By Toby Lewis
A central part of the Labour Party’s landslide-winning manifesto was the promise to create a publicly-owned clean energy company and transform Britain into a ‘clean energy superpower’. GB Energy would be ‘owned by the British people and deliver power back to the British people’, Starmer stated. The establishment of GB Energy was already an ambitious plan, and £8.3 billion has been dedicated to its capitalisation over the next parliament. It will foster UK energy independence, drive renewables forward and boost the UK economy and job market. Yet, to be fully effective, the plan could be even more ambitious. To see how such a project might be carried out, Starmer might look across the channel to President Macron in France. Électricité de France (EDF) is a state-owned French electricity company, founded in 1946, with a revenue of almost €140bn in 2023. EDF employs 180,000 people worldwide, of which a significant proportion are employed in France. Furthermore, Enedis, a subsidiary of EDF and the main distributor of power in France, employs roughly 40,000. As a multinational corporation, EDF benefits France both in its exports and in its trade balance. From the French blueprint, the British government can gain important insight on how to optimise their plans and effectively transform the nation into a clean energy superpower.
If implemented properly, GB Energy could benefit Britain greatly – effectively killing four birds with one stone. Firstly, GB energy has the capacity to speed up the transition away from fossil fuels, stripping away the profit incentives holding this back in the private sector. In place of fossil fuels, a heightened focus on nuclear energy and offshore wind turbines would offer a green alternative for high-efficiency energy. EDF controls 18 nuclear power plants in France, and this allows France to source 70% of its energy from nuclear sources. This would shift the UK away from over-reliance on oil and gas from the world market, where prices fluctuate greatly and are elevated by the OPEC’s oligopoly and collusion over oil and world events such as Russia’s invasion of Ukraine in 2022. Since the cost of renewables has been steadily declining since the 1970s, this would bring down prices exponentially and create energy security for the UK, particularly in the long run. Additionally, this would help combat inflation spikes and stabilise the UK economy, restoring confidence and thus contributing to growth. Furthermore, state ownership would allow the government to play a role in price setting within the energy sector, enabling significantly cheaper energy prices. Despite the current cost-of-living crisis – in which energy prices play a significant role – British gas made a £297m profit in 2024. Nationalised clean energy would constitute a step towards resolving such inequality.
Nationalised energy would also combine well with the UK’s pledge to increase defence spending to 2.5% by April 2027, as it would support UK self-sufficiency in the event of a national security emergency in which energy imports could be threatened. For instance, in the event of a geopolitical conflict restricting energy imports from the likes of Saudi Arabia, energy prices would be protected by domestic supplies, thus preventing price spikes and economic turmoil. As noted, the formation of EDF in France has created 180,000 jobs, and a similar number could be achieved in Britain in just a decade or two. These positions would require trained and skilled workers – engineers, managers, and quantity surveyors – necessitating high pay and pushing up real wages, which have remained all but stagnant since 2008.
Finally, it could counteract the UK’s huge and growing trade deficit, which has brought down the strength of the pound significantly in recent years. The falling value of the pound has contributed to rising costs of imports and falling living standards in a country incredibly dependent on imports of essential goods such as food. Mirroring the trajectory of the EDF and becoming a world-leading exporter of electricity would be vital here, as in 2023 the EDF exported $9.94B worth of electricity. By successfully establishing and implementing GB Energy, Britain could replicate this.
It is, however, difficult to overlook concerns about the short-term government expenditure required for such a project. At a time when the government is making significant cuts to sectors like welfare, some commentators have questioned whether Britain is entering a new era of austerity—one that could undermine the establishment of a nationalised energy body. The national debt currently stands at over 95% of GDP, adding further pressure.
Nonetheless, if the project is properly implemented, its long-term benefits would no doubt outweigh short-term costs. The tax revenue from those employed by the company, many of whom would be in a high bracket, would balance expenditure and make this a worthwhile investment for the future. Additional growth would be fuelled by increased exports and corporate revenue, indirectly boosting government income. These benefits, however, are not guaranteed. There is always the risk of mismanagement. If the government acts too cautiously, GB Energy may become little more than a public investment fund for renewable projects, without addressing the structural issues in Britain’s energy system. This would amount to simply funnelling money into infrastructure without achieving energy independence. In that event, leadership in renewable development would remain with countries like China, where cheap labour, abundant resources, and strategic state planning provide a competitive edge. In essence, for GB Energy to be fully effective and reciprocally beneficial to the nation, it must be ambitious, not half-hearted.
So far, GB Energy looks set to disappoint, a project destined to avoid energy nationalisation rather than to reignite it. The company will be independent and headed by former Siemens UK boss Jürgen Maier, and the government will have limited intervention beyond setting objectives and the company’s budget. As such, there is a risk that the company will only add to the already abundant bureaucracy and red tape issues faced by renewable energy in the UK. However, Starmer’s words regarding the project in 2024 are encouraging, “it is time for the British people to own things and make things again.” A state-owned company, working with private foreign investors in renewables is the only way. If the government is going to contribute to renewable energy in a meaningful way, it must be proactive and, above all, ambitious.
The views expressed in this article are the author’s own, and may not reflect the opinions of The St Andrews Economist.
Image Source: Envirotec Magazine