Shadow Chancellor Rachel Reeves watered down Labour’s ambitious climate pledges last week, slashing plans to invest £28bn per year in green industry.
The party’s pledged Green Prosperity Plan, which Reeves herself announced in 2021, has fallen victim to Labour’s fiscal rules – as the opposition seeks to bolster its economic credibility ahead of next year’s election.
Instead, Labour will boost investment over time, reaching £28bn a year after 2027 – over halfway through its first term in office.
Reeves will catch a lot of flak for her U-turn from green groups and the left of her party, but her decision reflects rampant interest rates, the war in Ukraine and the disastrous fallout of the mini-budget from the Liz Truss government.
However, it a shame that one of Labour’s few strong pledges has been scrapped, with the party seemingly preferring to make the next election a referendum on the Conservative government’s vast ineptitudes, rather than power an alternative and robustly greener vision for the future.
Following the decision, City A.M. has taken a clear look at the party’s energy manifesto to see whether Labour are fit for government.
Nuclear – 7/10
Nuclear power is the only realistic low-carbon option for baseload energy and Labour leader Keir Starmer deserves credit for confirming it will be a “critical part” of the UK’s energy mix if he gets the keys to Downing Street.
He has called for more large-scale GW projects alongside under-construction Hinkley Point C and the mooted Sizewell C, and supports small modular reactors.
While the government’s goals for nuclear power are ambitious, they have struggled to get new projects off the ground.
Labour has to show how it can build up plants quickly while containing costs – with Sizewell C straining for funds and Hinkley Point C over-budget and delayed by three years.
This includes convincing UK-based pension funds and investment firms wary of supporting nuclear plants that cost tens of billions of pounds.
Oil and gas – 2/10
Labour might criticise protestors clogging up roads and disrupting sporting events, but it still agrees with them.
Starmer has pledged to stop all new oil and gas developments if he wins the next election, to ensure the UK reaches its net zero goals. He also wants to further reduce energy bills by ramping up the windfall tax on the profits of fossil fuel companies – scrapping the 90 per cent investment relief.
This outlook many be principled, but it is also hugely damaging to the UK’s supply security ambitions and green agenda.
As it stands, 75 per cent of the country’s energy consumption still supported by oil and gas, and the Climate Change Committee predicts half of the UK’s energy requirements between now and 2050 will still be met by oil and gas. It makes no sense to throttle supply before reducing demand through ramping up renewables and energy efficiency across households, public buildings and the grid.
The UK’s toughened windfall tax has already seen the NSTA forecast a vast drop in investment for North Sea oil and gas
It is also incoherent to rely instead on supplies from the US, Middle East and Norway rather than domestic supplies that support jobs in the UK.
Until an environmental experiment can explain why highly carbon-intensive LNG is better for the environment than domestic supplies, it is also unclear how it even helps with the country’s net zero ambitions.
If Labour is serious about governing, the party must divorce themselves from the manifesto of Just Stop Oil.
Renewables – 8/10
Labour’s green energy agenda is vast and worthy of immense credit. What is especially admirable is the sense of urgency throughout its policies.
The opposition wants to make the UK a clean energy super power, targeting a quadrupling of offshore wind, tripling solar power and doubling onshore wind – all by the end of the decade.
ADVERTISEMENT
It has also announced GB Energy – a new publicly owned company – to help drive the campaign for cleaner domestic energy.
What it now needs to do is pledge to break down the barriers that no amount of funding on projects can break – such as reforming National Grid to make connections speedier, tackling the NIMBYism and planning obstacles that have crushed onshore wind and solar farms, and reducing the consultation periods to get projects off the ground.
If it achieves this, then they could unlock billions of pounds of private investment, and potentially even fill the funding gaps from Reeves’ U-turn.
Verdict – 5/10
Reeves’ steely approach to the nation’s finances and Labour’s ambitious agenda in renewables and eventual embrace of nuclear power deserve credit and position the party as a legitimate alternative to the Tories. More details are needed over policy and it should embrace the private sector more, with the City at the heart of Britain’s green dreams.
But the UK will still need oil and gas for decades to come, and relying on overseas vendors to meet the country’s needs with highly carbon intensive LNG is a supply security threat and environmentally unsound. There is still time left for Starmer and Reeves to think again.
By CityAM
More Top Reads From Oilprice.com:
- Oil Jumps As EIA Reports Surprise Crude Build
- Argentina's Vaca Muerta Shale Play Could Produce 1 Million Bpd In 2030
- Singapore Detains Record Number Of Oil Tankers As Shadow Fleet Expands
