New government commitments to clean energy and reducing utility costs
The new Labour government has outlined its commitment to clean energy, reducing utility costs for all, together with a focus on reinforcing Environmental, Social and Governance (ESG) standards(1).
In SaveMoneyCutCarbon’s view, the pledges made in the election manifesto, if enacted, might help to reduce energy and water bill costs for businesses, local authorities and the education sector, as well as homes. The commitments also might help to strengthen the elements of companies’ ESG strategies, with renewed focus on national net zero targets.
Ed Miliband, Secretary of State for Energy Security and Net Zero, said on his first day in the new job that families and businesses were still struggling with energy bills that were too high and are expected to rise again in the autumn.(2)
He said: “In an unstable world, the only way to guarantee our energy security and cut bills permanently is to speed up the transition away from fossil fuels and towards homegrown clean energy.”
Energy independence
And he emphasised four elements: to make the UK energy independent, bring down energy bills for good, create good jobs, and tackle the climate crisis.
He said the priorities were:
delivering our mission to boost energy independence and cutting bills through clean power by 2030
taking back control of energy with Great British Energy
upgrading Britain’s homes and cutting fuel poverty through the Warm Homes Plan
standing up for consumers by reforming the energy system
creating good jobs in Britain’s industrial heartlands, including a just transition for the industries based in the North Sea
leading on international climate action, based on domestic achievements
Energy costs and ESG
Reducing energy costs is likely to impact positively all sectors of the economy, both public and private – from hospitality and housing to oil & gas, and financial services.
Clean energy policies might have a beneficial effect on British industry, which Labour believes is held back by high electricity costs, and which has often made investing uncompetitive. It hopes that the clean energy focus would make “British businesses internationally competitive while our National Wealth Fund supports the most energy intensive sectors to decarbonise.”(3)
In terms of the developing ESG environment, Labour has signalled that it will reverse the previous government’s decision to prevent the Bank of England giving due consideration to climate change in its mandates, so strengthening the institutional framework for policy making.(4)
Companies focusing on their ESG strategies could be mindful of the intentions of the Labour government to effect change in environmental areas, which could impact on corporate goals and commitments.
The ESG environment might be reinforced with the intention to encourage more investment and sectors like housing might benefit from new policies, that could include planning reform.
Housebuilding and rental sector
The new chancellor, Rachel Reeves has announced that the government would reintroduce mandatory housing targets, and the loosening of planning rules to encourage more new homes. She said the new government had a goal of encouraging the construction of 1.5 million homes over the next five years.(5)
This could have an impact on the ESG strategies of the large construction companies, with new targets increasing pressure to meet building targets.
Landlords might also be effected by Labour’s energy-efficiency commitment. As part of the Warm Homes Plan, the government would ensure homes in the private rented sector meet minimum energy efficiency standards (EPC C) by 2030.(6)
Financial sector
The new government’s signal that it plans to make the UK the green finance capital of the world, aiming to mobilise trillions of pounds in private investment, would also have an effect on the ESG strategies of the financial services sector.
Labour says the aim is “to address the greatest long-term challenge of our age. mandating UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers – and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement.”(7)
Clean energy commitment
The Labour manifesto states: “The clean energy transition represents a huge opportunity to generate growth, tackle the cost-of-living crisis and make Britain energy independent once again. That is why clean energy by 2030 is Labour’s second mission.
“Labour will take decisive action to seize this economic opportunity. We will shape markets, and use public investment to crowd in private funding. At the heart of our approach will be our Green Prosperity Plan where, in partnership with business through our National Wealth Fund, we will invest in the industries of the future. Our plan will create 650,000 jobs across the country by 2030.
“To deliver our clean power mission, Labour will work with the private sector to double onshore wind, triple solar power, and quadruple offshore wind by 2030. We will invest in carbon capture and storage, hydrogen and marine energy, and ensure we have the long-term energy storage our country needs. A new Energy Independence Act will establish the framework for Labour’s energy and climate policies.” (8)
Oil & gas sector
For the oil & gas sector, this would see an extension of the windfall tax environment, Labour will extend the sunset clause in the Energy Profits Levy until the end of the next parliament and increase the rate of the levy by 3 percentage points, while removing the unjustifiably generous investment allowances. Labour will also retain the Energy Security Investment Mechanism.
As part of the overall energy strategy and commitment to reducing utility costs for businesses and homes, Labour has promised to create a new publicly-owned company, Great British Energy, with headquarters in Scotland. To support this, Labour will capitalise Great British Energy with £8.3 billion, over the next parliament. The focus is to drive forward investment in clean, home-grown energy production.(9)
Local power
The manifesto states that local power generation is an essential part of the energy mix, to reduce pressures on the transmission grid. The pledge is to deploy more distributed production capacity through a Local Power Plan. Great British Energy will partner with energy companies, local authorities, and co-operatives to install thousands of clean power projects, through a combination of onshore wind, solar, and hydropower projects.
The aim is to invite communities to come forward with projects, and work with local leaders and devolved governments to ensure local people benefit directly from this energy production.(10)
The government also pledges to reward clean energy developers with a British Jobs Bonus, allocating up to £500 million per year from 2026, to incentivise firms who offer good jobs, terms and conditions and build their manufacturing supply chains in the industrial heartlands, coastal areas, and energy communities. This might also have an impact on companies’ ESG strategies.(11)
Hospitality sector
The hospitality sector could benefit from the new government’s commitment to reducing energy costs as well as the possible reform of the business rates system.
