Remember the Green Investment Bank? Six years ago, the Tory government’s renewable energy project, including offshore wind farms, was sold to the infrastructure arm of Australian vampire Macquarie for £2.3 billion.
As the July 4 election approaches, we now have Keir Starmer’s Mark Two in the form of Great British Energy (GBE) – Labour’s £8 billion plan to take the UK to net zero.
Unveiled in Scotland, where it will be headquartered, GB Energy is being portrayed as the UK’s answer to Sweden’s Vattenfall and France’s EDF.
Good luck with that. It will be a fraction of the size of EDF, which will become fully public after it runs out of money.
EDF is spending £34 billion on the Hinkley super nuclear power station in Somerset alone. It is the largest construction project in Europe and will represent a major step forward on the UK’s path to baseload electricity supply and energy security. This is only possible thanks to Chinese financing and a price deal that will ultimately mean higher energy bills for consumers.
In deep water: If Labor chooses to suspend new auctions for offshore exploration, it will undermine energy security
The prospect of GB Energy ever overtaking EDF is fantasy. As proposed, GBE will undertake some joint venture work in onshore wind, solar and tidal energy and potentially unlock cash from the private sector. It will be a useful addition to ongoing investments in offshore wind, nuclear and carbon capture by SSE, Centrica and others.
Labor says it will not revoke existing oil and gas permits. However, if the country chooses to suspend new auctions for offshore exploration, it will undermine energy security.
Together with the new taxes that will be imposed on oil producers in the North Sea and the abolition of the exploration tax credit, this will hinder future investments. Scottish Prime Minister John Swinney describes the proposals as a ‘bloodshot’ for employment in his country. GB Energy’s headquarters will employ 50 to 100 people. It will not compensate for the thousands of engineering services lost in Aberdeen.
No one can afford to be complacent about climate change. However, the idea that the fossil fuel industry is the devil incarnate is risky. In the US, major oil exploration is doubling. This week, Chevron spent £42 billion on Hess, giving him control of new drilling rights in Guyana. Shell has warned that if the environment for big oil in Britain becomes inhospitable, it could move to the US. Investments in fossil fuels continue despite Joe Biden spending up to £292 billion to tackle climate change through the Inflation Reduction Act.
British climate fanatics do not seem to realize that Britain needs greater energy security in an age of geopolitical fragmentation. The big inflation of 2022-2023 was a direct result of Ukraine and was a severe blow to ordinary Britons.
Green activists engage in the equivalent of secondary picketing by hurting innocent third parties. Both the Hay and Edinburgh book festivals, two highly regarded literary events, have been jeopardized by objections to sponsorship by asset manager Baillie Gifford. The Edinburgh-based firm manages £225bn of funds, including the venerable Scottish Mortgage Investment Trust.
Some of the world’s largest fund managers, including JP Morgan, State Street, Invesco and BlackRock, have withdrawn from the Climate Action 100+ investor group in recent days. They say that while they recognize the “complexities and nuances” of the green agenda, their priority must be providing certainty to investors.
Labour’s enthusiastic embrace of climate change is admirable. But we must not forget that the resources being talked about are only a fraction of the £24 billion per year once promised. Setting up a new institution, when the already established Leeds Infrastructure Bank and the British Business Bank could do much the same work, is a costly duplicative bureaucracy.
Green investments should not be a matter of either or. The North Sea (if not onshore fracking) is a valuable stepping stone to the energy transition and the footprint of natural gas could be dramatically reduced through carbon capture.
BP, Shell and the other oil giants are already among the UK’s biggest investors in tackling climate change.
Driving them and other North Sea drillers and engineers off Britain’s future fossil fuels should not be an option.