The Green New Deal: insights for theory and practice from the United Kingdom

Donal Brown, Stephen Hall, Benjamin K. Sovacool, and Tom Bailey

The Green New Deal (GND) has become a rallying cry for progressives on both sides of the Atlantic. Alexandria Ocasio-Cortez’s GND manifesto has received significant attention in the UK , while the UK’s GND Group have been calling for a low carbon stimulus since the financial crisis of 2007/8 . This transatlantic exchange of ideas as well as the political backdrop of economic unrest and populism echo Keynes’ exchanges with Roosevelt’s original New Deal of the 1930s.

2016 Elections saw Labour Gain Votes

In 2015 the UK Labour party unexpectedly elected a veteran left-wing outsider – Jeremy Corbyn – as its leader. Standing on a similar platform to Senator Bernie Sanders, Corbyn has since reshaped the party towards its democratic socialist roots and away from its neo-liberal wing which had dominated for 20 years. In a snap election following the ‘Brexit’ vote, Labour saw the largest increase in its vote share since 1945, removing the Conservative’s House of Commons majority. Of particular note, in the hurriedly produced manifesto, was massive investment in housebuilding, transport infrastructure and a commitment to meet 60% of the UK’s energy needs from zero-carbon sources.

Labour’s 60% energy proposals include both electricity and heat from the entire UK economy in 2030. This would represent an unprecedented change, delivered in only 11 years. The plans require 90% of electricity demand to be met from low or zero carbon sources, a 47% penetration of low carbon heat, and a 23% absolute reduction in energy demand. If delivered this would reduce CO₂ emissions by least 75%(relative to 1990 levels) in little over a decade. Some US states such as California, have made comparable pledges, including commitments to reduce emissions by 40%, through 50% renewable energy, a halving of transportation emissions and a doubling of building energy efficiency by 2030. However, no major global economy has such ambitious plans.

UK’s Partisan Divide Mirrors the US

This article explores these proposals, drawing on the authors experience in developing their technical detail and the policy platform for their implementation. Much of this work is still underway, with the UK’s GND facing an uphill battle in moving off the drawing board and into practice. The other main governing Party the ‘Conservative and Unionist Party’, has no such plans and retains a market- oriented approach to energy policy and residential retrofit with little direct role for the state.  While Brexit threatens the two-party system so dominant in the United Kingdom, UK Labour remain the only major party to propose such a structural change to environmental policy and reinvigoration of substantive state programmes.

The cornerstone of this strategy is to massively upgrade the energy efficiency of the UK’s homes and businesses, which are amongst the worst performing in Europe.. This would involve a whole-house retrofit program to the majority of the UK’s 27 million homes: introducing minimum standards for sale or rent, moving towards an ‘A’ rating by 2030, accompanied by equivalent standards for commercial buildings and industry.

Delivered alongside this would be rapid deployment of low carbon heat to meet 47% of demand. This includes rapid deployment of heat pumps (6.7 million), solar thermal (9.9 million), district heat networks (25 TWh), biomass (26TWh) and waste industrial heat and regional trials of hydrogen-based heating, created through electrolysis. This heat strategy is especially challenging given the embeddedness of heat infrastructure and the fact that UK peak heat demand is approximately four times larger than for electricity..

Meeting the huge challenge of such a comprehensive retrofit strategy will require a systemic policy approach and a move away from the piecemeal strategy which has been adopted to date . Labours plans envisage a central role for municipalities in facilitating consumer engagement, supply chain development, finance provision and aftercare services. Unlike the previous market led energy supplier obligations., this strategy will likely see the state deliver the majority of the finance for this program. A combination of public grants, 0% interest ‘on-bill’ financing, and energy efficiency mortgages, will need to mobilise hundreds of billions of pounds within a decade.

Achieving a near total decarbonisation of the electricity supply (90%) requires a massive rollout of offshore (46GW) and onshore (30GW) wind to account for 58% of total power generation: a fourfold increase from today.. The plans also envisage 30GW of solar power, including 1.75 million rooftops, and large trials of carbon capture and storage, wave and tidal power. Labour have also promised to deliver a million zero carbon homes, alongside a major upgrade and electrification of public transport infrastructure.

Restructuring Energy Markets?

Labour hope to deliver this transformation, by challenging the oligopoly of the UK’s big six energy companies. The plans aim for the support of number of municipal and community owned challenger energy companies (such as Bristol and Robin Hood Energy), run for public benefit rather than private profit. It is hoped these new actors will lead to a democratic and distributed renewable energy system, based around new business models, enabled by smart grids and an increasing role for storage, flexibility and local energy trading. However, these models face significant challenges in a market dominated by multinational companies, and a regulatory environment which favours the traditional centralised business model .

These proposals are expected to deliver: at least 400,000 well-paid jobs from the energy plans alone – equal to approximately one third of the adults unemployed in the UK; huge health benefits from cleaner air and healthier homes; regeneration of old industrial ‘rust belt’ areas of the north of England and Scotland; as well as significant economic stimulus. Indeed macro-econometric modelling suggests that the home retrofit plans would return £3.20 through increased GDP per £1 invested by government..

However, such a radical mobilisation in such a short time period requires an equally radical overhaul in the theory and practice of UK industrial policy. Labour have committed a £500bn capital investment fund, with £250bn from government borrowing and £250bn from capital markets through a new state investment bank. It is anticipated these institutions will mobilise funding through a network of regional public banks – similar to Germany’s Landesbank’s and Sparkasse. Labour are also proposing to nationalise the electricty tranmission, rail and water companies. This would overturn of 40 years of economic orthodoxy  and a re-imagine the role of the state in the economy .

Consequently, these plans represent a “New Deal” scale re-employment opportunity, echoing the public works programme of the pre-war Roosevelt administration and the UK’s, post-war reconstruction and social housing programme. Arguably, state intervention of this scale, goes beyond climate action and implicates the underlying ‘social contract’. For the GND to gain traction it must therefore move beyond the policy sphere and enter the popular imagination, where popular calls for a new social contract have yet to emerge since the financial crisis a decade ago.

Donal Brown is a Postdoctoral Research on the Horizon 2020 consortium ‘PROSEU’ which investigates energy decentralisation in the European Union, he is based at the University of Leeds Sustainability Research Institute.

Stephen Hall is University Academic Fellow in Sustainable Cities at the University of Leeds Sustainability Research Institute.

Benjamin K. Sovacool is a Professor of Energy Policy at the Science Policy Research Unit at the University of Sussex Business School, where he also serves as Director of the Sussex Energy Group.

Tom Bailey is an energy systems and climate action expert with international experience across the private, public and third sectors