EE#6 Conference (re)call

Climate dividing lines firm up

Congratulations to those who fought Avanti West Coast not once but twice over the past fortnight. For those fortunate to only have to do it once, or not at all, this week’s Election Energy will tell you what you missed (besides a rolling multi-week hangover/flu blend). A shorter post this week as we’re all still recovering. As always get in touch with comments, requests for future topics, and please do share with friends and colleagues who might enjoy. 

Manchester

You’ve gotta fight… with the right… of your parrrtyyy

As we covered a fortnight ago, Sunak sees net zero as a dividing line with Labour that could sure up his core support and allow him to attack Labour’s electoral platform. What we didn’t cover was how Sunak is using climate to separate himself from his own party and its record in government. The PM doubled down on his “new approach to net zero”, but at the same time Claire Coutinho, his energy secretary, praised the Conservative delivery of renewable energy, nuclear and carbon capture. It’s going to be difficult to both say the policies that led to falling emissions were misguided and that Tories should be praised for their impact.

The other danger is that many of his MPs, elected on the policies he’s ditching, are spoiling for the fight. Several are standing down at the election and see little issue in hitting back over net zero and the environment. What was planned to be a red-blue divide could instead lead to a blue-on-blue war turning the air purple.

More worrying for Labour is the now-established use of the £28bn as a Tory attack line, both Hunt and Coutinho used their speeches to highlight the spending (and borrowing). The number itself is too abstract to go after, instead, the Conservatives are attempting to tie it to worries about rising inflation and rising taxes. Given the complexity of explaining how public capital investment could increase inflation I don’t expect this to last, but the implication of borrowing on voters' taxes is definitely here to stay (and may have pushed Labour to respond by reducing its size).

“Reeves made it clear Labour will increase borrowing by £28 billion every year which is a fairy tale for the British economy with no happy ending - just higher inflation, higher mortgages, higher debt and lower growth” Jeremy Hunt responding to Reeves’ conference speech.

The not-so-quiet carriage

Sunak’s reappraisal of Conservative consensus also meant the eventual cancelling of much of HS2. Putting aside the shoddy leg work and the ultimate collapse of Network North, or that Sunak’s team was unable to shut down the noise that consumed the conference, again this is risky. His own MPs are less likely to fight him on HS2, and it helps in a new battleground with the Green Party, but for voters, it looks like a pattern. This isn’t a one-off case of a wise head reassessing a struggling policy, it’s another example of something the government is unable to do. Missed targets and unbuilt infrastructure are wrapped together as incompetence - the exact opposite of the grown-up conversation Sunak wants. It’s also going to make convincing the public of the need for other vital infrastructure, like electricity transmission updates (we’re expecting National Grid’s pylon map in December), much harder. 

Less sunny uplands

Reported over the weekend, but not mentioned at conference, was a potential revival of Liz Truss’ plans to make it harder to build solar on agricultural land. While Coutinho promised to make it easier to build on agricultural (and other) rooftops, reclassifying agricultural land to prevent solar farms could be far more consequential. Solar farms currently take up less land than golf courses, are supported by the NFU, and are crucial to diversifying farmer incomes. This change would leave astonishingly little land left where we could build solar at all. 

Liverpool

Labour won’t back down

Part of the Conservative calculation of turning climate into an electoral fight would be to push Labour into retreat, get it to rethink or water down its policy platform. Keir and co however had other ideas. Even in private, Labour officials are bullish, not only is net zero the mainstay of the party’s electoral platform, it is central to their economic offer. Every roundtable I was in had a different shadow minister highlighting Sunak’s changes as an example of the uncertainty plaguing private investors and contrasting that with Labour’s long-term commitment. Meanwhile, wrapping climate, net zero and housing together allows Labour to pose as a party of delivery, creating a split with Sunak to show the public that government can build tangible things. 

Labour conference also put to bed worries that Sunak’s pivot would cause a rift between Ed Miliband and others in the party. If anything there was an acceleration of Labour’s plans with the Shadow Climate Secretary bundling much of the party’s policy into a new Energy Independence Act. Labour’s 2030 clean power target has so far been dominated by technical policy questions, this was evidence that they can use it for political gain too. The act could also mean that, unlike the UK Infrastructure Bank, GB Energy starts life on a statutory footing allowing it to act both bolder and faster. 

Grid Unlocked

The most consequential policy announcement came in Rachel Reeves’s Speech on the Monday of conference. Reeves, Miliband, Starmer, Reynolds have all heard issues with the grid on repeat from energy suppliers, transmitters, users and investors. The speech gave details on GB Energy’s role, helping organise a consortium to both standardise technologies and secure electrical cabling on mass, potentially at a lower price - similar to recent Dutch efforts. There’s also hope in the party that this level of commitment could help leverage private investment in new UK cable manufacturing. Why? Basically, everyone is after lots and lots of cable, it’s becoming a security and cost imperative to secure it early.

The accompanying release also promised more competitive tendering for grid construction something supported across the political spectrum, but that the publicly-owned GB Energy could bid into that competition. Labour wants its new institutions like GBE and the Wealth Fund to take public equity stakes, the grid looks likely to be the test case for if that works. The influence equity gives owners could help a Labour government push the private sector to go faster to meet its 2030 target too.

NB: We’ll go deeper into the grid over the next few weeks. 

Planning for government

Having the parts for the grid is one thing, building it is another. The Shadow Chancellor promised more planners in local government to accelerate planning approvals for things like pylons or onshore wind. 

Ironically amongst Sunak’s u-turn on net zero were a handful of policies that could make Labour’s planning changes easier - both accelerating Nationally Significant Infrastructure Projects (like energy) and publishing a spatial plan of energy developments. Labour would build on this by extending fast-track planning to other green constructions like battery factories, and updating the guidance of how and when local communities can intervene. 

What else?

• Another £80m for the social housing decarbonisation scheme from the government.

• Meat tax still isn’t a Labour policy.

• Greens announced four target seats: Bristol Central, Waveney Valley, North Herefordshire and Brighton (we covered why these in EE#5)

• Sunak’s policy changes, and a lower-than-planned decrease in allowances, led to a sharp drop in the UK’s carbon price. More on this soon.

• Labour’s National Wealth Fund will target a 1:3 ratio of public to private investment - that’s double the UK Infrastructure Bank, and will hopefully mean more frontier investing. The private sector complains the UKIB is crowding them out with safe bets currently.

• Conspiracy theories over 15 minute cities are now established Tory policy.