Labour's manifesto has significant focus on developing clean energy and improving Britain's energy security.
One of the first steps identified for the new Labour Government is setting up Great Britain Energy (a publicly owned energy company capitalised with £8.3bn funded through the windfall tax on the oil and gas sector) to invest in clean power. Making Britain a "clean energy superpower" is also identified as one of Labour's five 'missions' to rebuild the country.
In this overview, we unpack some of Labour key manifesto commitments in the energy and sustainability space. While some of these commitments are light on detail, they give a good indication of the direction of change. Further detail will come in the proposed Energy Independence Act, which will establish the framework for the new Government's energy and climate policies.
Net zero and climate change
Labour's manifesto reiterates the commitment to reach Net Zero and achieve carbon budgets. But the manifesto also identifies the clean energy transition as a key opportunity to generate growth, tackle the cost of living and make Britain energy independent.
What is interesting is that the Net Zero commitments are wrapped within wider policies aimed at achieving green growth. This strategic direction will be welcome news for many involved in the energy sector – hopefully overcoming the recent uncertainty caused by the previous Government's watering down of policies (eg minimum energy efficiency standards).
Labour have made a clear manifesto objective to achieve clean power (ie a zero-carbon electricity system) by 2030. That brings forward the planned deadline from the current 2035 date, but will require significant investment in the electricity grid. National Grid have previously identified priority areas requiring government intervention – including planning, the regulatory framework, the grid connection process, link to communities and skill gaps. Accelerating the transition of the electricity grid will be dependent on the new Government effectively addressing those barriers.
There is also recognition of the need to improve resilience and adapt to climate change – highlighting the risks to lives, livelihoods and wellbeing. Labour's plan talks about improving resilience and preparation across central government, local authorities, local and communities and emergency services. Too often climate change adaptation hasn't been prioritised, and the Climate Change Committee have previously highlighted the "absence of a credible vision for a well adapted UK, resilient to the climate risks now facing the British people and businesses". Further detail is needed on how the new Government intends to deliver on these manifesto commitments, but there is little doubt that climate change adaptation should have a higher priority.
Labour's manifesto also commits to playing a part in global leadership on tackling the climate crisis. This includes developing a new Clean Power Alliance of countries at the cutting edge of climate change, helping to deliver lower energy bills, accelerate the energy transition and protect clean energy supply chains.
Green finance
Labour want the UK to be the "green finance capital of the world", mandating UK-regulated financial institutions – including banks, asset managers, pension funds, insurers and FTSE 100 companies to develop and implement credible transition plans that align with the Paris Agreement's 1.5°C goal.
The manifesto also pledges to reverse the previous government's decision to prevent the Bank of England from giving due consideration to climate change in its mandates.
Clean energy
Labour's commitment to making Britain a "clean energy superpower" is part of their wider objective to cut bills, create jobs and deliver energy security. The manifesto talks about creating public/private partnerships to deliver this, and their Green Prosperity Plan is described as being at the heart of this policy. This involves the Government partnering with businesses through the National Wealth Fund to invest in industries of the future and create 650,000 jobs by 2030.
Some of the commitments to the clean energy sector include:
- working with the private sector to double onshore wind capacity, triple solar capacity and quadruple offshore wind capacity by 2030;
- ending the chopping and changing policy landscape;
- establishing Great British Energy (a new publicly owned company) to partner with industry and trade unions to co-invest in leading technologies, help support capital intensive projects and deploy local energy production to benefit communities;
- deploying more distributed production capacity through a Local Power Plan, where GB Energy will partner with energy companies, local authorities and co-operatives to install clean power projects through onshore wind, solar and hydropower – working with local leaders and devolved governments to ensure local people benefit from this energy production; and
- making changes to the current planning regime to make major projects "faster and cheaper by slashing red tape" and building support by ensuring communities directly benefit.
The role of GB Energy as a catalyst for private-sector funding is interesting, and may help to increase market interest and help unlock challenging projects. GB Energy's initial investments are intended to focus on wind and solar projects, but with new technologies such as floating offshore wind, hydrogen and carbon capture and storage also being eligible for funding.
The energy sector will welcome these changes, particularly the planned increase in wind and solar capacity by 2030. This needs to convert into a clear pipeline of activity, enabling the sector to tool up for an era of delivery.
Nuclear Power
Labour's manifesto includes an ongoing commitment to nuclear power as a part of the UK's energy mix. That includes a reference to extending the life of existing plants, which will help with grid capacity in the short term.
The manifesto talks about getting Hinkley Point C over the line, and highlights the role that Sizewell C and Small Modular Reactors will play in helping the UK achieve energy security and clean power. Given the age of the existing plants, and the timeline for bringing new nuclear projects to financial close, many in the sector will hope that the new Government intends to make a firm commitment for a new fleet of stations.
CCUS, hydrogen and energy storage
The manifesto also talks about investing in carbon capture and storage, hydrogen and marine energy, and ensuring there is the long term energy storage that the country needs. The National Wealth Fund plans to allocate £1bn to accelerate the deployment of carbon capture, and £500m to support the manufacturing of green hydrogen. It also mentions the fund directly investing in ports, hydrogen and industrial clusters across the country.
