The U.S. has become recognised for rolling out the most far-reaching climate policy of any major world power to date. The Biden administration’s 2022 Inflation Reduction Act (IRA) introduced a wide range of financial incentives to support a green transition, which has helped attract billions in private investment in renewable energy and clean technologies. The EU and the U.K., which were expected to lead the green transition, have lagged behind the U.S. on climate policy over the last two years. However, the U.K.’s new Labour government is rapidly developing its green transition strategy, supported by strong climate policies, innovative energy initiatives, and financial incentives that could soon rival U.S. efforts.
The U.K.’s largest electricity supplier, Octopus Energy, has launched a new initiative to offer consumers a discount on their energy bills during times of favourable conditions for renewable energy production. So, when the wind is blowing more, the company offers consumers reduced-price electricity from its wind turbines. The company hopes this will encourage consumers to support wind turbine projects, as well as use energy in a more considered way. This is just one of the schemes being run by utilities and the government to demonstrate that a shift away from fossil fuels to renewable alternatives could help slash energy bills and have a better impact on the environment.
One London-based start-up, Ripple Energy, is now inviting people to purchase a piece of a wind turbine in exchange for a discount on their electricity bills. Meanwhile, in Grimsby in the north of England, a local cooperative is investing in small-scale solar projects to help cut energy costs for charities in the area.
The U.K. has set ambitious climate targets but has been greatly criticised for not doing enough to meet these goals. The previous Conservative government pledged that all of the U.K.’s electricity would come from low carbon sources by 2035, as well as announced plans to increase offshore wind capacity five-fold by 2030, increase solar power capacity five-fold by 2035, and expand nuclear power. Yet, in February, U.K. ministers found themselves in court for a second time for failing to align the climate action plan with the government’s climate pledges, as well as filling the plan with ambiguities and loopholes.
However, since the Labour Party was voted into government in July, we have seen a significant shift in the country’s energy sector. In just over three months, Labour has launched a multibillion-dollar effort to reposition the U.K. as a global pacesetter for clean energy. In July, the government established a new publicly owned, clean-energy company –Great British Energy, which will own, manage, and operate clean power projects. In September, the U.K. government agreed to buy the electricity system operator from National Grid for around $816.8 million, further enhancing its role in the energy industry.
In August, the government announced a record-breaking investment of over $1.9 billion in domestic renewable energy projects. Some of the renewable energy and clean tech projects now underway include a new investment support scheme for long-duration electricity storage (LDES) projects, plans for the U.K.’s first large-scale carbon capture and storage sites in Teesside and Merseyside, and the publication of a report from a government-industry taskforce that highlights the U.K.’s potential to become a global leader in floating offshore wind energy. The government has also launched the website Innovating the Energy Transition, which outlines investment opportunities and provides a tailored step-by-step guide to help companies set up their business in the U.K.
The government’s ambitious new energy initiatives are already helping to attract higher levels of funding from the private sector in renewable energy and clean tech. In September, Octopus Energy Generation announced plans to invest almost $2.6 billion in clean energy projects by 2030.
Zoisa North-Bond, the CEO of Octopus Energy, stated, “The U.K. is on the verge of a green energy revolution.” North-Bond added, “This £2 billion investment in homegrown renewables will help boost our energy security and pave the way for a more affordable energy future… Solar and onshore wind are among the cheapest energy sources available. By building closer to demand, we can maximise green electricity when it’s abundant and lower bills for customers nationwide.”
In October, the government announced it had raised nearly $31.1 billion in private investment for pioneering energy projects. This came ahead of the International Investment Summit, which helped garner greater attention for sectoral growth in line with new government energy policies and climate pledges.
Following years of stagnation under the Conservative government, there have been significant strides in energy policy and clean energy incentives in recent months under the new Labour government. This is expected to attract high levels of private investment in the coming years and diversify clean energy investment beyond the U.S. market.
