Is decarbonising our energy system right… or left?
It isn’t a good time to be a private provider of public services. So far, 2018 has seen the collapse of Carillion; the government intervening on the east coast mainline franchise due to imminent failure; and a public debate on the negatives of private finance initiatives. As such, it is understandable that coverage of Jeremy Corbyn’s speech earlier this month focused so much on the nationalisation of the UK’s energy providers and the national grid. Or, as he put it, not 20th century nationalisation, but 21st century public ownership.
But what else did the speech cover below the headlines? First off, it was Corbyn’s greenest speech to date. Perhaps we should expect the leader of the opposition to be giving green speeches but, following an underwhelming environment chapter in the 2017 manifesto and very little said since, a speech explicitly talking about climate and environment was welcome. Leaving aside nationalisation for a moment, the speech’s focus on energy system reform was welcome. How we produce and deliver energy will be completely different in twenty years’ time and emphasis on changing our current energy system is vital for any future policy. As Corbyn pointed out, this will mean community and local energy playing a much bigger role in the national system, and reforming the grid to make this easier.
He also focused on smart energy systems and highlighted the importance of storage batteries and the need to import and export renewable energy to smooth out demand and supply. After energy generation, housing efficiency and transport are the next big carbon challenges for future governments so it was good to hear the Labour leader reaffirm his party’s commitment to insulate over four million homes.
Government policy still off target on carbon
In the speech, Jeremy Corbyn pointed out weaknesses in the current approach. Although progress has been made over the past few years, some government decisions have not helped the UK to maintain its climate leadership. Reversing the promise to make all new homes zero carbon, and continuing lack of certainty over renewable levies are two of concern. Despite the aspirations of its clean growth strategy published in November, government policy is still off target to meet its carbon budgets.
So the big question is: is public ownership of the energy system the only solution to fix these problems?
Although there are weaknesses, the current government can’t be accused of doing nothing. In 2016, the UK was the world leader in cutting its carbon intensity (the reduction in a country’s carbon emissions vs that country’s economic growth). In fact, it led by quite a way, reducing carbon intensity by 7.7 per cent, against a G7 average of 2.9 per cent and a global average of just 2.6 per cent. This has allowed the UK to portray a narrative to the world that climate mitigation is not just a moral imperative but, in fact, an economic opportunity.
Is public ownership the answer?
Corbyn’s speech argued that a national grid in public hands would be the only way to provide impetus for the research and innovation needed to make our grids smarter. But it is arguable that this is happening anyway, outside of public ownership. As we highlighted in our recent report, the UK spent £689 million in 2015 on smart grid research, development and demonstration projects, £577 million of which was private investment. This has prepared the UK well to take advantage of the estimated £211 billion global investment that will be spent on smart grids across nine emerging economies up to 2020.
Over the past decade, climate as a policy issue has risen above party politics and national boundaries to become a universal constant, regardless of what you may hear from occasional guests on Radio 4’s Today programme. President Trump’s announcement of his intention to withdraw the US from the Paris climate change agreement last year was met with a barrage of renewed commitment to the agreement from countries, businesses, cities, and civil society around the world. Climate may still be a political issue but it is no longer a partisan one and should remain as such.
The future challenges we face on climate change and reducing carbon are known unknowns. They will require a mix of everything: public ownership in some places, private innovation in others, but with international leadership overseeing everything. The key over the next decade will be prioritisation. Where will attention be most useful and where will money be best spent? Jeremy Corbyn’s view that public ownership is the solution will appeal strongly to his supporters, but we must be careful not to fall into the trap of thinking that there is only one way to tackle climate change.