Labour is right: it’s time for Britain to profit from its own renewables

How can Britain achieve 100% clean energy by 2030? Yesterday, Keir Starmer set out an answer: a new publicly owned clean energy generator. Great British Energy would own, run and invest in new, clean energy infrastructure, from offshore wind to tidal and solar. Operating as a generating company, not energy retailer, it would have the potential both to reduce our household fuel bills and create a future of clean, affordable, abundant energy.

The full scale and details of Great British Energy are yet to be determined. But though Labour’s proposal may appear novel in Britain, public ownership of renewables is already commonplace. Indeed, nearly half of the UK’s offshore wind capacity is publicly owned – just not by the British public. Instead, it is owned by foreign governments.

At Common Wealth, the thinktank I lead, we recently analysed ownership of Britain’s offshore wind and found UK public entities own just 0.03% of total energy-generating capacity – less than the Malaysian government (0.1%), and far less than Denmark (20.4%) or Norway (9.2%). Even the city of Munich (0.85%) owns more than the UK government. Overall, 82.2% of all current and pending UK offshore wind capacity is foreign-owned; after foreign state-ownership, multinational and private equity companies dominate this sector.

Wealth generated from our common resources is accumulating steadily, but not for our common benefit. Money from our energy bills and public subsidies currently flows to foreign governments and wealthy shareholders. The profits from our clean, publicly owned energy assets should be generating income for people in Britain. A recent TUC report found that private ownership of electricity generation means the government will miss out on up to £122bn of direct income over the next two years, money that could otherwise go to funding the Energy Price Guarantee and retrofitting homes.

A publicly owned energy company would ensure the wealth generated from the UK’s wind and waves is shared by us all. Some might look at the impressive ongoing decarbonisation of the UK’s electricity system and ask why public ownership is necessary at all. Why not leave clean power development to the private sector? After all, the renewables sector is already growing rapidly, and is set to expand significantly in the next decade.

There are simple reasons that public ownership would be a superior and more affordable solution than a transition driven by for-profit companies. Of course, building the new infrastructure required to deliver a 100% clean power system will require very significant investment. But a public clean energy company would be able to borrow at lower rates, and could therefore afford to invest on a scale and timeframe that is faster, cheaper and more efficient than the private sector.

At the same time, the purpose of a public company wouldn’t be maximising shareholder returns. Without the pressure to pay investors annual dividends, Great British Energy could concentrate on a different job: rapidly decarbonising power while cutting our household bills. Even if it were decarbonised, a privatised model of energy generation would still continue to transfer enormous (and growing) pools of wealth from ordinary households and businesses to private companies and foreign governments. Although this energy would be greener, there is no guarantee it would be cheaper. By contrast, Great British Energy would ensure our energy future was organised around the public interest.

Alongside a faster, less costly roll-out of clean energy infrastructure, a national energy champion could act as the anchor for a broader green industrial strategy. This national energy generator could create good green jobs, employ existing British companies in its supply chains and create an impetus for new research and development based here in the UK. The pivotal role that public energy companies play in the transition is already clear in Europe. Nine out of the top 10 countries leading the energy transition have a national green energy champion; the lack of a British equivalent helps explain the weakness of our renewable supply chains compared with leading European economies.

Labour’s policy is common sense. Our current energy system is prone to crises because it depends on expensive, volatile imported fossil fuels. By accelerating the transition to clean power, Great British Energy would reduce the UK’s exposure to import shocks driven by fossil fuels. By contrast, the government is doubling down on fossil fuels. Ministers have failed to see that clean energy is a force of economic stabilisation; the countries with more green power are less dependent on volatile imports that will become increasingly expensive. Green energy is a solution to both the climate and the economic crisis facing us. Building a green giant the size of France’s EDF – which is Labour’s goal – would be an important step forward.

This is a decisive moment. The UK’s natural wealth has been squandered in the past. After the discovery of oil and gas, the North Sea was transformed into a paradise for profit-seeking companies and overseas wealth. Without putting energy into public ownership, we risk repeating these mistakes. Starmer’s announcement is a welcome recognition that public ownership can be a powerful tool to deliver on common goals. Let’s hope this time that it is the public who will win.

• Mathew Lawrence is director of Common Wealth and co-author of Owning the Future with Adrienne Buller