Carbon capture and storage (CCUS) remains a critical part of the UK's plans to reach Net Zero. The previous government set out plans for a competitive carbon capture market in the UK, but this has yet to be realised. Labour's manifesto is short on detail, but the sector will welcome the commitment to fund and develop CCUS and industrial clusters in the UK.
Energy efficiency/retrofit
In what Labour has called the 'Warm Homes Plan', it has pledged £13.2 billion for retrofitting homes and rolling out clean heat. This is an extra £6.6 billion over the next Parliament, doubling the existing planned government investment, to upgrade five million homes. The manifesto isn't clear whether this will be open to all homes, or limited to certain tenure types. There is also no clarity on whether existing schemes (such as SHDF, ECO and PSDS) will continue.
The Warm Homes Plan intends to offer a mixture of grants and low interest loans to support investment in insulation and other improvements such as solar panels, batteries and low carbon heating. This will be rolled out in partnership with combined authorities, local government and devolved governments. The manifesto also talks about working with the private sector, including banks and building societies, to provide further private finance to accelerate home upgrades and low carbon heating. This is a useful indication of the likely approach, but the market will want greater long-term direction and policy stability to help build the necessary skills and investment.
Labour have also committed to ensure homes in the private rented sector meet minimum energy efficiency standards by 2030, although the manifesto is not clear on the minimum standard that will be applied. Given the previous government's U-turn on the plan for a minimum of EPC 'C' by 2028, landlords will want an early indication of the new minimum standards, any changes to the methodology and any exemptions.
In the commercial sector, Labour's manifesto commits to retain a permanent full expensing system for capital investment, and an annual investment allowance for small business. They also commit to giving greater clarity on what qualifies for allowances to improve business decisions. Further detail is needed here, but this could help support owners and landlords intending to invest in the retrofitting and decarbonisation of buildings.
Electricity grid
Labour highlights that the UK's electricity grid has become the "single biggest obstacle to the deployment of cheap, clean power generation and the electrification of industry". They have committed to work with industry to upgrade the national transmission infrastructure and "rewire Britain". There is also mention of local power generation being an essential part of the energy mix, and reducing pressures on the grid.
The pressures on the grid are well known, and National Grid's connections reform is already overhauling the grid connection processes. The sector will welcome the new government's ongoing commitment to upgrading the transmission infrastructure so it is fit for the future.
Fossil fuels
Labour has committed to remove fossil fuels almost entirely from UK electricity generation by 2030. It pledges to maintain a "strategic reserve" of gas power stations and deliver a "phased and responsible" transition in the North Sea that recognises the "ongoing role" of oil and gas in our energy mix.
It will not grant any new exploration licences in the North Sea but it will not revoke existing North Sea licences. The manifesto says that "oil and gas production in the North Sea will be with us for decades to come." It will not grant new coal licences and will ban fracking for good. Labour commitment to existing North Sea licences is likely to set up a showdown between the new Government and environmental activists. The recent decision of the Supreme Court in the Finch case could potentially have impact on existing North Sea licences, and the oil and gas sector will be watching these policy developments with great interest. If existing licences are overturned, would the new Government permit revised applications?
Labour's Green Prosperity Plan will be funded in part by a "time-limited windfall tax on oil and gas giants making record profits". Labour intends to extend the sunset clause in the Energy Profits Levy until the end of the next parliament, increase the rate of the levy by three percentage (3%) points and remove the current investment allowances. It also intends to retain the Energy Security Investment Mechanism, which looks at market reference prices and allows the Energy Profits Levy to be disapplied in certain circumstances.
Electric vehicles
Labour pledges to reintroduce the 2030 ban on the sale of new petrol and diesel cars – reversing the previous government's change to a 2035 deadline (in line with the EU and Canada). While that risks creating further confusion for the market, the timescales for new vehicle development mean that manufacturers are unlikely to be significantly impacted. There is no mention of vans or commercial vehicles, or any financial incentives for private car buyers.
Labour have committed to support the transition to electric vehicles by accelerating the roll-out of chargepoints. This remains a significant challenge, and will become ever more pressing given the proposed 2030 ban. They are also committing to reviewing insurance costs, and supporting buyers of second-hand electric cars by standardising information on battery condition.
Industrial strategy and skills
Labour's plans include a new industrial strategy, underpinned by the establishment of a new statutory Industrial Strategy Council. The industrial strategy is linked to the wider goal of green growth and making Britain a "clean energy superpower". The strategy includes the creation of new high-quality jobs, rebuilding domestic supply chains and exporting technologies of the future. The National Wealth Fund will make strategic investments in ports, hydrogen and industrial clusters.
On the issue of jobs and skills, Labour have committed to reward clean energy developers with a British Jobs Bonus (with up to £500m per year from 2026 to incentivise firms who offer good jobs and build their manufacturing supply chains in the industrial heartlands, coastal areas and energy communities.
They also proposed to establish a new entity Skills England to bring together business, training providers and unions with national and local government to ensure the workforce is available to deliver the Industrial Strategy. Skills gaps are a common theme when talking about delivery of energy efficiency and retrofit opportunities at scale. Addressing the skills gap will take time, and this will need to be a priority for the new Government to deliver on its plans for green growth.
