GB Energy Explainer

Find out all you need to know about Labour’s flagship energy plan for the election below:

Last week, Keir Starmer officially launched the Labour Party’s flagship energy policy, Great British (GB) Energy. However, since the launch much debate has been raised over the ambiguity of the project, will it be an answer to state-owned entities not seen since the 1980s or rather act as an investment vehicle which helps derisks private energy projects by offering funds? LGE has written a short explainer to try decipher the role GB Energy would play if Labour won the election.

What do we know so far?

When the project was first announced in 2022, it was part of Labour’s commitment to spending £28bn a year on green investment. Although this has now been cut to around £15bn a year, the plan for GB Energy remains a central policy, receiving initial funding of £8.3bn over the next parliament and being based in Scotland. The funding will come through a windfall tax on oil and gas companies. The overall target for Labour is to help produce clean power by 2030.

Yet outside of this the party has been very ambiguous about the concept of GB Energy, balancing the political intricacies of state intervention to help the transition to net zero and cheaper and securer energy alongside avoiding a reduction in market efficiency.

Options available?

GB Energy could therefore take multiple formats, depending on the level of intervention and investment the party is willing to make. The three options which have been debated so far are:

  • Investment Vehicle– GB Energy could act in a similar manner to the UK Infrastructure Bank which has already invested in some energy projects such as Sizewell C.
  • Energy Developer– GB Energy could be responsible for developing and owning energy assets, including renewables and operate like state-owned entities such as EDF in France. This role could be enacted independently or in partnership with private businesses, with the potential for projects to be sold into the private sector once established.
  • Net Zero Transition Vehicle– The final option would be for GB Energy to play a vital role in helping the UK move toward net zero by 2050, acting as an interlocuter between the key agencies involved in the transition, particularly reinforcing supply chain needs.

Labour therefore has many issues to resolve on its central energy policy and given the party’s strict adherence to staying within the ‘fiscal rules’ across all their policies, the political battle over what level of state intervention GB Energy should offer is likely to rumble on for some time longer.