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Future UK Energy Scenarios: What is each party promising?19 June 2024

With the UK general election around the corner, all the major parties have now published their manifestos. It will come as no surprise that energy policy features heavily, given the ongoing energy transition, global unrest impacting gas and electricity prices and concerns around security of supply.

Depending on the outcome, the nation’s energy future could look very different. We compare the parties’ manifesto commitments across seven key areas below, before turning to an examination of trends, exceptions and notable omissions.

"We compare the parties’ manifesto commitments across seven key areas below, before turning to an examination of trends, exceptions and notable omissions."

Net Zero and Renewables

PARTYNET ZERO GOALS
Conservatives
Deliver net zero by 2050.
Labour
“National Mission for clean power by 2030”.
Mandate UK-regulated financial institutions and FTSE 100 companies to develop and implement credible transition plans aligning with the Paris Agreement’s 1.5°C goal.
Liberal Democrats
Aim for 90% of electricity from renewables by 2030.
Require all large UK stock-exchange listed companies to set targets consistent with net zero goals.
Green
Zero carbon society as soon as possible and “more than a decade ahead of 2050”.
Reform UK
Scrap net zero to “save the public sector over £30bn per year for the next 25 years”.
Plaid Cymru
Deliver net zero in Wales by 2035.
SNP
For whole of UK to reach net zero by 2050, Scotland must do so by 2045.
UK government must invest at least £28bn a year in the green economy to deliver a step change in public and private investment in net zero and major investment in the domestic supply chain. As part of this investment, the UK government should seek an equity stake in future energy projects.
Establish a Four Nations Climate Response Group to agree climate plans across the UK that deliver on our net zero targets and ensure the UK government stops backtracking on climate ambition.

 

PARTYRENEWABLES
Conservatives
Offshore Wind:
• treble capacity during next parliament.
Onshore Wind:
• “strike the right balance” between energy security and the views of local communities; and
• areas hosting onshore wind to directly benefit, potentially via energy bill discounts.
Solar:
• support in the “right places, not on our best agricultural land”; and
• facilitate brownfield and rooftop solar.
Labour
Offshore Wind:
• quadruple capacity by 2030.
Onshore wind:
• double capacity by 2030.
Solar:
• triple capacity by 2030.
Liberal Democrats
Offshore wind, onshore wind and solar:
• remove “unnecessary” restrictions on new solar and wind power; and
• drive the “rooftop solar revolution”.
Green
Offshore Wind:
• 80 GW by 2035;
• increase maximum CfD strike price “to reflect supply chain costs”; and
• equip ports and supply chains to better support floating offshore wind.
Onshore Wind:
• 53 GW by 2035.
Solar:
• 100 GW by 2035; and
• solar panels “mandated” on all new homes.
Reform UK
Scrap “annual £10bn” of renewable energy subsidies.
Plaid Cymru
Seek to avoid:
• situations like wind farms being built on landscapes that provide habitats for endangered species; and
• unnecessary countryside destruction for large industrial scale solar farms.
SNP
No specific mention of technology, but a commitment to modernise the Contracts for Difference scheme to enable the stable deployment of Scotland’s renewable energy pipeline, which is mainly offshore wind.

Energy Security

PARTYFOSSIL FULES
Conservatives
• annual licensing rounds for North Sea oil and gas production;
• windfall tax to remain until 2028-29, subject to earlier price falls;
• maintain incentives to invest in the North Sea;
• new gas power stations; and
• retain fracking moratorium.
Labour
• maintain “strategic reserve” of gas power stations;
• “phased and responsible” transition in the North Sea that recognises the “ongoing role” of oil and gas, which will be with us “for decades to come”;
• no cancellation of existing North Sea licences, but no new exploration licences;
• no new coal licences;
• ban fracking for good; and
• “close loopholes” in the windfall tax on oil and gas companies.
Liberal Democrats
• push for all OECD countries to agree to end subsidies for foreign fossil fuel projects;
• implement G7 pledge to end fossil fuel subsidies;
• maintain fracking ban; and
• new ban on coal mines.
Green
• no new oil and gas licences;
• end all oil and gas subsidies;
• cancel “recent” fossil fuel licences, like Rosebank;
• stop all new fossil fuel extraction;
• support increase to windfall tax on oil and gas production and close existing loopholes; and
• new windfall tax on banks making “excessive” profits.
Reform UK
• “fast-track” new North Sea oil and gas licences;
• grant shale gas licences on test sites for two years; and
• increase combined cycle gas turbines, “clean” synthetic fuel and “clean” coal mining.
Plaid Cymru
• oppose new licences for oil and gas drilling;
• oppose new open cast coal mines;
• increase windfall tax and close loopholes; and
• maintain fracking ban.
SNP
• devolution of windfall taxation for companies operating in Scotland;
• take an evidence-based approach to oil and gas, with decisions made on a rigorously evidence-led, case-by-case basis, through a robust climate compatibility assessment;
• any further extraction must be consistent with climate obligations and take due account of energy security considerations;
• support energy transition as North Sea oil and gas declines with £500m North-East Transition Fund – to be matched by UK government;
• ban new coal licences;
• promote a fair and affordable transition to zero-emission transport fuels and ban the import and sale of new, non-zero-emission buses by 2025.

