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Is the new Government on the right track?
New National Wealth Fund
Work has begun to align the UK Infrastructure Bank and the British Business Bank under a new National Wealth Fund (NWF) that will invest in industries of the future.
The creation of Great British Energy and the transformation of Britain into a ‘renewable energy superpower’ were arguably the clearest parts of Sir Keir Starmer’s vision ahead of the election.
What did they propose?
The spending pledge of £28bn a year in renewable energy investments was, famously, abandoned months ago in favour of a pledge to spend around half that. But their manifesto remained clear that the philosophy of major state investment and intervention in growing renewable energy will be a defining feature of this Labours government.
It attacked the Conservatives for failing to grow renewable energy because they are ‘ideologically opposed to using the role of the state, including public investment’ to do so.
Pointing out the country’s advantages – ‘our long coastline, high winds, shallow waters, universities, and skilled offshore workforce combined with our extensive technological and engineering capabilities’ - Labour promised to take a different approach.
The Green Prosperity Plan will ‘partner with businesses’ to invest in ‘industries of the future’ with the aim of creating 650,000 jobs.
With its stretching target of a clean energy grid by 2030, Labour has promised to work with the private sector to double onshore wind, triple solar power, and quadruple offshore wind by 2030, as well as investing in hydrogen, marine energy, and carbon capture. This work will be backed by a legislative framework through a new Energy Independence Act.
Nuclear energy will also get a boost under the plans, with a promise to get Hinckley Point C over the line, Sizewell C started and small modular reactors up and running.
A strategic supply of gas power stations will be retained, the manifesto said, with a ‘phased and responsible’ transition in the North Sea. But new licenses for oil and gas drilling will not be granted, and neither will coal mining or fracking operations.
Great British Energy, capitalised with £8.3bn in state funding, will also be established and will ‘partner with industry and trade unions to deliver clean power by co-investing in leading technologies; support capital-intensive projects; and deploy local energy production’. It will be headquartered in Scotland.
The remaining money would be for it to set up and establish itself in the market.
Details are yet to emerge but it is expected this company will initially invest in the government’s Local Power Plan. This is a funding pot for local government and community groups for grants and loans towards small-scale clean energy projects, such as solar panels on council houses, schools or hospitals.
A further £7.3bn fund over the course of the parliament will look to kick-start and drive growth in green steelmaking, gigafactories producing electric vehicle batteries, decarbonising ports carbon capture and green hydrogen. For every £1 spent, Labour hopes to attract £3 of private investment.
It has also promised to ‘ensure a much tougher system of regulation that puts consumers first and attracts the investment needed to cut bills’.
How deliverable is it?
The 2030 target will be excellent for spurring investment, but it is an enormous challenge.
It is an extremely short time line to line up investment and get schemes up and running.
A big question is how the planning system will deal with the applications for solar farms and onshore wind, for which - if we are to meet the target - spades need to start getting in the ground immediately.