Labour’s GB Energy: what is it and can it work?

TL;DR

• Labour’s decisive victory in the General Election has given them a mandate to implement their ambitious climate and energy strategy, including creating a publicly owned energy company: GB Energy.  

• The government’s approach aims to make the UK’s energy supply clean and secure, harnessing underused natural resources and both private and public investment to move away from imported fossil fuels, help households save money on their energy bills, and create 650,000 new jobs.  

• GB Energy won’t supply energy itself, but it will partner with private sector companies to support both mature renewable sources such as solar, wind, and nuclear and emerging energy types including hydrogen and tidal power.  

• An overall investment of £8.3 billion will be generated from responsible borrowing and a windfall tax on oil and gas companies. £3.3 billion of that total will be used to support and scale local initiatives across the UK.  

• Critics of the plan have labelled GB Energy as a gimmick, a costly distraction, and a flawed approach to solving the climate crisis. However, others point to successful European equivalents as proof that this strategy could drive real change as well as galvanizing the UK population to join the fight against the climate crisis.  

The detail

Following 14 years of Conservative government, the UK electorate voted for change when they went to the polls on 4^th July. The Labour Party swept to victory, achieving a landslide result and taking 412 of the 650 seats available. While there were several factors that contributed to this decisive swing from Conservative rule to a Labour government, one key part of Prime Minister Keir Starmer’s manifesto concerned the UK’s climate, energy, and nature policies. Specifically, he pledged to put a strategy in motion that would make Britain a clean energy superpower, with a major part of his plans being the launch of a new publicly owned energy company: Great British Energy (GB Energy).  

The summary of Labour’s mission statement on energy and climate change is to make the UK’s energy sources clean and secure. In taking a national and localised approach, inspiring private investment, and using public funds to develop emerging sustainable energy sources, the new government hopes to cut energy bills, create new jobs, and introduce cheaper zero-carbon electricity by 2030. 

Prior to the election, Labour’s clean energy strategy was built on four pillars: GB Energy, the Green Prosperity Plan, the National Wealth Fund, and the Warm Homes Plan. Together, these are intended to help the government maximise the UK’s untapped natural resources including its long coastline, high winds, shallow waters, universities, and skilled offshore workforce.  

The economy of clean energy  

Labour’s plan to tackle climate change include doubling onshore wind, tripling solar power, and quadrupling offshore wind by 2030, investing in carbon capture and storage, hydrogen, and marine energy, and supporting the green steel industry. As a result, by 2030, the government hopes to reduce household bills by up to £1,400 a year, save businesses £53bn by cutting their energy costs, and create 650,000 new jobs. 

Considering the economic impact of making the switch to clean energy is a key component of Labour’s strategy. Following a trend that Chancellor Rachel Reeves has termed “securonomics”,  the Labour manifesto asserts that making Britain a clean energy superpower could enable it to unlock a global market share worth £1 trillion by 2030. The government also plans to empower the towns and cities that birthed the first industrial revolution, ensuring that they become leaders in the clean energy revolution.  

The New Energy Independence Act will provide the legislative framework for the government’s climate and energy policies. Starmer’s Labour has also committed to banning fracking and will not issue any new oil, gas, or coal licences.  

Introducing GB Energy  

GB Energy will play a crucial role in taking Labour’s ambitious manifesto pledges off the page and into practice. Interestingly, GB Energy isn’t intended to provide power to households or businesses itself. Instead, the publicly owned company will form partnerships with the private sector, industry, and trade unions to support the development and delivery of clean energy. The company is still under development and while it has been confirmed that it’s HQ will be based in Scotland, the exact location has not yet been announced.  

Energy Secretary Ed Miliband has appointed climate and energy expert Chris Stark to lead in the company’s “Mission Control”. Alongside partnering with established energy companies to champion thousands of clean energy solutions intended to impact the UK in its entirety, GB Energy also plans to work with local leaders and devolved governments on specific projects that will be owned by local councils and communities. 

Even so, the company’s initial priorities will be to co-invest in new technologies such as offshore wind, tidal power, and hydrogen as well as scaling and accelerating mature technologies like wind, solar, and nuclear.  