 

PARTYNUCLEAR
Conservatives
• approve two new fleets of Small Modular Reactors (“SMRs”) within first 100 days; and
• deliver Wylfa nuclear power station and work with industry to deliver Hinkley Point and Sizewell sites.
Labour
• extend lifetime of existing plants;
• get Hinkley Point C over the line; and
• new nuclear, such as Sizewell C and SMRs to “play an important role”.
Liberal Democrats
No specific mention within an energy supply context.
Green
Cease new nuclear developments and phase out nuclear energy.
Reform UK
“Fast-track” nuclear energy with new SMRs.
Plaid Cymru
Oppose new nuclear sites.
SNP
Rule out new nuclear power plants in Scotland.

 

PARTYGRID REINFORCEMENT AND INTERCONNECTORS
Conservatives
Cut grid connection waiting times to deliver an estimated saving of £15 - £25 per householder per year out to 2035.
Labour
Work with industry to upgrade national transmission infrastructure and “rewire Britain”.
Liberal Democrats
• build the grid infrastructure “required”;
• more electricity interconnection between the UK and other countries;
• reduce grid connection access costs; and
• reform network to permit “local energy grids”.
Green
• invest in interconnectors and grid storage; and
• "significantly expand and improve" grid efficiency and increase capacity.
Reform UK
No specific mention of grid reinforcement or interconnectors.
Plaid Cymru
• implement alternative methods for linking renewable energy to the grid, such as undergrounding of cables; and
• push for changes to how the grid is structured, so that communities can benefit directly.
SNP
An independent Scotland in the EU, offering Scotland the opportunity to regain what has been lost as a result of a hard Brexit and harness the opportunities that independence would provide.
Make changes to the electricity grid system that currently holds back the development of renewable energy in Scotland, including reducing fees for Scottish producers to connect.

 

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"All parties, except Reform UK, have committed to an overall net zero or clean energy target of sorts."

Common trends and overlaps

Net zero and clean energy targets – all parties, except Reform UK, have committed to an overall net zero or clean energy target of sorts. The Green Party, Labour and Liberal Democrats have gone a step further than net zero with targets contemplating clean power as the predominant (or even sole) energy source.

Oil and gas – Labour, the Green Party and Plaid Cymru appear united in their desire to close down loopholes in the windfall tax and draw an end to new licensing.

Wind and solar – except Reform UK, all the UK-wide parties plan to significantly upscale deployment in at least one of these industries, with Labour and the Green Party going so far as to include quantifiable targets across both wind disciplines and solar.

Grid – most parties acknowledge the need for increased investment in grid infrastructure.

Nuclear ­­– Labour, the Conservatives and Reform UK all acknowledge the importance of SMRs in the future energy mix, with the Conservatives and Reform UK appearing to offer most encouragement.

Outliers

The Green Party – the party’s commitment to a “zero carbon society as soon as possible and more than a decade ahead of 2050” must be noted for how far it goes beyond the commitments of other parties.

Reform UK – with plans to “scrap net zero”, scrap an “annual £10bn” of renewable energy subsidies and grant new shale gas licences, Reform UK appears to be moving in the opposite direction to the other parties.

Notable absentees

Hydrogen – other than a Green Party commitment to “rapidly increase use of green hydrogen”, and SNP’s commitment to promote Scotland’s “hydrogen export potential” by securing progress with direct interconnection between Scotland and continental Europe, hydrogen commitments are scarce. Labour and Liberal Democrats note general plans to “invest” in the technology, with nothing of note from the other parties.

