A Parliament primed to deliver faster action on climate, clean energy and the environment

Labour stood on a manifesto promising to make Britain a clean energy superpower. It now has a clear mandate for its commitments to move to 100% clean power on the electricity grid by 2030, end the licencing of new oil and gas projects, and reinstate the 2030 deadline for sales of new petrol and diesel cars.

The 5 new Reform MPs may snipe from the sidelines, but there will be overwhelming support for this direction of travel in Parliament. When Labour, Liberal Democrats and Greens are counted together, at least 487 MPs stood on a platform of faster action on climate change and clean energy. ?

The devil will be in the policy detail – and constituency NIMBYism will always be at play – but this Parliamentary arithmetic and direction of travel in Labour’s Green Prosperity Plan should provide a step change in pace on climate action and a period of policy stability and certainty.

Delivering its clean energy mission

Ed Miliband has hit the ground running in the Department for Energy Security and Net Zero. The Labour Government has already lifted the de facto ban on onshore wind farms and it has pledged to prioritise energy infrastructure in the planning system to tackle the grid connection delays currently holding back investment in the net zero transition.

It will next announce an Energy Independence Bill in the King’s Speech next week to establish Great British Energy - the publicly owned investment company that Labour says will co-invest with companies and communities to develop clean energy technologies such as renewable energy and nuclear power.

Introducing himself to his civil servants this week, Ed Miliband reiterated his priorities for the Department, committing to:

·?????? boost energy independence and cut bills through clean power by 2030;?

·?????? establish the Great British Energy investment company; ?

·?????? cut fuel poverty through the Warm Homes Plan;

·?????? stand up for consumers by reforming our energy system;

·?????? create jobs in old industrial heartlands and promoting a just transition; and

·?????? lead on international climate action.

With the sceptics framing net zero as a costly burden, Mr Miliband will aim to cut bills with clean electricity and energy efficiency. By stepping up the insulation of British homes, doubling onshore wind – the cheapest form of electricity generation – and severing the link between wholesale gas prices and energy bills through energy market reform, Labour will hope it can deliver falling energy bills by the end of the Parliament.

Cross-Government action on net zero and a new net zero strategy

In a signal of how serious Labour is on the net zero agenda, it has appointed the respected former Chief Executive of the CCC, Chris Stark, to oversee a ‘Mission Control’ centre overseeing Labour’s goal to provide Britain with cheaper clean power by 2030. Sir Keir Starmer has also promised to personally chair new “mission delivery boards” to “put into action” Labour's manifesto commitments. This is welcome because there has previously been difficulty in coordinating and driving action on net zero across Government.

To put the UK on track to meet its Paris climate agreement commitment to reduce emissions by 68% by 2030 – set out in its Nationally Determined Contribution - will require a significant acceleration of efforts. The Climate Change Committee (CCC) points out that the current rate of annual emissions reductions outside the electricity supply industry must quadruple – meaning there is much more for other Departments to do beyond the power sector.

Labour’s cautious ‘Ming Vase’ strategy has left policy gaps to fill when it comes to decarbonising transport, industry and heat and buildings, and policy development will be needed here over coming months. Critically, the new Government must publish a revised Carbon Budget Delivery Plan by May 2025 after the High Court again ruled in May 2024 that the previous Government’s net zero strategy was unlawful.? This will provide the Government and Energy Security and Net Zero Secretary opportunity to publish a comprehensive cross-governmental plan for putting the UK back on track to achieve its 2030 on the path to reach net zero by mid-century.

Transport

Transport is responsible for a third of the UK’s emissions with surface transport the highest emitting sector – the bulk coming from cars, vans and trucks. ?Labour will reinstate the 2030 deadline on new sales of petrol and diesel vehicles. It has also pledged to accelerate the roll out of charging infrastructure, but has not given any details of the delivery mechanism yet.

Decarbonising road freight will be crucial. ?The National Infrastructure Commission recently called on the Government to support industry to decarbonise road freight by 2050. To help big UK businesses in their net zero transitions, the new Transport Secretary should push her Department to publish its promised strategy for HGV decarbonisation as a priority.

A trickier test of the new Labour Government's willingness to take difficult decisions to accelerate the shift away from fossil fuels will come in the Autumn budget. Will the new Chancellor lift or retain the thirteen-year Fuel Duty Freeze? Lifting it would help to raise tax revenues and incentivise cleaner forms of transport, but it would be a politically unpopular - and perhaps a gift to Reform MPs campaigning in Labour seats next election.

Investor confidence and Government expectations of business

Given how fiscally constrained the new Government will be, Labour is looking to unlock and catalyse greater private sector investment with Great British Energy and its new National Wealth Fund to invest in industrial decarbonisation. This will mean that leading responsible businesses can play an even more important role as partner to a future Labour Government in driving investment in clean electricity generation, green hydrogen, electric vehicles, and energy efficient facilities.

Labour appears determined to ensure major companies do their bit. Its manifesto promised to mandate UK-regulated financial institutions and FTSE 100 listed companies “to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement.” This goes further than the current requirement for listed companies to publish climate-related financial risk disclosures brought in by the Conservatives in 2022.

Conclusion: greater climate ambition, but political point-scoring will remain

After a long period of revolving door leadership and energy ministers, many businesses will welcome the clear strategic direction on climate and energy policy. Despite Labour abandoning its original pledge to invest ￡28 billion a year in its Green Prosperity Plan, the package of net zero policies that Labour has been elected on still represent the largest green investment proposal ever set out by a party entering Government.

Nevertheless, with such a large majority, effective scrutiny will be both more difficult and even more important. Select committees will reflect the greater makeup of Labour MPs in the House with many new Members likely to hold the party line for now. Liberal ?Democrat and Green MPs will no doubt push for even more ambition, while some Conservatives will want to scrutinise the cost of faster action. Remain MPs will try to stoke a culture war on climate issues.

Labour’s promise to double onshore wind capacity in England and adapt planning to prioritise infrastructure roll out could cause flash points later in the Parliament. The influence of local constituency voices campaigning on the basis of environmental and landscape issues shouldn’t be underestimated in individual MP decision making.

The political consensus on climate change could also crack if the Conservatives choose a leader who tacks to net zero scepticism. The Social Market Foundation’s Theo Bertram, a former advisor to Prime Minister’s Blair and Brown, warned observers to “watch out for a Tory leadership candidate (probably a winning one) backing Netzit: a referendum on net zero”.

For now at least, the strong majority favouring action on net zero looks set to bring a step change in pace during this Parliament. If the UK decarbonises its power sector by 2030 it will be the first major economy to do so.

Achieving this transition will need vocal support and partnership with business – including providing real world data and insight to underpin policymaking. There is a real opportunity now for businesses leading the way on this agenda to step forward and engage with a Government committed to driving the clean energy transition at pace.

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Nicholas Davies

Lexington Associate Director, Sustainability and Social Value