When it comes to funding, Labour has committed to providing £8.3 billion to GB Energy over the next parliament. This amount will be raised through a combination of responsible borrowing and a windfall tax on the oil and gas giants that is expected to be around £1.2 billion. In addition, the Local Power Plan – dedicated to supporting small-scale initiatives and scaling up municipal projects – will receive a total of £3.3 billion over the course of parliament, generating up to 8 GW of energy in return.  

Groundbreaking plan or expensive “gimmick”?  

As with any government policy, especially one that is hoping to solve the climate crisis, Labour’s plan has vocal supporters and critics.  

Those who view GB Energy with optimism point to the success of similar government-owned energy companies currently operating across Europe. RWE in Germany is one example; 15% of the company is owned by German municipalities and cities and its recent investments include the construction of a €30 million windfarm, which now generates enough electricity to meet the demands of 28,000 households.  

However, several environmental campaigners believe Labour’s plans don’t go far enough.  

The Institute of Environmental Management and Assessment (IEMA) advocates for the introduction of a national circular strategy to ensure the materials and products needed for the UK’s transition to a net-zero economy are reused, remanufactured, and recycled. It is also concerned that there is currently no plan in place to protect 30% of the land and sea to support nature’s recovery by 2030.  

A similar argument has been made by Renaud Foucart, Senior Lecturer in Economics at Lancaster University, who points out that the government’s commitments may seem radical but are, in fact, very reminiscent of Boris Johnson’s net-zero strategy. 

One of the most vocal detractors of Starmer’s plan has been Claire Coutinho, the former Conservative Secretary of State for Energy Security and Net Zero. Writing on X, she said: “GB Energy is not just a gimmick, it’s a con” and claimed that Labour, “can’t explain how their supposed savings add up”.  

Others are concerned that for the plan to succeed, several other links in the chain need to be addressed first. Not only has the National Grid been subject to underinvestment for years, but GB Energy’s investment strategy relies heavily on private sector buy-in. Critically, the funding target will require private investors to contribute three times more than government. 

A delicate balance 

No matter which side of the fence commentators land on, it’s generally agreed that GB Energy isn’t a quick fix for the climate crisis. Many assert that it will take more time than Labour anticipates for the company to be on par with its European peers. Adam Bell, a former UK government energy official, said that it will likely take, “not just one parliament, it’s probably at least two, before you’ve got something of the scale of EDF or Ørsted”. 

One credible yet anonymous source within the industry also shared their concern that GB Energy could be a costly misdirection. They said, the “risk is that we put a lot of time and resources into creating GB Energy and that it actually distracts from some of the things that we know are the major barriers to 2030”. 

It’s fair to say that any policy aimed at coupling economic concerns and environmental priorities will be imperfect and rife with compromises. The problem with compromises is that you run the risk of trying to please everyone while, in fact, achieving very little. It remains to be seen whether the new Labour government will be able to follow through on its climate and energy commitments, but its plan will likely be more actionable thanks to the balance it strives to strike.  

A climate-focused approach that would resonate with the average Green Party voter is unlikely to be met with enthusiasm by stalwart Conservatives or traditional Labour supporters struggling with the cost-of-living crisis, high energy bills, and an uncertain job market. Comparing the £8.3 billion pledge to the party’s original promise to spend £28 billion each year on green initiatives will inevitably disappoint those who are already frustrated by the slow progress towards net-zero. However, the proposed funding still represents a significant investment, especially when it’s aimed at underdeveloped clean energy sources that might be seen as too risky for private investors to go into alone.  

GB energy is also an exciting prospect. Following in the footsteps of leading European energy companies, part owned by their respective governments, it offers an opportunity to invest in underdeveloped renewables, move away from imported fuels, and, perhaps most importantly, unite the country behind a publicly owned enterprise championing clean energy.  

Its critics have called it a branding exercise, but when hearts and minds still need to be won if we are to win the fight against climate change, its patriotic name and logo could well prove to be its biggest asset.

 — Lew 👋

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