Energy storage – save for the Conservatives’ commitment to “build two carbon capture and storage clusters”, proposals are fairly loose (or non-existent) in this field, with Labour, Liberal Democrats and the Green Party noting general plans to “invest”, and no specific mention by other parties.

"It is clear from the package of promises put forward by each party that there will be ‘winners’ and ‘losers’ across the energy sector."

Winners and losers

It is clear from the package of promises put forward by each party that there will be ‘winners’ and ‘losers’ across the energy sector.

Conservative – with plans to treble offshore wind during the next parliament, the offshore wind sector is a clear winner, which ought to give investors in the sector increased confidence. However, this will require a significant ramp-up of supply chains and grid infrastructure investment – the manifesto offers little guidance on how this might be achieved. Without similar unambiguous volume targets, investors in the onshore wind and solar industries will likely be left with more questions than answers. Players in the oil and gas and nuclear sectors should gain a degree of confidence from the Conservatives’ plans to continue with North Sea licensing as well as approve new SMR fleets and commit to delivery of existing planned nuclear projects.

Labour – the solar and wind, both onshore and offshore, sectors appear to come out on top, with a commitment to significant, unambiguous targets for expanding all three sectors. The elephant in the room therefore is how to achieve this in practice? The need for grid infrastructure upgrades is obvious, with the manifesto noting the need to “rewire Britain”, albeit without setting out in detail how this is proposed to be delivered. It is a mixed picture for the oil and gas sectors, with the party confirming new North Sea exploration licences will be brought to an end, whilst also committing to maintain a “strategic reserve” of gas power stations. The party will need to ensure sufficient supply chain capability is maintained to facilitate this “strategic reserve”, which may require more incentivisation as new opportunities within the sector are gradually shut down.

Liberal Democrats – the manifesto appears to focus on the “local” community side of things, with a “rooftop solar revolution” championed, alongside reforming the network to permit “local energy grids”. A clear, coordinated nationwide strategy will no doubt be required to deliver a national grid that functions effectively with such an increase in local connections. This would also need to be delivered alongside a significant ramp-up in energy storage investment, to ensure the increased generation is not wasted. Moving away from the “local”, the absence of clear targets will not instil confidence from the perspective of a corporate renewables investor.

The Green Party – the Greens’ vision of a zero-carbon society before 2040 will require vast and sharp deployment of investment capital, supply chain and construction resources. This will also put heavier pressure on expanding and reinforcing the nation’s transmission and distribution grids at a time when National Grid Energy System Operator has already been making public statements for years about the unprecedented rise in connection applications for new generation. In this scenario, the oil and gas sector will be the clear loser, though the industry’s skills and capital could be shifted into offshore wind and other offshore infrastructure to support the acceleration of net zero.

Reform UK – the party’s self-termed “contract” paints a bleak picture for the renewables industry, with renewables subsidies and net zero goals proposed to be “scrapped”. On the flip side, it is a positive outlook for oil and gas and nuclear industries, with plans to “fast-track” SMRs and new North Sea licences. Two years of new shale gas licences is also a point worthy of note. Perhaps the main challenge in achieving these ends will be in maintaining sufficient oil and gas supply chain expertise to deliver this (assuming neighbouring countries are not following the same approach).

Plaid Cymru – the outlook looks fairly grim for oil, gas, coal and nuclear sectors, with the party planning to oppose new oil and gas drilling, open-cast coal mines and new nuclear sites. Renewables investors might not be filled with much confidence either, with the manifesto appearing to go into more detail on what the party is seeking to avoid (“unnecessary countryside destruction”), rather than outlining concrete proposals for new development in these sectors. One assumes these reservations will need tempering given the party’s aims to deliver net zero in Wales by 2035.

SNP – the party’s main focus is on an independent Scotland which will rejoin the EU. This would be a shake up for the rest of the UK, but given existing interconnection with EU member states, there is already a set of rules in place governing cross border energy trading.  The recognition of waning oil and gas does not spell doom for the industry, as the SNP is looking to support the industry for a just transition “to help build on the region’s world-renowned expertise, create jobs, foster innovation and deliver a fair and managed transition to net zero”. The green economy is a clear winner under SNP leadership.

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