At the Labor Party conference in September 2022, Opposition Leader Keir Starmer announced to prolonged applause that he would create Great British Energy (GBE) within the first year of government.
This article first appeared on latest issue Revival and Ecologists Magazine.
“Yes, meeting, Britannia Energy will be publicized!”
The cheers grew louder. It is the first time the Labor leader has explicitly acknowledged the need for public ownership in Britain’s failing energy system. Impressive details will only emerge later.
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After uncritical hype from journalists and commentators, Labor finally gave some details of its promises. GBE will be a new public company that will be able to produce its own renewable energy while investing in private companies that do the same.
Created by Labour’s promised £8bn of seed money from the National Wealth Fund, it will compete in the private market and use those revenue streams to grow to the size of French energy company EDF, now worth around £40bn.
This represents a major step forward for Starmer in energy policy. Left to its own devices, the private sector has failed to invest in the transition from fossil fuels to renewable energy. In a timid regulatory environment, private energy companies squeeze ungodly profits while customers’ bills skyrocket. Markets have failed, but Labor has finally signaled it is ready to intervene.
Unfortunately, however, this intervention was not enough. Since GBE will compete with the current giants in the private market, it’s unclear how it will be able to lower the bill as expected.
Its energy will still be sold in hyperinflated international energy markets, and the drive to generate revenue will dampen any urge to absorb costs.
Economy
The need for the GBE to establish itself over time also has worrying implications for decarbonisation targets. Labor plans to achieve net zero power by 2030, but if it starts out as a small player, the GBE won’t be able to flood the market with renewables immediately.
Furthermore, the energy market is not just about electricity generation – although this will be the GBE’s limited remit. Consumers interact with private suppliers, taking their share of profits, while energy transmission (a natural monopoly) has been privatized, creating the UK’s most profitable industry.
Without extending the scope of the GBE (or equivalent) to also include transmission and supply, public money will continue to drain from the system in the form of parasitic shareholder profits.
Even if Labor gives GBE the scope and resources it needs to make an immediate impact, a big problem remains. Against the backdrop of the climate and economic crisis, neither profit-seeking nor markets in the energy sector play any role.
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Labor should be committed to public ownership of the whole system.
It looks like the NEA sets the standards and targets, while owning national strategic sectors such as nuclear, offshore wind, oil and gas (throughout the transition period); regional and municipal agencies that operate transmission and generation; and independent from the energy majors Competitive local cooperative power generation. Such an integrated, publicly owned system would allow for democratic planning, and workers and communities would have a say in how their skills and infrastructure are redeployed.
Workers can also be guaranteed the same terms and conditions as the industry changes. Compare this to the private renewable energy industry, which is notorious for eroding wages, driving down conditions and ending any collective bargaining.
Before the next general election, Labor must differentiate its proposals on energy from those of the government and other parties. Since 2010, successive Conservative governments have blocked the renewable energy transition by scrapping subsidies, selling off green investment banks and erratically employing fracking.
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The Liberal Democrats have pledged to produce 80% of their electricity as renewables by 2030 (lacking Labour’s), but have no other ideas than to rely on failing markets. The Greens have called for bringing the big five suppliers into public ownership and achieving net-zero emissions across the economy by 2030.
Now, the demands go further than Labour’s demands, but the strength of the Greens – the moon of promise – comes from their weakness – the infinite distance from power.
Like it or not, Starmer’s Labor Party is coming to power. Starmer is pioneering a distinctly Fabian approach characterized by a readiness to forcefully intervene in markets but a reluctance to completely replace them with public ownership.
However, particularly on energy, Labor must go further. Entering government will be a historic opportunity to solve two of the crises of modern capitalism: climate and energy. Labor can only do this by embracing public ownership of the entire energy system.
the author
Chris Saltmarsh is the co-founder of Labor for a Green New Deal and the Burning Down: Fighting for Climate Justice. This article first appeared on latest issue Revival and Ecologists Magazine.
