UK: Back to the future with Liz and Rishi

We live in blessed times in the UK.

Yes, we face unprecedented pain this winter due to soaring energy bills; we are in a drought after the driest July since 1935; and we face a fight to even get off the island due to Brexit border battles and post-pandemic passport problems.

But who even wants to go away? We have a Tory leadership race that is heavy on energy discussion. The true winners here are us professional energy wonks!

On 5th September, the UK’s Conservative Party is set to confirm who has won the race to be the new prime minister. The candidates are foreign secretary Liz Truss and former chancellor Rishi Sunak, with Truss currently strong favourite.

Energy has been a key battleground in recent weeks. In this article, we look at what their policies mean for renewables over the next two years; and whether energy will be key to the next general election, which is due by January 2025.

Back to the future

There have been many reasons to criticise UK Prime Minister Boris Johnson during the last two years, but those in the renewables industry may come to see the years with a modicum of fondness.

Johnson has been positive about how ‘doubling down’ on UK renewables could unleash a “green industrial revolution”, even if clarity about how the UK could reach, say, 50GW of offshore wind by 2030 has been harder to find.

By contrast, Truss or Sunak have said little positive about renewables.

Truss would alter planning laws to make it harder to build solar farms and we expect a similarly restrictive approach for onshore wind.

Meanwhile, Sunak wants to make it harder to build onshore wind by scrapping plans, announced in April, to build more renewables to help the UK be energy independent after Russian’s invasion of Ukraine. Short memory indeed.

Technologically, their energy policies are even more retro. These include the return of nuclear and dusting off plans to support shale gas fracking. We are looking forward to recycling debates from the mid-2010s about the costs of nuclear and the environmental damage of fracking.

There are positives here too.

The prospect of more support for rooftop solar is good; and there appears to be continued support for offshore wind. Well, at least until the candidates seek to placate rural communities opposing the construction of onshore grid links!

But we are underwhelmed by little mention so far about innovations such as energy storage. It feels like a return to David Cameron’s “green crap” era.

The biggest energy policy difference so far has been on a windfall tax for oil and gas firms – Sunak is for, Truss is against – and we expect this to dominate the pair's energy debate in the coming weeks. It goes to the heart of how each leader will look to appeal to voters in the next general election. Sunak is keen to appear on the side of voters, while Truss shows off her pro-business chops.

Long election

This week, we have also seen the opposition Labour Party seek to remind voters of its energy policies and set out its stall before the next election.

Labour has reiterated commitments to double onshore wind and solar to 30GW and 40GW respectively by 2040; and achieve 75GW offshore wind (60GW fixed and 15GW floating) by 2035. It unveiled the targets in March.

But here’s the thing: renewables on their own are not a major vote winner, even when they do get widespread support. The UK’s next leader will only support renewables if they are clear that onshore wind and solar can boost energy security; keep down power prices; and avoid higher temperatures and droughts in the summers ahead. The industry must keep making this case.

However, the one energy policy we think could influence the next election is the windfall tax on oil and gas companies. UK energy users are heading into a tough winter and the risk for energy companies is that they will be presented as the villains of this crisis, as banks were after the 2008 crash. Frontrunner Truss might argue now that oil and gas companies should be free to make big profits, but she could U-turn quickly if sub-zero voters turn sour.

This could get messy. Let's hope for a warm winter.

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