A general election has finally been called and Labour are comfortably ahead in the polls. What is the party promising for UK energy policy, and what does it mean for the UK’s net zero target?
Great British Energy
Labour’s flagship energy policy is the creation of a publicly owned company to be called Great British Energy. It is the only policy remaining from Labour’s original £28bn-a-year “green investment pledge”, announced in 2021 but ditched in February 2024.
According to the Missions section of their website, Great British Energy will be “owned by the British people, built by the British people and benefit the British people”. It will have a budget of £8.3bn, to be invested in floating offshore windfarms. It would be headquartered in Scotland and focus on creating good jobs in the renewables sector, cutting bills and delivering energy security.
The plan to create Great British Energy has been wrongly described by some sources as “nationalising energy”. Labour has no current plans to nationalise existing generation sources or suppliers.
Offshore wind
Labour’s offshore wind target would be to create 55GW of capacity by 2030, with 5GW of this to be “fast-tracked”. The current government already has a target of 50GW by 2030. But this has been jeopardised by the fiasco that was the fifth allocation round of Contracts for Difference, where many companies could not afford to bid at the price set. The government is now playing catch-up with the new Sustainable Industry Reward (SIR).
Ambition for onshore wind
Labour pledges to more than double our onshore wind capacity to 35GW by 2030. (We currently have around 15GW.) The details of how this will be achieved are not yet available.
A recent Cornwall Insight webinar pointed out that planning law changes in 2015 and 2016 created a “de facto ban” on onshore wind in England (although not in other parts of the UK). Yet relaxing these rules has not yet resulted in a surge of new development – because barriers remain in place, such as grid connections. The government is working on removing these barriers with the Connections Action Plan. But it has no specific target for onshore wind capacity across the UK despite being urged by the industry to set one.
Clean power by 2030
The offshore wind target is part of Labour’s broader plan to achieve clean power by 2030. The government already has a plan to decarbonise the power sector by 2035, so this means bringing it forward by half a decade. Labour says a zero-carbon electricity system will take up to £1,400 off the annual household bill and £53 billion off energy bills for businesses by 2030.
Solar and onsite generation
While Labour’s pledges for offshore and onshore wind go further than the current government’s, its current plans for solar don’t go quite as far on paper. Labour is promising to increase solar capacity to 50GW by 2030, while the current government is already planning to reach “up to 70GW” by 2035. Of course, the five years of extra time and the “up to” allow a lot of space for slippage on that headline figure, so Labour’s pledge could mean delivering more in reality.
Shadow Energy Secretary Ed Miliband has also spoken emphatically about the untapped opportunities of onsite generation. At the recent Innovation Zero conference in London, Miliband said we are still underestimating the benefits of decentralised energy, and are “at the foothills of what it can achieve for our country”. When asked about France’s law that requires car park owners to install solar PV, he said the UK “should make much more of rooftops,” and hinted at an announcement in the coming months.
Labour are also promising to double the government’s target on green hydrogen.
Make oil and gas companies pay more tax
Labour announcement of a “proper windfall tax” on oil and gas companies acknowledges that a windfall tax is already theoretically in place. In May 2022, Rishi Sunak (then Chancellor) imposed the Energy Profits Levy, a 25% surcharge on what he described as “extraordinary profits” from the sector. It raised £2.6 billion in its first year, part of an overall £9 billion tax take from the sector. Chancellor Jeremy Hunt then increased it to 35%, putting the overall tax rate on oil and gas firms to 75%.
This sounds like a lot, but in practice oil and gas firms can reduce the amount of tax they pay by claiming tax reliefs. By doing this, BP and Shell have managed to pay almost no UK tax in recent years and actually get more back from the government than they pay. Labour aren’t creating a new windfall tax, but they are pledging to close the loopholes which stop companies paying almost anything of the existing taxes.
Significantly for our net zero targets, Labour have also said they will veto any new oil or gas licences in UK waters. This sets them apart from the Conservatives, who plan to continue granting fossil-fuel licences.
What does this mean for corporate net zero strategies?
While we’ve not yet seen Labour’s manifesto – which will set out the full details of their energy plans – it’s clear that Labour is taking the UK’s net zero target seriously. Should Labour win the election, the energy brief will be handed to self-confessed ‘energy nerd’, Ed Miliband, who is passionate about climate change and a clean energy transition. Labour leader Keir Starmer has touted climate action as “the UK’s biggest opportunity”.
Along with the investment in renewables and energy efficiency measures, we may see the tightening of energy and carbon rules for businesses, and either a carrot or stick approach to boosting uptake of onsite generation. If your business is a high-volume energy consumer, now is a very good time to get your house in order and ensure that your climate targets and emissions reporting can stand up to scrutiny.
ENTRNCE can support large energy users in both the public and private sector to make informed decisions on bringing down emissions. Drop us a line to find out more.
