(Bloomberg) -- The UK government will create a company to own and operate clean energy assets in a bid to inject more public money into the shift away from fossil fuels.
The company, called Great British Energy, will receive £8.3 billion of taxpayer money to own and operate assets in collaboration with the private sector. The idea is a central part of Labour’s energy strategy and legislation will be introduced as part of the King’s speech to get it up and running.
It’s part of a bet that the state needs to play a bigger role to reach Britain’s climate goals and help bring down energy bills that are still historically high, despite falling from peaks seen after Russia’s invasion of Ukraine.
Many of Britain’s biggest energy companies - BP Plc, Centrica Plc and National Grid Plc - were once state-backed enterprises. Many of the biggest players in Europe leading the clean energy shift are companies with government-backing such as Denmark’s Orsted A/S, Equinor’s Equinor ASA and Sweden’s Vattenfall SE.
This iteration of UK government involvement in the energy system will see it invest along with the private sector, rather than push to re-nationalize major infrastructure.
It’s not yet clear where exactly GB Energy will invest its money. The Secretary of State will be required by the legislation to set strategic priorities for the company. Ultimately it will invest in the production, distribution, storage and supply of clean energy as well as the reduction of greenhouse gas emissions from energy produced from fossil fuels or energy efficiency.
One option could be to support technologies like carbon capture and hydrogen needed to decarbonize the most emissions-intensive parts of the economy. Labour also wants to ramp up the nation’s solar and wind energy capacity as it aims for a fully decarbonized grid by 2030, but it first has to fix the planning regime which is causing long delays.
The speech also outlined an overhaul in how the Crown Estate, the owners of the UK’s seabed, will operate. By allowing borrowing, the government believes 20 to 30 gigawatts of new offshore wind seabed leases can be secured by 2030. The Crown Estate will also be able to invest money more liberally, such as in digital technologies and port infrastructure that could help speed up the growth of offshore wind.
Earlier this year, before coming into government, Starmer rolled back on a pledge to spend £28 billion a year transitioning the UK to green energy in a bid to neutralize Conservative attacks over taxes. Labour plans to extend a windfall tax on oil and gas companies to fund many of its plans.
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