What would the UK’s net-zero transition look like under Labour?

The Green Deal Industrial Plan was first meant to be published earlier this month, but will now be released in the coming weeks after a key speech by Starmer at Scottish tidal energy firm Nova Innovation on Monday (19 June).

In his speech, Starmer pledged to “throw everything” at the UK’s net-zero transition. He emphasised how doing so could create new jobs and levelling up opportunities domestically, while also positioning the UK strongly to capitalise on the growing – and increasingly competitive – global market for low-carbon technologies.

Beyond this top-line vision, he re-committed to several of Labour’s key energy transition commitments while also providing some new pledges and additional details.

We use this information to plot out what the UK’s transition to net-zero would look like under Labour, should the Party win the next general election next year. Recent polling suggests that the Party continues to grow in popularity and is on course to trump the SNP.

Energy transition

Starmer confirmed, this week, a commitment for Labour to end all new oil and gas exploration licensing from the point of the next general election. It would honour all licenses in the works before this point. The Conservatives have set no formal end date for oil and gas licencing and set the UK’s latest licencing round into motion in October 2022.

This has been a major point of contention. Tory MPs and North Sea investors have accused Labour of failing to plan for a just transition for workers in the sector. Green groups say any party with a credible net-zero plan would axe licenses underway for the largest projects, such as Rosebank.

In any case, Labour is proposing a significant scaling up of renewables and nuclear to maintain energy security, coupled with efforts to reduce energy use in the first instance.

On the generation piece, Labour wants to end unabated gas-fired electricity generation by 2030 – five years earlier than the Conservatives. It bears noting that the UK is not on track for the 2035 goal at present, so achieving the 2030 goal would be challenging to say the least.

Decarbonising the grid, under Labour, would involve quadrupling the UK’s offshore wind capacity and doubling its onshore wind capacity this decade. The offshore target is in line with the Conservatives’ while the onshore target is more aggressive.

Labour has also pledged to triple the UK’s solar capacity from some 15GW at present to 45GW by the end of the decade. This used to be more ambitious than the Tory commitment, but the party recently accepted a recommendation to target 70GW of solar capacity by 2035.

Additionally, Labour has stated its support for marine and tidal energy, low-carbon hydrogen and nuclear energy. Starmer has repeatedly bad-mouthed the Conservatives for failing to properly address the UK’s impending nuclear generation gap. At present, Labour does not have time-bound numerical targets in these sectors.

Starmer acknowledged in his speech this week that simply investing in new clean power generation is not enough; other practical barriers need to be addressed. He stated that Labour would fast-track planning reform to build out grid infrastructure and address delays to connections, which exceed ten years in some cases.

Starmer also reiterated his party’s commitment to creating a new publicly owned energy company, GB Energy, and promised to seek a site in Scotland for its headquarters. He floated an initial budget for GB Energy of £1bn per year. 60% of this would go to local authorities and the remaining 40% to the developers of community renewable energy projects. Community Energy England has stated that just 23 new community-owned renewable energy generation assets were installed in 2021, the lowest number since 2017.

Energy efficiency is an important focus alongside transitioning the energy generation mix. Labour is running on a pledge to retrofit 19 million homes this decade, out of the UK’s total housing stock of some 25 million homes. It has not yet set out detailed plans on how this will be achieved. Retrofitting homes on a national scale is a notoriously difficult task, and one of the key green policy areas where the current Government is lagging behind the advice of its own experts.

Regarding energy efficiency in the private sector, Labour has pledged to cut business rates for firms investing in retrofitting and in generating their own energy. It has stated that its plans will slash £53bn off of annual spending on energy bills by businesses.

Green finance

Shadow Chancellor Rachel Reeves has previously stated her party’s intention to better embed climate considerations into Treasury decision-making.

Last year, she stated a commitment for the party to invest £28bn annually on the  domestic net-zero transition each year through to 2030. She claimed that the current Government allocates just £7bn a year in this way. Official data places the figure at about £14.5bn.

