What next for the clean energy transition

After party conference season, the opportunities for and challenges to a clean energy transition are even clearer

In recent months, both of the main political parties in the UK have been underwhelming in their commitment to a green transition. But as I watched Keir Starmer deliver his speech from one of the cavernous halls of the Labour party conference, I felt hope that the leader of the opposition might have finally turned a corner. One area where the opposition’s vision for the country stands above the current government is on clean energy. At the conference, as I watched and participated in hitherto obscure energy policy, such as upgrading the electricity grid or building more local energy, it seemed the party was serious about making Britain a clean energy superpower. But rhetoric and reality are two separate things, and whoever’s in government after the next election will have to undertake a transition unlike any in our history.

Take the electricity network for example. The National Grid, the operator of all our transmission lines, forecasts that we need to build 5 times more transmission capacity in the next 7 years than we have in the last 30; and 4 times more sub sea cables than we have currently. The scale of this challenge is huge and we’ll have to contend with a highly competitive global market for electrical cables, with demand far outstripping supply. Securing this urgent supply, through bulk procurement in the open market and investing in new domestic supply chains, will be critical to achieving these targets.

But this isn’t just about market challenges, getting public and planning consent is another major bottleneck for clean energy projects, with some waiting for over a decade to get connected to the grid. Both leading political parties, along with some energy suppliers, seem committed to finding ways of compensating households through reduced energy bills or lump sum payments for accepting new energy infrastructure in their backyards. Ensuring such schemes are designed effectively and underpinned by principles of fairness will be key for the next government.

It was heartening to see Labour commit to speeding up” the climate mission. Starmer’s speech drew a clear line in the sand on net zero, offering a stark contrast to the government. However, while these rhetorical differences are important, the broader political economy of net zero is beginning to get very messy. If Labour’s clean power mission is already looking highly ambitious, the economy wide transition will demand a lot more from policy makers.

This was made viscerally evident to me at a fringe event discussion on the future of hydrogen. The panel, with contributions from the spectrum of the hydrogen lobby to the GMB union, peddled myths on heat pumps and sold the pipe dream of hydrogen boilers for homes across the country — all of which went unchallenged. 44 independent academic research papers have already debunked their claims but it is clear the old fossil fuel industry, that is betting on hydrogen for its future, will not go down quietly into the night.

Then there are those that argue that policy makers shouldn’t pick winners and let market competition find the leading technology solution. Afterall, that is what we did in the case of cars, with incentives for all forms of alternative vehicles but it was the electric car that emerged the clear winner. However, unlike the majority of automakers that are able to make the switch to electric, while creating more jobs, for gas companies and their employees the net zero transition is much more existential. The challenge isn’t merely to find favourable technical evidence in support of say heat pumps vs hydrogen, but more importantly winning the unions and workers over, without which this transition will remain unjust. Similar challenges exist in the food and aviation sectors where highly contested solutions coupled with the public’s genuine fears make for a potent mix that can be exploited politically.

Whoever comes to power after the next election, will need to quickly come to grips with the political economy of net zero that risks gradually descending into chaos. Early indications are that Labour seem up for the challenge. Ed Miliband summed it neatly by calling Labour’s approach as Bidenomics with British characteristics”. If directing state finances to both crowd-in and actively channel private capital to achieve specific social and economic outcomes is one facet of Bidenomics, the creation of new institutions such as the Great British Energy company to spearhead the transition is perhaps the British, or shall we say European, facet. But whatever one might call it, this is a welcome shift in ideology than what we had over the last 15 years and time will tell if it will come to pass.

Image: iStock

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