GB Energy: The Future of Energy Governance?

Harvey Wood - University of Sheffield Alumni, Research Fellow at the International Development Research Network

Labour’s election occurred in the context of trending conservative-populism across Europe witnessed by June’s EU elections, in which populist-conservative groups were successful in their anti-environmental messaging by framing climate initiatives as contrary to national sovereignty. What is more, the Russia-Ukraine War has highlighted Europe’s dependency on Russian gas and the unsustainability of the continent’s energy politics status quo.

Labour conceptualise the transition as a "huge opportunity to generate growth, tackle the cost-of-living crisis and make Britain energy independent once again". As such, their plans target these  interconnected domestic and international elements of energy politics, policy and governance.

Moreover, and most critically, it has departed from the Conservatives when it comes to the role of the state, which is to have renewed relevance in effecting a "serious industrial strategy". Here lies the most pivotal dynamic in Labour plans for GB Energy: the revival of the state in governing the workings of Britain’s energy politics, consequently redrawing the balance between public (state) and private (market) actors in its governance. This reflects a new chapter in Britain’s climate and energy governance.

The Future of Fossil Fuels in Britain and Beyond: Redefining the Role of the State

Labour’s plans vis-à-vis energy reflect a tension. Starmer has stated that there will be no new fossil fuel contracts, but won’t prematurely end existing ones. Oil will remain part of Britain’s energy mix for "decades to come".

The pledge to move away from new contracts is a promising progressive policy, not dissimilar from the 'fossil fuel non-proliferation' pact that calls for an end to fossil fuel extraction, despite existing on the fringe of what international cooperation can realistically achieve in the near-term. Starmer does, however, offer a clear contrast to the example set by the Biden Administration which, despite rhetoric on climate change, committed to the Willow Project - an extraction site that will provide 750 million barrels of oil. Despite its verbal commitment to acting on mitigation, President Biden has failed to offer exemplary international leadership and thus continues to abdicate responsibility to protect the global commons.

These examples raise the issue of executive authority as a tool for achieving energy transition. In the US, it is clear that fossil fuel interests are still critical to the state; this chimes with Newell’s insights on the mutual dependency of state and fossil fuel industries in the current form of 'fossil fuel capitalism', a dependency that must be altered in order to make any energy transition a reality. Seen in such a light, the US constitutes a 'rogue state'in the collective solution to mitigate climate change because of its history of "unilateralist and obstructionist" action within the arena of multilateral cooperation and which clearly has progress to make with regard to pulling its weight. On the contrary, Labour’s promise to end new contracts offers a bold policy that is congruent with the recommendations of scientists if the world is to achieve its agreed targets, which have been typically ignored. While it remains to be seen what effect this may have on the international community, it does represent a positive development and a potential example to follow for both the US and other laggard nations.

Britain in the World: Forging a New Post-Liberal Consensus on Domestic Energy Governance?

The Conservatives have called GB Energy unrealistic. This obscures an alternative governance example that exists in Europe and which yields hopeful results. With GB Energy, Labour are emulating European peers elsewhere; France, Norway, Sweden and Denmark all have state-owned energy companies. This reflects a turn away from Thatcher’s privatisation of energy over 35 years ago.

These highlight the possibilities as regards the role of the state in conducting domestic energy policy, rather than leaving the fate of the nation’s energy politics to the market. Labour’s plans thus reflect a key change: from a state absent to a state proactive in energy politics. When compared to the examples of Sweden, Norway and Denmark - where the state owns 100%, 67% and 51% of their constituent energy companies, respectively - Britain is seen to be an outlier in the mosaic of Europe’s energy governance. Scandinavian models meant that these countries were better prepared for the global energy shortage of 2021-2022, evident in their consistently lower costs to consumers relative to other EU states.

Despite the Scandinavian model of energy governance, the prevalence of the 'Liberal Environmentalist' paradigm remains: an ideational and political order in which markets are perceived as the primary mechanism through which to achieve (positive) environmental outcomes, while the state is pushed from "the centre of world political order". GB Energy and its Scandinavian counterparts offer an alternative vision of the norms of energy politics that could - and should - alter the prevailing consensus. A revived state could act more decisively to direct energy politics and thus offer a better chance of mitigating climate change than the current order, which has reproduced environmental degradation in recent decades. In practice, this would involve fostering domestic and/or regional renewable energy initiatives while simultaneously exercising its executive authority to constrain what fossil fuel companies can do with regards to extraction. It also means being more ambitious in international arenas. These dynamics, and a new paradigm that legitimates them, are critical if the world is to achieve an energy transition in time.