In recent weeks, Starmer has come under pressure from some factions of his Government to spend some of the £28bn on projects which have primary benefits that are not environmental, with some environmental co-benefits, such as new infrastructure.

In response, Labour has stated that it would not be ready to dedicate £28bn in full to solely environmental projects until 2028. Some green groups agree with the party lines that this is reasonable – especially with many parts of the world in recession. Others have accused the party of backsliding.

The Conservative Party prides itself on being the party of business and has has emphasised how, as Chancellor, Rishi Sunak set out a vision for the UK to be the world’s first net-zero financial centre in 2021. It has overseen the launch of the UK’s first sovereign green bonds and two major updates to the green finance strategy, as well as the launch of the post-Brexit Infrastructure Bank. It is also developing the UK’s first green finance taxonomy and mandate for net-zero transition plans. Nonetheless, the consensus is that more is needed to create a genuinely world-leading net-zero financial centre. 

Jobs, skills and trade

The current Government is targeting two million green jobs by 2030 but has not put forward a comprehensive skills strategy update since enshrining net-zero in law. In 2021, the UK hosted some 247,000 green jobs.

Labour has promised a proper skills plan creating half a million jobs in energy-related sectors alone. The plan is not out in full but will include a new requirement for large businesses to offer ‘climate apprenticeships’, spending at least a quarter of ther Apprenticeship Levy funds for work on the low-carbon transition.

Increasing public spending on rapidly-growing cleantech sectors and also crowding in private investment is Labour’s top-line strategy for creating more green jobs, with a focus on the priority regions for levelling up.

The party has floated an £8bn ‘national wealth fund’, consisting of private and public finance, to create jobs in sectors such as hydrogen, electric vehicle manufacturing, low-carbon heating installation and low-carbon steelmaking.

Labour is also committed to creating a new National Transformation Fund that could leverage up to £400bn from the private sector. Such a fund would invest in the digital transition and in public health as well as environmental sustainability.

Nature

Starmer did not mention nature this week; the focus of his speech was very much on the energy transition side of things. This has prompted some NGOs to implore the Party to publish a new nature strategy soon and show that it is not approaching the nature and climate crises in silos.

Labour has not comprehensively updated its nature strategy since 2019. At that point, under Jeremy Corbyn, it committed to:

• A new Clean Air Act enshrining the World Health Organization’s advice on maximum levels of air pollution into British law
• Ensuring that half of England’s rivers and lakes meet ‘good ecological status’ standards by 2027, up from around 16%
• The creation of ten new national parks in Labour’s first term, with £75m of additional funding
• £1.2bn annually for habitat restoration in England
• £2.5bn annually for tree planting
• The creation of 20,000 new nature jobs by 2030

The only new commitment this year is for tougher requirements than the Conservatives on water companies and farmers found to be contributing to pollution.

The Tories last year tabled a new Storm Overflows Discharge Reduction plan, that requires water companies to address all sewage discharges by 2050. While this is backed with a multi-billion-pound pledge from the sector, the Government is being taken to court over the plan this July, with campaigners alleging that it is far weaker than previous regulation.

Labour’s plans for ending the so-called ‘sewagegate’ scandal include creating a new oversight bodyv by merging Ofwat, the Drinking Water Inspectorate and parts of the Environment Agency. The body would oversee new targets for each water company to reduce sewage discharges by 15% each year.

Labour would not take water into public ownership but would increase infrastructure investment requirements and reporting requirements from the sector. It would also work with industry to unlock long-term capital planning for climate resilience.

Both Labour and the Tories are agreed on the UK’s participation in the UN’s global biodiversity treaty, agreed late last year. The treaty has a headline vision of ending nature destruction and degradation and working to large-scale restoration. Specific requirements include mandating business disclosures on nature-related impacts and risks; setting aside 30% of degraded habitats for restoration and redirecting $500bn of subsidies that currently harm nature.

What do you make of Labour’s net-zero plans? What areas of green policy should the opposition provide more detail on? Let us know in the comments.