Green Chancellors and nature spending tests: What would net-zero and climate policy look like under Labour?

Labour has unveiled its plan to combat the energy cost crisis

Boris Johnson’s time as Prime Minister was draped in controversy and accusations of a toxic workplace culture. Yet for the many lows of his tenure, the net-zero movement was one of the few areas to truly build momentum.

It may not seem that way, given the debacle over the Green Homes Grant and the fact that the Net-Zero Strategy was ruled unlawful by the High Court, but Johnson was quick to align himself with the climate movement, especially through the eponymous Prime Minister’s Ten Point Plan for A Green Industrial Revolution.

Green groups may be hoping that the next Prime Minister – either former Environment Secretary Liz Truss, or the architect behind the UK’s green gilts package Rishi Sunak – could build on a commendable yet ultimately paper-thin approach to net-zero from the Government. However, a recent YouGov poll found that only 4% of surveyed Conservative members felt that net-zero should be one of their top priority areas. Out of 10 key policy areas, net-zero ranked last in terms of priorities. This should send alarm bells ringing that the Government may be about to abandon net-zero and swim against the tide of the global climate movement.

Regardless of who wins between Truss and Sunak, their leadership position will likely be challenged immediately as the nation finds itself scurrying towards its seventh General Election of the 21^st century.

Labour leader Keir Starmer has this week issued a rallying cry for his Party, claiming they are “ready” for the next election. Despite the Tories’ seemingly haphazard approach to net-zero, Starmer claims it would go hand-in-hand in efforts to respond to the cost of living crisis.

“Everything I want for Britain comes back to this central mission,” Starmer said. “Without growth we won’t get a high wage economy. Without growth, we can’t revitalise public services. Without growth we can’t repair that broken contract, re-energise communities or unite the country. Low growth countries are weaker at standing up for the national interest. Low growth economies can’t support people from my background to get on. Low growth economies can’t rise to meet the challenges of the future.

“Challenges like climate change. I want to be very clear on this point. We will not be distracted by the siren calls – from the right or the left – that say economic growth and net-zero do not go together. That these two objectives are somehow in tension. Or even that we should actively pursue a policy of no growth. I reject that completely. It is totally the wrong way round. A plan for net-zero needs growth. A plan for growth needs net-zero.”

Net-zero manifesto

So, just what would a net-zero strategy under Labour look like? While the specifics are likely to be updated if Labour were to win a General Election, the party has long campaigned for more ambitious approaches to climate action.

Energy and transport

Going into the 2019 General Election, Labour originally pushed for a 2030 timeframe for net-zero. The party subsequently softened its stance following feedback from unions that argued that such a short timeframe would create risk for jobs and industry. Labour has since claimed that a “significant majority” of carbon emissions would need to be eradicated by 2030 to continue on the net-zero pathway.

Big strides would be made to decarbonise and modernise the UK’s energy system in order to enable the flexible generation of clean energy and also respond to rising energy costs.

The Party’s ‘30 by 2030’ report outlines plans to create a net-zero carbon energy system by the 2030s which would see nearly 90% of electricity and 50% of heat come from low-carbon sources.

The report details plans to build 7,000 new offshore wind turbines, 2,000 new onshore wind turbines, enough solar panels to cover 22,000 football pitches and new nuclear power capacity for “energy security” purposes.

Labour would also introduce plans to upgrade “almost all” of the UK’s 27m homes to the highest energy-efficiency standards, a move that, the Party claims, would reduce average energy bills by £417 per household per year by 2030 and eliminate fuel poverty. Technologies cited to help achieve this ambition include heat pumps, hydrogen and solar-powered hot water generation.

Labour notably pushed for the Government to introduce a windfall tax on oil companies and while this was reluctantly agreed there are notable loopholes. Labour’s version of the tax would seek to “safeguard the people, jobs and skills that depend on the offshore oil and gas industry” while getting oil majors to cover the costs of their climate damage.

Other notable policy pitches made by Labour in regards to energy include bringing both the energy and water systems into “democratic public ownership” that would see surplus energy and profits used to help reduce energy bills. Rail would also be put into the hands of public ownership alongside an ambition to electrify it to reduce emissions.

The Conservatives have moved the target on ending new sales of combustion engine vehicles from 2040 to 2035 and then again to 2030, which matches Labour’s longstanding target.

A new UK National Energy Agency has also been touted to oversee grid infrastructure and the delivery of the zero-carbon grid vision, while 14 new Regional Energy Agencies would be set up to replace the existing district network operators.

Climate finance and green growth

One of the major criticisms of the Government’s approach to net-zero has been the detachment from the Treasury which, despite publishing a Net-Zero Spending Review, hasn’t moved to integrate climate considerations into the heart of all its spending plans.

