Net Zero in crisis: Parliament must reject the Seventh Carbon Budget

It is welcome that senior Labour politicians and potential leadership contenders, including Wes Streeting and Al Carns, are finally acknowledging the importance of cheap electricity and the central role it plays in Britain’s prosperity, industrial strength and national security.

For too long, the energy debate has been conducted as if costs and security of supply were secondary issues - with decarbonisation being the primary purpose. 

Unfortunately, none of these voices vying for the leadership have yet identified the real cause of Britain’s high energy costs. This matters because if you cannot diagnose the cause of the problem, you cannot design a serious solution.

Britain’s high energy costs are not downstream from slow planning or poor delivery. It is the consequence of an energy system increasingly built around intermittent renewables, where the full system costs are rarely admitted. Grid expansion, backup, balancing, constraint payments, storage, redispatch and the loss of firm dispatchable capacity all have to be paid for. Those considerable costs fall on households, businesses and the wider economy. 

If you move those costs into general taxation to insulate the renewable energy sector from voter and political pressure, as is being proposed by a range of energy policy voices in the Labour Party, it does not fix the problem. It merely moves the burden from bills to taxes and hides the cost of the system from public view. Productivity and growth will remain constrained because the underlying cost base of the economy has not changed. Labour has no mandate to do this.   

As Sir Tony Blair and Professor Sir Dieter Helm have said, fixing Britain’s energy system will take more than clever political reframing. It demands honesty. Politicians must confront the realities of the system they are trying to build.

Streeting appears to want to keep the Net Zero destination while softening the timetable and changing the language. That might sound pragmatic, but if the UK remains legally bound by carbon budgets, slowing one part of the pathway means emissions savings must come from somewhere else. He does not explain where.

If Ed Miliband’s clean power by 2030 is an arbitrary target, what replaces it? If the pace of power decarbonisation slows, does he expect deeper cuts from transport, heating, industry, agriculture or aviation? Similarly, if the ZEV mandate slows, a move that is being proposed by Sir Keir Starmer, where will the compensating emissions cuts come from? If domestic gas is needed during the transition, how does that fit with a pathway that assumes a rapid fall in unabated gas generation?

These are not minor details. They go to the heart of the argument. This is the reality of a statutory Net Zero target. 

Parliament is due to vote on the Seventh Carbon Budget before the end of the month. The damage caused by the previous six Budgets has caused immense damage to the British economy. Before 2030, the country faces blackouts as our reliable gas-fired fleet closes and the government refuses to act. Our domestic manufacturing industries are losing 3,000 jobs per month and are on the verge of total collapse. Hospitality and retail are struggling to remain competitive because of high energy costs. Farmers face having their livelihoods destroyed because of aggressive emissions targets impacting livestock farming.    

These questions demand answers now. If the party is not prepared to scrap the Climate Change Act, then Ministers must explain how they can deliver cheap and secure energy while adhering to the stringent Net Zero by 2050 target. As such, it is clear that MPs should reject the Seventh Carbon Budget until Labour can answer these fundamental questions.