Support 110 years of independent journalism.

Labour is betting on the private sector for net zero

At the party’s conference this week, Labour tried to square the circle of fiscal discipline and necessary investment for the green transition.

By Jonny Ball

From the edge of the sprawling Labour Party conference venue, where hungover lobbyists jab at their phones and desperately smoke cigarettes, you can see the stories of the energy transition in physical form, on the other side of the River Mersey.

Tranmere Oil Terminal unloads tankers from across the world. Its haul is piped down to Stanlow, a huge refinery that you can also see to the south-west. But look in the other direction into Liverpool Bay and there’s a 380MW wind farm, owned and operated by Orsted, a state-owned Danish company. The Mayor of the Liverpool City Region, Steve Rotheram, wants to go further, with a tidal barrage to generate huge amounts of clean electricity for decades to come. The move is opposed by some conservationists who worry about its effect on wildlife.

There can be few more apt places to view the problems, pitfalls and contradictions of the green transition. And suitably, just behind me, the shadow energy security minister Alan Whitehead is talking. The day before, on the conference floor, delegates voted with the Unite leader Sharon Graham’s motion to nationalise the energy industry. But there’s little enthusiasm for that where I’m standing.

“It makes no sense to buy up or control the kit of the past,” Whitehead told a crowd gathered for the Socialist Environment and Resources Association’s fringe event. “It makes a lot of sense, however, to buy into, and in some instances control, the kit of the future.”

Whitehead, who has held the energy brief since 2016, was elaborating on Labour’s plans for a state-owned company called GB Energy, a policy first announced at last year’s conference. This isn’t about nationalising the private sector, he assured the audience, but creating a parallel public company with a “catalytic role”. GB Energy would be a “fairly lean vehicle”, he added (capitalised with an initial £8bn), that would be involved in providing “seed capital” and “derisking” local green energy projects. He told attendees it was something for the “first 100 days” of a Labour government.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.

[See also: Labour should go big and get on with green investment]

“It’s both macro and micro,” he told Spotlight. “Investing and part-owning parts of the low-carbon kit that we’re going to need on the large-scale, but also making sure low-carbon local energy projects work. If we get back to community-based onshore wind projects, those very often fail not because the idea isn’t good or the need isn’t there, but because they simply don’t have the pockets to get it over the line and deal with all the hurdles. So GB Energy will guarantee that process and underwrite it.”

If this is the model, then Labour’s Local Power Plan proposals sound suspiciously like they could morph into the centralised competitive bidding pots castigated by senior Labour figures such as Lisa Nandy, and more or less anyone familiar with local government.

Elsewhere, the exhibition hall is packed with companies displaying their net-zero credentials. Conversations with businesses’ public affairs maestros follow a familiar pattern: they want the government to “derisk” private investment, and provide stable, predictable “Bidenomics”-style opportunities for them to get behind. If in the days of George Osborne and austerity, active government and public spending was seen as “crowding out” the private sector, this conference is all about the state “crowding in” private funding with big investments of its own, mitigating the downsides for private capital in a volatile world.

The speech by Ed Miliband, the shadow energy security and net zero secretary, name-checks Orsted as a model of best practice – the renewables giant’s shares are 50.1 per cent government-held and 49.9 per cent private. Labour says it will “unlock £200bn of private investment” with its clean grid plans, opening up bottlenecks, speeding up grid connections that are currently delayed by up to fifteen years. The new transmission infrastructure required will necessitate a revolution in planning regulations, ignoring local opposition to hundreds of miles of cables and pylons running through England’s green and pleasant land.

Not everyone is convinced by the rhetoric heard everywhere in Liverpool – a “just transition”, a clean grid by 2030, hundreds of thousands of net zero jobs. In a private New Statesman round table, Gary Smith, general secretary of the GMB union, made the opposite case on behalf of his half a million members.

“Without gas we would have had 250 days of blackouts last year,” he said. “Forty per cent of electricity is coming from gas… Offshore wind has not delivered the jobs that have been promised… There’s very little in the way of UK content, apart from sweeping up dead birds… We’ve got to be honest on the scale of the challenge. Let’s focus, like Biden has, on jobs and national security.”

With an autumn election likely, the next year will be tortuously slow for Labour as the party tries to bring unions, the private sector and voters along with its vision for a green economy, while trying to balance it all against a long list of fiscal commitments. The party has a huge task on its hands to meet this historic challenge.

This article was originally published on the Green Transition newsletter. To see previous editions and subscribe, click here.

[See also: On net zero, the Conservatives are increasingly estranged from business]

Content from our partners
What you need to know about private markets
Work isn't working: how to boost the nation's health and happiness
The dementia crisis: a call for action

Topics in this article : , ,