How well would Labour handle the net zero challenge?

This post is by Dr Mitya Pearson, Leverhulme early career fellow at the Department of Political Economy, King’s College London.

Labour’s headline policy announcements on energy and climate change in recent months include ambitions to insulate 19 million homes over a decade and create a zero carbon power system by 2030. Its poll leads in recent months mean it’s worth thinking seriously about the challenges it would face in government to achieve them. 

The unpopularity of some climate policies with Conservatives has hampered progress since 2010, but there is evidence that Labour MPs consider it a high priority so, in government, Labour should have more freedom to act. 

Power and energy efficiency
Labour’s plans for power imply a massive ramping up of renewable generation in a limited timeframe. This will be less about designing new subsidy schemes and more about removing the barriers constraining the industry, like protracted planning processes, supply chain bottle necks, spiralling project costs and the chronic difficulties of securing grid connections. While not all in the immediate control of the government, these issues demand an audit of what is currently holding back delivery. 

The party’s plans for energy efficiency require more funding and new or reworked initiatives.  But they will ultimately have to rely on those implementing the policies and renovating buildings. Labour has suggested local authorities will do much of the work. While logical, different local authorities vary dramatically in terms of their capacity to act and funding is tight across the country. Any new responsibilities will need to come with additional resources to be viable. 

The building industry has a limited number of people with the skills, or inclination, to deliver energy efficiency projects. It will take time to change this, so Labour’s net zero policies should be well integrated with its broader skills agenda. 

An eye-catching Labour proposal is the new state-owned energy company, Great British Energy. It’s still not known exactly what aspects of the energy market it will get involved in. While offshore wind is already well covered, it could play an important role in investing in less mature renewable technologies and identifying those niche, strategic projects across the energy system which struggle to attract private investors. Great British Energy would also take time to setup, so Labour should be realistic about how quickly it would start to support energy policy objectives. 

How fast could things change?
Labour should work out how it intends to accelerate the green economy through existing ministerial powers and guidance, what would be done via secondary legislation and what needs primary legislation. If Labour is voted into government in late 2024, it will likely be the late 2020s before any of its new policies involving acts of parliament can start showing results. This task is complicated by the fact that net zero policy is a moving picture, and its plans for government will have to adjust to changes made between now and then. 

It is widely argued that the UK retail energy market is dysfunctional. That reform is needed is recognised in the current government’s call for evidence on its future and the Energy Security Bill, but it is not clear how far these will get by the next election. It will affect the next government’s ability to achieve its climate policy objectives if it has to spend time propping up a problematic system or overseeing changes to energy company business models. 

Another complication is that assets related to the use of gas for heat and power are paid for by spreading costs across large numbers of energy users. The UK has to cut its gas use to meet its climate change targets, but there will be a long period when some is still needed and it will have to find ways to make this situation economically viable. 

Labour needs to head off threats from abroad
To a significant extent, getting to net zero is about governments mobilising private investment in the right direction. Recent economic turmoil, ongoing uncertainty about energy market reform and competition from  the US Inflation Reduction Act, and the planned response to this from the EU, have raised concerns about how attractive the UK is looking for low carbon investment. Labour will have to do something about this if it is to put the country in the green economy fast lane and compete globally. 

Covid-19 and the invasion of Ukraine have shown how events can disrupt well laid plans or, in such circumstances, make meeting targets like a zero carbon power system by 2030 much more challenging. Labour can’t prepare for the unknown, but it needs to take steps to pre-empt such shocks from thwarting its ambitions on climate.  

London’s Ultra Low Emission Zone extension demonstrates the potential for policies in this area to run into opposition, highlighting that careful policy design should aim to address people’s concerns and, as far as possible, avoid adding to the costs of those on lower incomes. 

Labour has signalled its programme for government would include a greater willingness to commit funding, attention and political capital to the net zero challenge. While a change of government in 2024 could lead to substantial policy change, it’s worth remembering that many of the political and practical challenges that bedevil climate policy now won’t vanish on day one of a new government.