Labour would seek to rectify this. Shadow Chancellor Rachel Reeves wants to become the country’s first ‘Green Chancellor’ with a pledge to invest an additional £28bn annually through to 2030 to assist net-zero.

Reeves stated that the £28bn is around four times the amount that the Government is currently allocating to tackle the climate crisis annually. According to data from the Office for National Statistics (ONS), the UK Government spent £14.5bn on environmental protection during 2018 – the last full year for which data is available.

Reeves has also spoken of the need for increased investment in sectors including electric vehicle (EV) battery manufacturing, active travel, offshore wind, green hydrogen, flood defences, nature conservation and restoration and building energy efficiency.

Reeves has also detailed plans to phase out business rates in England. Rates are currently based on the value of the properties occupied by businesses. So, if businesses carry out upgrades to decarbonise, such as boosting energy efficiency or fitting renewable generation arrays onsite, they will face higher rates.

Outlining plans for the Party’s proposed alternative, Reeves claims the new system would  “incentivise investment, feature more frequent revaluations, and instant reductions in bills where property values fall, reward businesses that move into empty premises, encourage, not penalise, green improvements to businesses, and no public services or local authorities will lose out from these changes”.

Aside from “green chancellors”, Labour has spoken of plans to create a Sustainable Investment Board that would encompass the aforementioned role alongside BEIS and the Bank of England Governor. A robust “nature test” would also be introduced alongside net-zero considerations on spending.

Labour would also call on the Office for Budget Responsibility to incorporate climate and environmental impacts into its forecasts and launch a “National Transformation Fund” worth £400bn and would rewrite investment rules for the Treasury to ensure that money is spent in alignment with the net-zero target. Of the £400bn, more than half would be set aside for a dedicated “Green Transformation Fund” focused on solutions like renewable and low-carbon energy and transport, biodiversity and environmental restoration.

Labour would notably support a notion to reverse the current overseas aid cut to ensure that the UK delivered its fair share of the $100bn pledge from developed countries to support others in combatting the climate crisis.

Finally, Labour has earmarked 3% of GDP to be spent on research and development (R&D) by 2030. This would focus on sustainable investments including building at least three new steel recycling plans and providing innovations to upgrade existing manufacturing sites.

Labour is pushing for regulation to ensure “companies are not just reporting on compliance with the Paris Agreement but acting on it too”. In the build-up to COP26, Shadow Business Secretary Ed Miliband set a list of demands of the Government to ‘Keep 1.5C Alive’ of which, mobilising private finance by requiring financial firms and FTSE100 companies to publish their carbon footprint and adopt credible 1.5C-aligned transition plans.

One potential incorporation into transition plans would be a Climate Apprenticeship programme spearheaded by a Labour Government that enables employers to upskill workers for green functions. Under this programme employers would be tasked with allocating 25% of their funds across their Apprenticeship Levy accounts to training “climate apprentices”.

People

Of course, all of these are just targets and much like the issues facing Conservative green policy frameworks, would need to be underpinned by coherent and tangible strategies. As such, it is incredibly important that ownership across net-zero is spread across departments, with notably MPs there to ensure these targets are enshrined into workings.

So, who would stand out amongst a potential Labour cabinet in order to steer progress towards net-zero?

Sir Kier Starmer (Party Leader)

Should a general election be called this year, it’s unlikely that someone other than Starmer will lead the Party in its campaign. Starmer became the MP for Holborn and St Pancras in 2015 and served as Shadow Minister for Immigration, then Shadow Minister for Brexit, before being elected as the Party’s leader.

Understandably, Starmer’s focus during his tenure as leader to date has been the handling of the Covid-19 pandemic and distancing the party from Corbyn’s leadership style. He has overseen a significant update to the Party’s net-zero and climate approach and has openly advocated for a net-zero target in the 2040s; better strategizing for green jobs and avoiding accusations of climate hypocrisy around COP26. Climate activists have, however, criticised his support for measures to limit protesting and his soft-left approach in general.

Before becoming  Party leader, Starmer’s main environmental involvement was as an architect for a proposed update to the Clean Air Act. You can view his voting record on environmental issues here, including his resistance to higher taxes on plane tickets and his support for adding a net-zero stress test to key decisions.

Angela Rayner (Deputy Leader)

Rayner has risen up the Labour ladder rapidly since her election as MP in 2015, serving as Shadow Education Secretary from 2016-2020 and Starmer’s Deputy Leader thereafter.

As Deputy, she has played a key role in communicating many of the climate policies Labour is proposing and in questioning the Conservative Party’s approach. As Shadow Education Secretary, Rayner pledged to make climate “a core element” of the primary school geography and science curriculum.

You can view Rayner’s environmental voting record here. She voted the same way as most Party peers in most cases, supporting Labour’s drive for a net-zero stress test on the pensions sector and on major infrastructure funding decisions. In her local area, Rayner has been advocating for utility-scale solar projects and more support for community nature and agriculture projects.

