Keir Starmer was elected in July on a bold platform to make the UK a clean energy superpower by 2030. Yet, while recent actions like lifting the ban on onshore wind and greenlighting new solar projects are positive steps in the right direction, they are just a fraction of the actions required to deliver this ambitious goal.
The good news for Labour can be found on the other side of the Atlantic where public investment has catalysed unprecedented levels of private sector investment in clean energy.
By leveraging a public sector-led, private sector-enabled clean energy industrial strategy, supported by legislation like the Inflation Reduction Act, the US is showing that it’s possible to drive a rapid, homegrown transition towards net-zero transition – and, simultaneously, growing its domestic manufacturing, strengthening local economies, and chipping away at its reliance on foreign supply chains.
While the UK cannot seek to replicate it dollar for dollar, the principles that underpin the US model provide some key lessons.
Identify and boost clean energy value chains
The success of the Biden Administration’s Clean Energy Industrial Strategy is due, in part, to its targeted investments in key areas of clean energy value chains where the US can build or expand its competitive advantage. With this strategic approach, the US is positioning its industries to capture significant shares of global markets.
The Starmer government should adopt a similar approach, prioritising and supporting the UK’s most promising clean energy sectors.
Our analysis, undertaken in partnership with the Tony Blair Institute for Global Change points to significant opportunities in offshore wind, nuclear, and hydrogen, with potential for the UK to become a leading producer in Europe. This is where the UK must seek to focus investment.
Mobilise private sector investment
The US strategy has been shaped and delivered in close and active collaboration with the private sector. Federal loans, grants, and tax credits are successfully catalysing massive private investment for clean energy infrastructure and innovation. Today, investment across 20 clean energy technologies now represents 5% of all investment in the US economy, with each dollar federal funding crowding in $5-6 in private investment.
While the scale of UK government investment will necessarily be smaller, the potential for “crowding in” private investment into clean energy projects is significant and necessary.
READ MORE: Budget 2024: ‘Labour’s clean growth revolution needs investment now’
Our analysis shows that to meet even a 2050 goal, the UK will need to invest an estimated £552 billion total – more than any single government can mobilise.
Labour’s Chancellor of the Exchequer, Rachel Reeves, has already laid the groundwork with initiatives like the £7.3 billion National Wealth Fund and £8.3 billion GB Energy. These initiatives are poised to unlock substantial private sector engagement, catalysing £3 of private investment (£46.8 billion) for every taxpayer pound (£15.6 billion).
Prioritise place-based policies
It is critical for communities to see the economic advantages of clean technologies – whether through lower energy bills or new, good-paying job opportunities.
In the US, the administration has encouraged investments in former energy communities and areas with limited economic opportunity, and requires all companies seeking government support must submit Community Benefits Plans to boost the local economy, protect the surrounding environment, and advance diversity, equity and inclusion in recruitment and training.
Analysis from Rhodium Group and MIT demonstrate that clean energy investments are benefiting communities with economies historically reliant on fossil fuels and to those with lower-income and less-educated populations, though there is significant room for improvement to better target communities.
Reform the outdated planning system
As Chancellor Rachel Reeves notes, the UK’s restrictive planning system is the single greatest obstacle to economic success and decarbonisation. To unlock its clean energy potential and allow for rapid deployment of clean generation, a “once-in-a-generation” overhaul of the current planning and regulatory systems is needed.
The US has demonstrated how strong political leadership, effective co-ordination across government, and recruitment of top-tier expertise can drive clean energy deployment.
Labour’s commitment to making clean energy a central mission demonstrates an understanding of the need to mobilise all available resources and government levers to drive change. However, this will require bold and decisive action to push through the necessary planning reforms.
Adapt to international developments
The UK’s clean energy strategy must be flexible enough to adapt to changes across the international landscape–including the forthcoming US Presidential elections.
A Harris Administration would open the door to significant new collaboration on clean energy supply chains between the US, EU and UK, with huge potential rewards for each, not least in terms economic prosperity, job creation and energy security.
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A new Trump Administration, however, would, pose significant risks to a UK clean energy industrial strategy, potentially jeopardising nearly $1 trillion in clean energy investments in the US and undermining global collaboration. The Starmer government must be prepared to navigate these types of external factors.
Labour’s plan to achieve a clean energy economy by 2030 is extraordinarily ambitious and there are huge challenges to overcome if it is to be delivered.
But the US experience holds essential lessons that can help the UK make this fundamental shift in support of its longer-term net-zero goals. Keir Starmer’s new government would do well to take a look.
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