The second of two post-European-election articles explores the potential of Great British Energy. The first explored how new UK and European Union leaders must bind together global climate allies.

The new UK government has a mandate to be ambitious. GB Energy, a new public investment vehicle, must embody that ambition – and help trigger the systemic change that the climate and broader sustainability emergency needs.

A recent IEA report outlined in both detailed analysis and clear language how a truly “just” energy transition will see everyone benefit – and avoid the upfront costs falling on the least advantaged. To realise GB Energy’s potential, the government must go beyond its planned investment with a systemic approach that interconnects all environmental, social, and economic challenges of the transition and avoids focusing on individual unconnected technologies, investments, and policies.

GB Energy must also loudly illustrate its achievements to the public, in politics, and throughout business: proving the energy transition and all sustainability works for everyone, everywhere. In doing so, helping pull politics, consumer behaviour, and business into alignment with the trajectories of the Paris Agreement and 17 UN Sustainable Development Goals (SDGs).

Labour’s manifesto proposed £8 billion for GB Energy – focusing on infrastructure, not retail energy. It will own, manage, and operate clean energy projects: in collaboration to begin with, before a mid-long-term view for full ownership. £3bn of the £8bn plan is for local government. £5bn is for projects and supply chain development less attractive to investors. A zero-carbon energy system by 2030 is the new government’s target, which Ember, a thinktank, estimates could save people £300 a year on average. GB Energy can embody this message and connect the global context with outcomes for people that ensures a just transition.  

From 2010 to 2024 the carbon intensity of UK electricity fell by 75%. But we need more and cleaner electricity still.

Grid capacity, home insulation, battery storage, planning reform, and so much more lies on the UK’s energy transition need-list. Electricity makes up 20% of the global final energy demand today. And the IEA estimates demand will reach 55% in a 2050 net-zero aligned scenario; the Energy Transition Commission thinks 65%. That means more electricity for homes, transport, businesses, and industry. A vast amount of solar and wind plus a combination of nuclear, hydrogen, carbon capture, new chemistries (for example, to produce cement), and other innovations.

GB Energy will not produce this electricity or bring the required innovations to maturity alone. The IEA asks for $4 trillion annual global spend on the energy transition by 2030, up from $1.7 trillion today. The UK Climate Change Committee suggests a similar 1.5% of GDP (roughly 1% on power plus 0.5% on buildings). There are upfront costs that the market is not currently paying despite widespread alignment on the SDGs benefits for all in the long term. Government policy must therefore help derisk investment and ensure fair allocation of the costs.

Policy working alongside markets brought the cost of wind and solar dramatically down in the UK and globally. China can produce solar panels for $0.11 per watt versus $0.25-30 in the US. As well as continuing to guide the energy transition towards financial sustainability, policymakers must limit their urges to overly-protect domestic markets. GB Energy should see these price dynamics as a challenge to innovate and bring home-produced costs down where possible and build new global collaborations to share the best of the worldwide energy transition.

Labour and GB Energy have the pieces of a just energy transition in their hands.

Since July’s election, Labour has begun to expand on its manifesto plans for GB Energy, and the UK’s wider energy system.

Planning reform, including unlocking onshore wind from an overly prohibitive system, has seen immediate progress with minimal opposition.

As the cheapest form of energy, the market should be able to ramp-up onshore wind generation without subsidy. For offshore wind the government target is 55GW by 2030, a quadrupling. While that ambition won’t likely be met, most sources agree the UK can get close enough to achieve a near-clean grid.

Planning approval for infrastructure has been notoriously slow whether onshore or offshore – local vetoes onshore, and grid connections, ground assessments, and wildlife studies when offshore. The government’s partnering with The Crown Estate will help streamline development for offshore sites. It will also inject new budget to overcome the barriers of past failed energy auctions.

Grid infrastructure globally needs massive physical and digital infrastructure upgrades.

National Grid is planning £30bn of UK investment over the next five years including asset replacements and new connections. Grid connections can currently take almost a decade. And battery technologies require development for short-term and multi-decade storage. Throw over-budget-and-time nuclear projects into the mix too. There is a clear role for GB Energy to work closely and quickly with the market to pull in funding and ensure investments do not heavily leak into consumer prices.

UK energy prices are already overwhelming for many battling a cost-of-living crisis. Market reform to decouple electricity from wholesale gas prices should be pressed for but is as yet unconfirmed by Labour. For those in fuel poverty especially, realising the financial benefits of renewables expansion cannot come soon enough.

Other encouraging components of a just-looking transition include doubling home insulation investments to £13bn by the next election. But much more is needed.

Twenty-to-twenty-five million homes must be upgraded in 20 years with heat pumps and insulation to meet UK climate targets. Alleviating energy poverty will also benefit health, education, and employment. Other positive signs include solar mandates for new and upgraded homes, reinstating 2030 bans on new gas boilers and non-electric cars, and a landlord responsibility to maximise home energy efficiency.

A systemic approach means enforcing transition plan regulations.

Transition plans should connect the global environmental, social, and economic sustainability spectrum. And existing UK legislation should continue to be tightened and crucially, enforced, with the most collaborative approach possible with business and finance.

Labour’s in-tray includes TATA Steel’s abrupt plans to lay-off 2000 workers while transitioning to electric arc furnaces, and the impact to Scotland’s oil and gas industry with no new licenses to be granted. Labour should also grapple with cancelling the granted Rosebank licence if it wants to further dent global emissions over the coming decades. Such a move would however be less straightforward that its effective cancelling of the Cumbria coal mine.

Clear policy signals to business – through collaboration and clear roadmaps whether towards end points or in developing technologies – are especially vital as the world moves through its largest ever year of elections. For example, more than 100 businesses and investors recently called on the EU to aim for a “floor rather than a ceiling” of 90% emissions reductions by 2040 – citing resilience and competitiveness. The perception of a more stable government in the UK, and improved European ties, shows immediate although early-days improvements in financial and private sector confidence.

Labour has a historic majority. GB Energy could be a historic platform for a truly just energy transition. A systemic approach and clear advocating of interconnected benefits will give it a chance of overcoming the challenges woven throughout its task.

Global renewable capacity has tripled since Paris Agreement in 2015 largely through policy support. Politics and policy can do it. Clusters of countries can absolutely come together successfully to share solutions and challenges whether they’re related to infrastructure, finance, technology, or politics. 11 major challenges identified are identified in another of several recent IEA report. But those challenges are within Labour and GB Energy’s power to meet.