Ed Miliband (Shadow Secretary for Climate Change and Net-Zero)

An MP since 2005, Miliband played a key role in the delivery of the Climate Change Act 2008 and its 2019 update to include net-zero by 2050. He was the leader of the Labour Party when COP21 was held and the Paris Agreement ratified and used his position as leader to advocate for more international climate finance and collaboration.

Prior to leading the Party, Miliband was DECC Secretary under Gordon Brown for two years, meaning he is now in his second climate-related Secretary Role. Prior to holding his current position, Miliband was Shadow BEIS Secretary, and this experience makes him well-positioned to speak on the need for private sector action in the creation of a sustainable future.

Miliband’s rhetoric on climate has not simply revolved around criticising the Government’s approach, although this is a key facet of his role. He has stated that it is important to “paint the climate dream”, maximising the social and economic benefits of measures that reduce emissions and boost climate adaptation. In 2020, he published ‘Go Big’, a book detailing 20 ways in which policy and the private sector can “fix our world”. The book advocates a Green New Deal and hints that he would be in favour of a pre-2050 net-zero target.

Lisa Nandy (Shadow Secretary for Levelling Up and Communities)

Wigan MP Nandy is a member of Labour for a Green New Deal and, like Miliband, is of the line of thought that having a hopeful outlook and a movement led from the bottom-up is crucial.

She was Corbyn’s Energy and Climate Change lead from 2015 and 2016 and, after serving as Shadow Foreign Affairs Secretary between 2020 and 2021, was appointed to her current position late last year.

As Shadow Foreign Affairs Secretary, Nandy advocated for the UK to engage more closely and take more of a leadership role in climate talks within the G7 and G20 groups. She also spoke of Russia’s ability to be an aggressor due to its fossil fuel export status and advocated for better loss and damage provision for developing nations already experiencing the brunt of physical climate impacts.

In her current role, she criticised the Levelling Up White Paper, which proved generally unpopular due to a lack of in-depth detail. Green Alliance has been urging Labour to centre its alternative propositions around the net-zero transition to produce a credible alternative.

Rachel Reeves (Shadow Chancellor)

Rachel Reeves has already been covered in this round-up but does have a few notable climate-related milestones. The Labour MP for Leeds West and has been an MP continuously since 2010, having originally trained as an economist. She was the chair of the BEIS Committee under Corbyn before becoming Shadow Chancellor in 2020.

Reeves was the architect of the update to the original Climate Change Act 2008, which saw the UK moving in 2019, under Theresa May, to legislate for net-zero emissions by 2050.  Regarding Reeves’ voting record, she has ruffled feathers in the green economy by supporting HS2, due to its forest impact. However,  she has voted positively on most other issues.

Jonathan Reynolds (Shadow Secretary for Business and Industrial Strategy)

A solicitor by training, Reynolds is the MP for Stalybridge and Hyde and was first elected there in 2010. He served as Shadow Energy and Climate Change Minister from 2013-2015, then Shadow Transport Minister, then as Shadow Treasury Minister, then as Shadow Secretary for Work and Pensions. He took up his current role, Shadow Secretary for BEIS, in November 2021.

Reynolds has repeatedly stated, since net-zero was legislated for in 2019, that net-zero is an opportunity for economic growth and better skilled jobs in the UK, and for the UK to lead internationally in sectors such as low-carbon steel and offshore wind.

In the face of the energy price crisis, Reynolds has called Conservative Party Policymaking “unambitious and short-sighted”. He has advocated for the removal of VAT from domestic energy bills and for more of a focus on energy efficiency, going as far as to advocate for energy rationing. You can view Reynolds’ voting record on environmental issues here.

Cross-party support

Given the severe damage done to Labour across the red wall in the last general election, any potential Labour victory may well need support from other political parties. Labour, or perhaps even the Conservatives, can take solace that the likes of the Green Party and the Liberal Democrats are both heavily advocating for action towards net-zero.

In its 2019 General Election manifesto, the Green Party reiterated its support for a Green New Deal Bill, which is seeking to reduce emissions to net-zero by 2030.

The party would also introduce a Sustainable Economy Bill that sets binding targets on the economic impact on the environment and a New Homes Bill, which would create a legislative framework for building 100,000 new zero-carbon homes for social rent each year.

As for the Lib Dems, the party has previously pushed for a target of 80% of UK electricity to come from renewable sources by 2030. Plans were also proposed to generate funds to make all homes greener, starting with low-income homes.

Wind and tidal power and hydrogen-powered trains are just some of the technologies the party would back to deliver its climate pledge. On an individual level, the party would also overhaul flight costs to target frequent fliers in a bid to deter air travel and the associated climate impact.