Last month, the UK government announced the biggest expansion of offshore wind ever seen in British or European history. A record-breaking auction round (AR7), where companies compete for financing to build new offshore wind farms, added 8.4GW of new clean energy capacity – enough to keep the lights on in 12 million homes. The success of AR7 indicates momentum around the government’s Clean Power Mission and its objective to generate at least 95 per cent of the nation’s power from clean sources by 2030. The lesson is obvious: a clearly defined mission framework can transform climate objectives into good jobs and sustainable growth across the country.
As evidenced by the recent auction, which drew in £3.4bn in private investment, a well-designed industrial strategy can attract private funds by setting ambitious, measurable and time-bound targets backed by patient public financing. When done right, climate missions don’t just cut emissions; they also create massive opportunities for businesses aligned with the same long-term goals.
AR7 operates under a scheme known as Contracts for Difference (CfDs), which offers fixed-price contracts to power generators so they can sell electricity at a set price in the future. This means that the power generator receives a payment when the market price of electricity is below the fixed price, guaranteeing them a degree of return on their investments. On the flip side, if the market price is higher, the power generator must cover the difference so that the consumer does not end up paying more – the latter scenario took place at the height of the energy crisis, when CfD projects paid back £114.4m to consumers.
The government’s clean power plan is strongest when it connects climate action to economic resilience, challenging the tired myth that we must choose between green ambition and prosperity. As I have written previously, in a world shaken by energy price shocks and petrostate geopolitics, switching to clean energy is not just a lofty goal. It is key to our ability to stabilise energy bills, create new jobs and keep our economy stable. Net zero is a security strategy as much as an environmental one.
Yet environmental and security ambitions alone won’t cultivate public trust. The government must balance its long-term, transformational investments in clean energy with a dedication to tangibly improving people’s lives. Its focus on good jobs in clean industries, highlighted in the Clean Energy Industries Sector Plan, is encouraging, but communities need to feel visible progress on wages, costs and opportunities. For example, the government has indicated that the offshore wind projects funded by AR7 could directly generate 7,000 new jobs in the UK’s industrial heartlands. The green transition will be judged on the government’s ability to deliver on such promises.
The 2023 United Auto Workers strikes in the United States offer an instructive warning. Workers there refused to accept a green transition – from combustion-engine to electric vehicle production – that left them bearing the costs while shareholders reaped the gains. Climate action, economic growth and workers’ rights must be joined up from the outset. The UK government must not sacrifice prosperity for its green industrial strategy. Its “Clean Industry Bonus” (CIB), a financial incentive for offshore wind developers who invest in domestic supply chains, is a good step in this direction.
To maximise public value, however, the UK government must continue to ensure there are conditions to receiving public funding. Firms that benefit from grants, loans, equity stakes, tax relief or guarantees should be expected to maintain fair labour standards, limits on share buybacks and the reinvestment of profits into workers and research and development. These are not anti-business demands, but the basic terms of a new social contract that links public risk taking to shared rewards. Current government support for carbon capture and storage technology (so far to the tune of £22bn) offers a clear example of what not to do. These funds often flow directly to incumbent oil giants that are not held accountable to the green transition. Instead, conditions on public support can ensure that the gains from the net-zero transition are broadly distributed rather than captured.
This approach also offers a way of avoiding the UK’s past mistakes on public-private partnerships. Historically, too many UK deals have seen the state overpay while the private sector underdelivered. The “private finance initiative” (PFI) era left UK taxpayers funding inflated returns for contractors while schools, hospitals and prisons were eventually handed back in poor conditions and without clear services improvements. Avoiding another Thames Water crisis – where financial engineering and excessive leverage hollowed out a vital utility while generating outsized returns for a private firm – is critical.
Most importantly, while the UK’s recent progress on clean power is undoubtedly impressive, a truly transformative strategy to achieve net zero cannot stop at the power sector. A large share of the UK’s emissions come from transport and housing (30 per cent and 21 per cent respectively in 2024), so net zero must ultimately be about transforming how we move, build and live. A strong clean power grid provides a crucial foundation, yet it is only the first layer. It remains unclear how other carbon-intensive parts of the UK’s economy, including health, defence and heavy industry, will meaningfully decarbonise beyond plugging into a greener grid.
This is where the UK’s public finance institutions such the British Business Bank and the National Wealth Fund can play a crucial role if they are aligned with a clear mission-oriented framework. Deployed strategically and resourced sufficiently, they could accelerate net zero across the whole economy rather than through isolated initiatives in the energy sector.
Offshore wind can and should be a role model for a new approach to delivering on missions. But to deliver on this potential, the government must get public-private partnerships right and follow through on its promise to generate public value. And it must apply this approach not just to clean power, but to an intersectoral approach that decarbonises and creates opportunities across all parts of the economy.
[Further reading: The battle over leaseholds is far from over]
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