offshore wind energy will be permitted by the Crown Estate, which owns the seabed.
Those who live nearby often receive limited compensation. In Scotland, communities living near onshore wind farms receive 0.6% of the value of the electricity generated.
This does very little to address regional problems of inequality or exclusion. Community-owned projects have a better track record and offer up to 34 times more financial benefits than projects built by private energy companies.
Great British Energy is a policy that many voters will support. While it remains unclear what forms it might take and how it might transform the energy sector, it represents an opportunity to produce and use energy differently – as long as it is part of a broader, more equitable energy transition.
These policies come at a time when energy costs and energy poverty are skyrocketing for millions, and every national energy company must make addressing this issue a priority. Labor’s energy efficiency plans show that the party intends to do this. After all, the cheapest electricity is electricity that we don’t use.
It’s also politically savvy: Some of the areas hardest hit by energy prices are in marginal seats. A national energy company playing a central role in funding and governing renewable programs would allow them to be more targeted, would allow unprofitable projects to be funded, and any financial returns could be used to further support families and communities.
But there is still room for Labor to be more ambitious. Great British Energy could be the first step towards an inclusive energy transition, but we need to think about what comes next.