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Energy Leaders Leaning Towards Labour's Green Policies As Tories Waver


5 min read

Energy industry bosses have praised Labour's approach to green policy as criticism mounts over the government's rhetoric on the environment.

Labour’s Green Prosperity Plan includes transitioning to clean energy by 2030, establishing a new publicly owned energy company, setting up a National Wealth Fund to create jobs by investing in the private sector, and upgrading insulation in nineteen million homes to bring down energy bills. 

A new poll of international green energy investors commissioned by the Labour Climate and Environment Forum (LCEF) found that 78 per cent of respondents said they believed the proposals would bring more opportunities to UK businesses than risk. 73 per cent of investors said government-led investment in renewable resources will drive similiar or an increased level of private sector investment.

In contrast, the UK Sustainable Investment and Finance Association (UKSIF) earlier this week sent a letter to government signed by 36 financial institutions with a combined net worth of £1.5tn warning its policies to "max out" North Sea oil – as well as recent hostile rhetoric to the UK’s plans to phase out of new petrol and diesel cars by 2030 and gas boilers by 2035 – was damaging businesses. 

Investment managers, banks, asset owners and other financial institutions said they were concerned by the "government’s recent public statements and policy signals, which risk undermining the UK’s leadership in the clarity, certainty, and confidence of policy making toward meeting the UK’s commitment to net zero".

UKSIF chief executive James Alexander told PoliticsHome the LCEF polling reflected what they were hearing from their members and a desire for the government to signal more positively on green issues. 

"Our members are exactly the people that this this is all about, and what Labour policies are aiming to target - because what we need, obviously, is a pro-business approach," Alexander said.

"We need to see a proper plan to get the green economy moving, and I think that's particularly important in the context of the US Inflation Reduction Act and other work that the EU is doing."

Alexander also said responding to the US's Inflation Reduction Act was important to draw new investment and new enterprise into the UK. 

"What we're really seeing, the US in particular, is money is now being ploughed into the US into exactly the projects that we want to see," he continued. 

"Not only projects that will reduce emissions, both in the short term and in the longer term, but will also create the entire sustainable economy, bringing with it lots of opportunities for economic growth for new enterprise – and of course, for all the jobs that come with that.

"The risk for the UK – if we don't do something similar, something equally bold, equally forward-looking – is that we're going to miss that enormous opportunity that the transition to a sustainable future brings with it."

Adam Berman deputy director at Energy UK told PoliticsHome the polling "consistently shows the public’s support for decisive action to tackle the climate crisis", and that the area provides opportunity for the UK economy.  

"The energy industry is clear that the economic prospects of the UK and its population depend upon seizing the huge opportunities that the transition to a low carbon economy offers and responding to growing competition for investment from abroad," Berman said.

"So we welcome ambitious policy proposals like those set out here and look forward to working with any government that has the commitment to deliver on those ambitions.”   

Government stands by its legal commitment to achieve Net Zero by 2050, and has not formally rolled back on any of its major policy pledges in the area. But there has been pressure from within the party to soften its stance on the environment, in particular the commitment to ban the sale of new combustible engines by 2030, which faced challenges in the wake of fall-out from the expansion of Ultra Low Emissions Zones in London. Downing Street has since reaffirmed the 2030 pledge. Earlier this week government promised to scrap an EU rule designed to protect waterways with the aim of booting housebuilding. 

In the Energy Bill, due to be scrutinised in parliament in the coming weeks, core elements of the legislation include accelerating the growth of low carbon technologies, facilitating the delivery of new nuclear, and scaling up the size of CO2 and hydrogen transport and storage networks.

Earlier this month then-energy and net zero secretary Grant Shapps announced the government would be holding a London Energy Conference in spring 2024 to bring together international governments and industry leaders on the issue of energy security.

But nonetheless the government's less than favourable recent rhetoric on environmental issues, coupled with calls for a referendum on Net Zero by some backbench Tory MPs has spooked investors. 

Tory MP and deputy chair of the European Research Group (ERG) David Jones told PoliticsHome the government should be adopting a more flexible timeline on net zero.

"I certainly think that the government should be adopting a less stringent timeline – insofar as Net Zero is concerned generally," Jones said.

"If one looks at what's happening in other countries, Germany has pushed back to 2035 when internal combustion engines can no longer be sold – we're still 2030. And it's going to cause problems in transport."

LCEF director Paul McNamee told PoliticsHome their polling on Labour's green policy was "very positive and very exciting" and showed optimism for the party's plans among business, in contrast to the concern over the government's approach.

McNamee said businesses are "clamouring" to see the sort of long term green energy policy proposed by Labour, which he believed would enable businesses to feel secure "to invest in the infrastructure that is needed in this country". 

"We were surprised at just how high the polling was," he added. 

"Because these are investors, banks – and from major investing nations: UK, USA, Canada, Australia. I think it shows the appetite that's out there, it shows you public investment will unlock that private investment."

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