Renationalisation would set net-zero goal back, report claims

Labour’s plans to renationalise energy networks would threaten the goal of reaching net-zero emissions by 2050, a new report has claimed.

Frontier Economics analysed Labour’s Bringing Energy Home plan at the request of the Energy Networks Association (ENA).

Its analysis found that the wholesale changes proposed by Labour would divert resources and investment that should be focussed on a pathway to net zero.

It also pointed to the potential for reduced accountability through the proposed creation of a National Energy Agency, which would set its own policy and regulate itself and others, in addition to being directly responsible for delivery. The report says this would bring incentive problems and conflicts of interest and could lead to delivery errors.

The report also warns that Labour’s proposals would act as a disruption to innovation and increase costs to customers.

Mike Huggins, director of energy at Frontier Economics, said: “Our appraisal of the policy proposals set out in Bringing Energy Home is based on the available evidence: drawing on historical performance of utility infrastructure in the UK under different ownership and governance models, together with academic and other evidence on what circumstances are likely to drive better outcomes for consumers.

“Based on our review of this evidence, the conclusion is clear. There is nothing in these proposals that suggests we should have confidence that they will meet the enormous challenge of achieving net zero on time and at reasonable cost. These proposals carry with them a very significant risk of being less effective – more costly and greater risk of delay – than the current system.”

David Smith, chief executive of ENA, said: “The energy networks are wholeheartedly committed to delivering net zero by 2050, having already played their part in helping Britain become the superpower of renewable energy that it is today. We share the objectives set out in Bringing Energy Home, but we are clear that the most cost effective and efficient way to achieve these is by building on the progress networks are already making towards this target. A complete restructuring of the energy sector would not only be costly and unnecessary, but would also lead to significant disruption and delays to achieving the goals of net zero by 2050 when it is clear that time is not something we currently have the luxury of.”