We can all welcome Ed Miliband back as Energy Secretary. The missed opportunities of the last 14 years are tragic, but the steps he will take to act immediately on onshore wind and signal the end of North Sea oil and gas are positive signs for what is to come.
But what about Great British Energy? It’s a convenient election slogan, but what does it actually mean? It’s key to how the country’s energy future is financed and owned. In the age of fossil fuels, people got rich by chance because they happened to own the land where oil, gas and coal were found.
Our energy future doesn’t have to be like this. Unlike fossil fuels, the fuels of the future are available for free – from wind, solar, wave and ocean energy. But harnessing these energy sources requires building costly infrastructure.
Cheap
In future we will own our own energy and profit from it, or get it cheaply if we choose. But the way investment in the transition is funded now will determine who owns that energy in the future. That’s why the bylaws for Great British Energy are so important.
Labour said in its manifesto that it supports a locally owned energy system, and I agree, and Labour’s Local Power Plan to support this sector is very welcome, but it only has a budget of £1 billion a year and it’s not clear that projects must be 100% locally owned.
The associated funding is a tiny fraction of the tens of billions of dollars needed to meet Labor’s target of zero-carbon electricity by 2030.
There are many ways to finance the energy transition so that it belongs to us, the people, and does not leave us as energy slaves into the future, as we were in the fossil fuel era.
The most obvious is debt. The Greens manifesto committed to massive short-term borrowing to fund the energy transition. Governments can borrow more cheaply than private companies, but the overwhelming advantage of government investment is that the energy infrastructure will be ours.
Stake
Such a strategy is neither reckless nor irresponsible. Martin Sambu: Financial Times“The Treasury can still borrow long-term at around 2 per cent per annum in real terms. Anyone who knows how much poor infrastructure hampers Britain’s productivity finds it incredible that the UK has a shortage of investment projects that could deliver much higher returns. A truly responsible government would pursue such projects.”
The OBR also supports such action. modeling The report on the fiscal risks of climate change concludes that early investments to avert the climate crisis would reduce long-term debt and strengthen the economy more than delayed action.
