Madano Election Hub - Labour's Energy Strategy: our five takeaways

Last week was a significant moment in the policy and politics of net zero. Keir Starmer launched his plans to “make the UK a clean energy superpower” - bringing many months of Labour Party policymaking to fruition and showing in full colour the alternative being offered to the electorate.

At a speech in Leith, Edinburgh, Starmer was joined by Shadow Chancellor Rachel Reeves, Shadow Secretary of State for Climate Change and Net Zero Ed Miliband, and Leader of the Scottish Labour Party, Anas Sarwar. There was a real focus on Scotland – in part a response to concerns from industry and Trade Unions that plans to restrict new oil and gas licenses will leave communities on the North Sea exposed. This is also a political play for Starmer, who looks to revive Labour’s dominance in Scotland as the SNP’s popularity fades, which will be crucial to Labour’s chances of winning a majority.

For the Conservatives, Secretary of State for Energy Security Grant Shapps has argued that Labour’s plans are giving in to the demands of protest groups such as Just Stop Oil, risking the UK’s existing jobs in oil and gas, and making us reliant on gas imports. However, a study released by Carbon Brief has highlighted that the UK would need less imported gas by 2030 under pledges made by the Labour Party, than under the Conservative government’s current plans.

These announcements coincided with a week of debate around the cost of net zero, as politicians on both sides of the house try to wrestle ambitious climate pledges with the cost-of-living crisis, attempts to curtail inflation and a high cost of borrowing.

Here are five key takeaways:

1. Labour has presented the most ambitious climate package ever put forward by a major political party in the UK

While there’s been plenty of coverage about the party reducing its ambition on net zero, the ambition to fully decarbonise the grid by 2030 cannot be overstated. This is a daunting undertaking, and given we are still 12-18 months out from a general election, would need to be mostly delivered within a single Parliament. Doing so would require a war-time level drive of reform, investment, and political will.

On one hand, it’s positive to see ambition on climate change from Labour – whether the pledge is achieved, the relative progress would be transformational. Energy majors have vouched that the 2030 target is achievable, as long as the Government empowers them to “go for it”. However, others have condemned the pledge as unrealistic and pointed to the potential negative economic impact of moving so rapidly.

The measures Labour is leaning into are straight out of the United States’ Inflation Reduction Act playbook. The ‘British Jobs Bonus’ is an intriguing proposal to provide incentives for supply chains and jobs to be based in the UK, and the National Wealth Fund would deliver substantial public investment.

2. A Labour Government offers significant opportunities, but also risks, for companies in net zero sectors

Ed Miliband has been clear in his ambition for Labour to partner with the private sector, in delivering on the plans outlined last week.

Many in the industry will be licking their lips at billions of pounds of potentially game changing subsidies and support schemes, as well as the substantial reform to planning policy, which should allow them to build new renewables projects faster.

However, the reaction must remain tempered. Sudden change – like planning reform - will create a period of uncertainty for investors, so Labour must work with industry to ensure the reforms are delivered in a way which protects existing investors through the transition.

3. Ambition is shifting the political centre ground

Last week, the Conservative Environment Network’s latest steering committee called upon the Government to take more climate action more seriously, to ensure the Conservatives “remain credible” on environmental issues. There are concerns from backbenchers that the Conservative manifesto for 2024 will lack ambition on net zero when compared to Labour.

Whatever the result of the 2024 election, climate change and green industries are an essential battleground for all the main parties, and Labour’s ambition will likely shift both parties in the same direction.

4. The economic debate on net zero is not yet over

Given the sheer scale of what Labour pledged last Monday, the level of coverage in national media felt somewhat underwhelming. It’s clear that Labour still has some work to do in convincing the public of the criticality of its clean energy strategy.

Meanwhile, debate around the costs of the “hydrogen levy” continued to punctuate discussions around the Energy Bill, a major piece of legislation passing through Parliament. Furthermore, Labour stood down from its original £28 billion a year for clean energy commitment, on which it cited the high cost of borrowing and economic downturn. Whilst there is little support for anti-net zero views, how net zero is levelled with economic realities is a debate which will continue to play out over the coming years.

5. This is a crucial election for net zero

Whatever the outcome of the next general election, the UK’s net zero target remains both viable and realistic.

How we get there, however, would look quite different.

You’d be hard-pressed to think of a General Election where the two major parties were further apart on energy than what we’re facing in 2024.

Labour is in favour or substantial public investment, whilst the Conservatives believe a more free-market approach is the best route to reaching net zero. Both sides have merits and drawbacks, but the result in 2024 stands to create significant winners and losers.

Building strong relationships with the public, government and opposition is what will allow businesses in the net zero space to succeed in either eventuality.