One of the battlegrounds on which the Labour Party chose to fight the last election was on climate and energy. It sought to draw a distinction between its climate ambitions – one of its six manifesto pledges was to “make Britain a clean energy superpower” – and backpedalling from the Conservatives under Prime Minister Rishi Sunak, who saw net zero as an electoral liability.
Despite the difference in rhetoric, however, much of the cross-party consensus on addressing climate change remains in place. While the Conservatives pledged to decarbonise the UK’s power system by 2035, the Labour government has set a 2030 target.
But these five years will make an already challenging goal much harder – or impossible, some argue. What are the prospects of Labour decarbonising the UK’s power system by 2030 – and might rethinking the challenge make better economic and environmental sense?
A capacity challenge
Labour has set out what it plans to deliver to meet its 2030 goal. Its manifesto commits it to doubling the UK’s onshore wind capacity, tripling solar power, and quadrupling offshore wind by 2030. It also promises to invest in carbon capture and storage (CCS), hydrogen and marine energy, and long-term energy storage. It also plans to put the nuclear sector on a stronger footing, moving forward with Hinckley C, extending the life of existing capacity and promising new plants, both large ones and small modular reactors.
But the UK is not on track. According to modelling by Cornwall Insights, solar and wind will account for only 44% of power generation by 2030, far short of the 67% needed for a fully decarbonised energy system.
Before the election, forecasts produced by Aurora Energy Research for Policy Exchange, a right-leaning think-tank, found that Labour’s target was “unfeasible”, and would require almost double the annual investment needed for the 2035 goal, from an additional £8.2 billion/year above business as usual to 2030, to £15.6 billion/year. That later target would enable technologies such as nuclear and bioenergy with carbon capture (BECCs) to carry some of the load.
Soft barriers
Not everyone is as pessimistic. Chris Stark, who was until recently the chief executive of the government’s advisory Climate Change Committee, says hitting the 2030 target is just about possible, with a “Herculean effort”. Part of the answer is in speeding investment in CCS, he says.
His ‘can-do’ attitude has been rewarded with a job in government, as head of a new ‘Mission Control’ unit, with a mandate to “turbocharge” the effort to reach the 2030 target.
Perhaps more challenging than finding the capital needed are a whole suite of ‘soft’ barriers to clean energy roll-out. The Institute for Government (IoG) has set out a series of these, which include:
- Grid capacity, and queues for grid connection
- Supply chain constraints, given that the UK is competing with other countries for equipment
- Finding sufficient people with the skills to build and operate the infrastructure needed
- Low capacity in the planning system: average waits for consent for nationally significant infrastructure have risen from 2.6 to 4.2 years between 2012 and 2023
- Challenges in co-ordinating across the energy sector.
The IoG goes on to set out recommendations for the first week, month and 100 days for the government to begin addressing these barriers.
A good start
The new Labour government has certainly got off to a good start. Within days of the election, Chancellor Rachel Reeves reversed the previous government’s de facto ban on onshore wind. It has moved swiftly to set up Great British Energy, as an entity that will invest in and directly own new projects, as well as support emerging technologies and develop domestic supply chains.
But much more is needed. As Scottish & Southern Energy has argued, the sector urgently needs a roadmap for technology development, especially around CCS: the utility estimates that 7-11 GW of CCS-equipped despatchable power generation capacity (likely gas-fired) by 2030 will be required “to come close to Labour’s clean power system target”. Currently, there is none.
A useful target?
There are also questions to be asked about the wisdom of bringing forward the decarbonised power system goal by five years. Certainly, the message that it sends about the climate challenge is welcome – particularly after the previous Conservative government backed away from net zero, in the (unsuccessful) search for a wedge issue to motivate its right wing. And there is much to be said for stretch targets – particularly given the urgency of the climate crisis, and the repeatedly proven ability of the market economy to deliver technological and business model innovation in response to the right signals.
But the target could come at steep economic and political costs. The costs of decarbonising the last 10 or 20% of the grid will be substantially higher than addressing the first 50-70%. There is also risk that some costs of the net zero transition fall on vulnerable – or vocal – parts of society. In what is likely to be a difficult economic environment for some years to come, increased costs linked to clean energy investments are likely to become a potent political weapon.
Bigger battles to fight
There are also, in climate terms, bigger fish to fry. The Climate Change Committee has recently warned that the UK is considerably adrift from its wider 2030 emissions targets, which cover industry, transport, agriculture, etc., as well as power supply.
It notes that the power sector has delivered much of the reductions the UK needed to meet its first two carbon budgets (the last of which ran to the end of 2022). However, for the third budget (2023-30), the “rate of reduction outside the electricity supply sector will need to accelerate to meet the UK’s 2030 target”.
Rather than spending a fortune getting from a 80 or 90% decarbonised grid to a 100% carbon free one, might a different approach be to build out as much low-cost renewable energy capacity as possible, and use the resulting cheap power to decarbonise other parts of the UK economy?
Some of these – electrified transport being the most obvious – can and will shift demand for power to when it is cheapest. Cheap power could help incentivise new forms of energy storage, such as those using molten salt or compressed air. It might also be possible to re-think manufacturing processes, designing business models that operate only when low-cost green power is available such as chemical manufacturing that can adjust production rates based on real-time electricity prices using automated control systems.
The messaging from the Labour government around allowing the 2030 target to slip will be awkward: one positive angle would be that much of the renewable energy capacity, and the associated business opportunities, would likely be located in less prosperous parts of the UK such as the coastal areas of the North of England where much of the offshore wind is and will be connected. Messaging aside, it might well make more sense for Labour to spend political and financial capital on accelerating the UK’s broader decarbonisation rather than leaning too heavily on decarbonising the last 10 to 20% of the grid.