THE money that the UK needs to get to net zero is “far larger” than the budget which Labour have pledged for their new GB Energy company, an expert in the field has said.
Speaking to the Sunday National, Robert Gordon University professor Paul de Leeuw said that the £8 billion which has been earmarked to fund Labour’s new energy firm over the five-year term of the next Westminster parliament may sound like a lot but “actually it isn't”.
De Leeuw also said there were many unanswered questions about how GB Energy will function, how it will interact with other government-backed schemes already working in the energy industry, and what goals it will choose to prioritise.
Labour leader Keir Starmer has pledged to create the publicly owned energy company, which will be based in Scotland, as one of his six “first steps” if he takes power after the General Election on July 4.
His party have said that it will be funded by a windfall tax on oil and gas giants, with around £8bn over five years, £3.3bn of which will be ring-fenced for small-scale community projects.
Starmer has also said that GB Energy will cut bills and invest in renewable energy – but experts have warned that Labour will have to choose between those options, not do both.
In a letter to The Guardian last week, University of Sussex energy lecturer Dr Matthew Lockwood said: “It’s no surprise that GB Energy is a vote-winner, but which of its competing goals would a Labour government prioritise when it inevitably has to choose?”
De Leeuw told the Sunday National he thought GB Energy should put decarbonising the electricity grid at the top of its agenda because “it is really international markets which determine what our bills are going to be”.
He went on: “GB Energy could help to put the foundations in place, but you need to do it with a lot more money, right? Although £8bn sounds a lot, actually it isn't.
“The offshore energy industry at the moment already spends over £20bn a year. It's all about proportionality.
“The money that needs to go into the UK to get to net zero is far larger. It is like 2 to 3% of GDP that needs to go into the energy transition. The numbers are staggering.”
In cash terms, the UK’s GDP was £2.7 trillion in 2023, according to the House of Commons Library. This would mean that somewhere between £54bn and £81bn will need to be invested in the just transition every year.
De Leeuw said that although “far more needs to be done”, GB Energy could act as a catalyst if done correctly.
However, if done incorrectly, then dire warnings repeated by the SNP of 100,000 job losses in Scotland’s energy sector may prove prescient.
De Leeuw said the figure used by the SNP was “real”, but only “half the equation”.
He said that around 120,000 people in the UK are directly or indirectly employed in oil and gas, with another around 80,000 in industries supported by it.
If there is no new investment in oil and gas, then those figures could drop by 60,000 and 40,000 respectively – but work on a just transition could counteract any job losses.
“It's a replacement,” de Leeuw said. “The person who puts in a pipeline can also put in a new cable. The person putting in a footing for an oil and gas platform can put in a footing for a wind farm. Most skills are very transferable.
“So what we see happening is actually, yes, there's a very high risk if you get it wrong, you lose the jobs and you lose the supply chain capacity and you lose the people that can accelerate the renewables agenda.
“You need to get you called to the Goldilocks zone, get it just right. It is really critical we do that.”
But there are so many unanswered questions around GB Energy that it is hard to know what it will do or how, de Leeuw said.
Even Labour candidates seemed to struggle with it. Earlier this week, Labour’s nominee for West Aberdeenshire and Kincardine Kate Blake was asked how GB Energy will create tens of thousands of jobs.
Responding, she told the BBC: “GB Energy will be [...] a vehicle [where] we work with private industry as well as to create thousands of clean power jobs.”
Blake’s quote seems to sum up what one Labour MP told The House magazine in May: “It’s not clear to me what Great British Energy actually is going to do or how it’s going to do it.”
De Leeuw said there were knowns and unknowns about GB Energy: “What we do know is it will be a publicly owned company based somewhere in Scotland. It will have an independent board. It will have independent activities going on.
“It will invest in technology. It will co-invest in scaling up community activities and municipal-type activities – not dissimilar to what you see in Europe – and also accelerating the energy transition. And it will be capitalised, over the course of the Parliament it’s about £8bn going in. That bit we know.
“What we don't know is how it’s going to operate. We don’t know where it’s going to be based yet – it’s in Scotland but that’s a big place.
“We don’t know what it’s going to deliver. Is it going to lower our bills, accelerate activity, help community schemes, be technology?
“We don't also know who's going to compete with because there's already quite a few of these mechanisms established. You have other organisations like technology organisations, like the Energy Systems Catapult, the Net Zero Technology Centre. We already have quite a lot of financial arrangements. So how it's going to compete and interact with the other ones, we don’t really know that yet.”
Labour were approached for comment.