Kate Nicholls, chief executive of UK Hospitality said: “We look forward to working with the new Labour Government, which during the campaign has clearly recognised hospitality’s role serving Britain and creating places where people want to live, work and invest.
“We now need to see this followed up with action in the first 100 days. Delivering on manifesto commitments to replace business rates and reform the Apprenticeship Levy would be a clear sign that the Government backs hospitality as the central pillar of the everyday economy.
“Swiftly addressing business rates would fulfil a longstanding ask of the sector and avoid a cliff-edge in April, when current relief is set to end and rates are due to increase again.(12)
Local authorities
Local authorities have been alerted that they would play a role in the decarbonisation of the country, along with the continued emphasis on local authorities making efforts to reduce their energy use and carbon emissions.
Labour’s manifesto pledged: “The Warm Homes Plan will offer grants and low interest loans to support investment in insulation and other improvements such as solar panels, batteries and low carbon heating to cut bills. We will partner with combined authorities, local and devolved governments, to roll out this plan.” (13)
The Labour Party manifesto commitments in a nutshell:
Maintain the nation’s binding 2050 net-zero target.
Maintain all environmental protections while boosting housebuilding.
Mandate FTSE100 firms and regulated financial institutions to produce credible net-zero transition plans.
Launch Great British Energy, a publicly owned renewable energy investment entity with specialism in community projects, as a priority.
Aim for a decarbonised electricity grid by 2030 by quadrupling offshore wind, trebling solar and doubling onshore wind.
Support a mix of large and small nuclear power plants.
End new oil and gas licences in the North Sea.
Spend £7.3bn on low-carbon industry over the next Parliament.
Bring forward a modern industrial strategy.
Produce a ten-year infrastructure strategy and extend R&D budget cycles.
Double Westminster’s energy efficiency spending to £12.6bn over the Parliament.
Reinstate rented property energy efficiency standards, albeit with a two-year delay.
Scrap the forthcoming 2035 ban on new fossil fuel heating, but implement new measures to stimulate the heat pump market.
Reinstate the 2030 ban on new petrol and diesel car and van sales.
Publish a land-use framework.
Create nine new national river walks and three new national forests.
Put failing water companies under special measures.
‘Automatic and severe’ fines for water polluters.(14)
Bibliography
1 Labour Party. (Accessed July 5th 2024) “Change. Labour Party Manifesto 2024” https://labour.org.uk/change/.
2 GOV.UK (Accessed July 8th 2024) “Energy Secretary Ed Miliband sets out his priorities for the department” https://www.gov.uk/government/news/energy-secretary-ed-miliband-sets-out-his-priorities-for-the-department (© Crown copyright. OGL)
3 Labour Party. (Accessed July 5th 2024) “Make Britain a clean energy superpower. Labour Party Manifesto 2024” https://labour.org.uk/change/make-britain-a-clean-energy-superpower/
4 Labour Party. (Accessed July 5th 2024) “Change. Labour Party Manifesto 2024” https://labour.org.uk/change/.
5 GOV.UK (Accessed July 8th 2024) “Chancellor unveils a new era for economic growth” https://www.gov.uk/government/news/chancellor-unveils-a-new-era-for-economic-growth (© Crown copyright. OGL)
6 Labour Party. (Accessed July 8th 2024) “Make Britain a clean energy superpower. Labour Party Manifesto 2024” https://labour.org.uk/change/make-britain-a-clean-energy-superpower/ https://labour.org.uk/change/make-britain-a-clean-energy-superpower/
7 Labour Party. (Accessed July 8th 2024) “Make Britain a clean energy superpower. Labour Party Manifesto 2024” https://labour.org.uk/change/make-britain-a-clean-energy-superpower/ https://labour.org.uk/change/make-britain-a-clean-energy-superpower/
8 Labour Party. (Accessed July 8th 2024) “Make Britain a clean energy superpower. Labour Party Manifesto 2024” https://labour.org.uk/change/make-britain-a-clean-energy-superpower/ https://labour.org.uk/change/make-britain-a-clean-energy-superpower/
9 Labour Party. (Accessed July 8th 2024) “Make Britain a clean energy superpower. Labour Party Manifesto 2024” https://labour.org.uk/change/make-britain-a-clean-energy-superpower/ https://labour.org.uk/change/make-britain-a-clean-energy-superpower/
10 Labour Party. (Accessed July 9th 2024) “Make Britain a clean energy superpower. Labour Party Manifesto 2024” https://labour.org.uk/change/make-britain-a-clean-energy-superpower/ https://labour.org.uk/change/make-britain-a-clean-energy-superpower/
11 Labour Party. (Accessed July 9th 2024) “Make Britain a clean energy superpower. Labour Party Manifesto 2024” https://labour.org.uk/change/make-britain-a-clean-energy-superpower/ https://labour.org.uk/change/make-britain-a-clean-energy-superpower/
12 UKH: UK Hospitality (Accessed July 9th 2024) “We need to see Labour deliver on its commitments, and quick.” https://www.ukhospitality.org.uk/we-need-to-see-labour-deliver-on-its-commitments-and-quick/
13 Labour Party. (Accessed July 9th 2024) “Make Britain a clean energy superpower. Labour Party Manifesto 2024” https://labour.org.uk/change/make-britain-a-clean-energy-superpower/
14 Labour Party. (Accessed July 9th 2024) “Change. Labour Party Manifesto 2024” https://labour.org.uk/change/