Britain Has Huge Clean Energy Ambitions, but Are They Realistic? - The New York Times

Britain Has Huge Clean Energy Ambitions, but Are They Realistic? - The New York Times

Britain Has Huge Clean Energy Ambitions, but Are They Realistic?

Analysts warn that the Labour Party’s proposals are unlikely to be cheap and could come at the cost of jobs in the oil and gas industry.

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There may be no better place to see evidence of Britain’s shift to cleaner energy than a sleek industrial complex on the Humber estuary outside Hull, a faded port city.

On a July morning, workers in a brightly lit building were preparing molds for fiberglass wind turbine blades longer than football fields. Outside on the docks, squat six-wheeled vehicles gingerly maneuvered a blade weighing 50 metric tons for loading onto a ship that would take it to Scotland for installation.

The factory, which is operated by Siemens Gamesa, a unit of the German company Siemens Energy, began producing the massive blades in 2016. It has since expanded to accommodate larger models.

The factory is a case study for how the new British government under Prime Minister Keir Starmer, whose Labour Party delivered a decisive election victory last week, hopes to use investment in clean energy to bolster stagnant economic growth.

Andy Sykes, the manager of the factory, said that 500 million pounds, or about $630 million, had already been invested in the plant, which employs 1,300 people in an area that has struggled economically for decades. Another round of expansion is in the works.

The plant also serves as an anchor for green efforts in the region, one of Britain’s major industrial areas, which is dominated by oil refineries and other polluters.

Mr. Sykes, though, said the British government would need to attract the funding for port expansion and other efforts to keep the offshore wind industry growing. “There needs to be a commitment and a guarantee that there’s a return on investment,” he said.

The government is also facing concerns about the costs of the transition and its potential to hurt job growth in a region that depends on the energy industry for employment opportunities.

Executives in the clean energy industry like most of what they have heard from the Labour Party. Mr. Starmer, who took office on Friday, had made the rapid expansion of low carbon energy — from wind to nuclear — a key plank of his campaign to not only tackle climate change but to also bring in what could be tens of billions of pounds in investment.

Among his pledges: quadrupling Britain’s offshore wind capacity, which is already second globally to China’s, as part of an ambitious effort to eliminate emissions from electric power generation by 2030.

Mr. Starmer also wants to streamline Britain’s agonizingly slow development planning process, sweeping away restrictions that prevent the building of land-based wind farms, for instance. Wind is already the largest source of power generation in Britain, accounting for about 30 percent of supplies over the last year, slightly more than natural gas.

And Mr. Starmer wants the government to have a bigger role in renewable energy.

The vision pleases both clean energy operators and environmentalists, who have chafed at what they perceive as a loss of momentum on climate goals under the former Prime Minister Rishi Sunak.

“Achieving that by 2030 or even getting close to that would be just an enormous step forward, far, far ahead of our major economy peers,” said Chris Stark, a former chief executive of the Climate Change Committee, a government body that monitors Britain’s plans to cut greenhouse gas emissions.

Mr. Starmer is also taking a tough approach to old-line energy producers. He has said he would tighten an existing tax squeeze on oil and gas companies operating in the North Sea and stop issuing exploration licenses in the area, which, while in decline, is still a major source of both energy and jobs.

“The U.K. has, and I think continues to be, at the leading edge of the energy transition,” said Roger Martella, the chief sustainability officer at GE Renova, a maker of wind turbines and other energy-related machinery.

Labour has presented these proposals as an almost risk-free bonanza. The push will not only help stave off climate change, but also create some 650,000 jobs, the party forecasts.

The party says that more blades spinning in the safety of home waters would insulate Britain from the impact of international events, like the sharp rise in electricity and natural gas prices that occurred after Russia’s invasion of Ukraine in 2022.

“Families and businesses will have lower bills for good,” the party said in an election document.

Analysts warn, though, that Labour’s proposals are unlikely to be cheap, and they come with other risks. For one thing, Labour is proposing a large effort to build green energy infrastructure in an economy that is more focused on sectors like finance. “The U.K. doesn’t have almost any of the supply chain for developing wind or solar or, indeed, nuclear or anything else,” said Dieter Helm, a professor of economic policy at the University of Oxford.

Such shortcomings have already been seen in the soaring costs plaguing Hinkley Point, the first nuclear power station that Britain has tried to build in decades.

A rush to build renewable energy sources could push up costs, which might then be passed on to consumers. “If cost is no object, that’s great,” said David Reiner, who teaches energy policy at the Judge Business School at the University of Cambridge, adding that Labour’s goals might be achievable with an increase in electric bills.

The environment for building renewable energy projects has become much tougher since the coronavirus pandemic. According to industry estimates, the costs of developing an offshore wind farm — large ones run to billions of dollars — have risen 40 percent in recent years because of higher material and labor costs and interest rates.

An auction last year for government support produced no bids for offshore wind projects, and the industry said that the government’s electric power pricing targets were unrealistically low. Industry executives said the results of a new auction, expected to be announced in September, would be seen as a bellwether for the future British market.

Finally, there are risks that moving fast to curtail oil and gas production could cost more jobs around the North Sea, especially in Scotland and northeast England, than the ones green energy would create.

James Reid, an analyst at the consulting firm Wood Mackenzie, forecast that production could fall 50 percent by the end of the decade if Labour’s fiscal proposals cause “people to turn the investment taps off.”

Highlighting the stakes: Around 200,000 North Sea energy jobs are linked to oil and gas, but just 34,000 are linked to renewables, estimated Paul de Leeuw, the director of the Energy Transition Institute at Robert Gordon University in Aberdeen, Britain’s oil center. “It is scary and a real call to action,” he said.

Mr. de Leeuw said that renewable energy could compensate for a lot of jobs expected to be lost in the oil industry, but the pace of building new projects needed to be much faster, “not an easy thing to do,” he said.

Oil workers are alarmed at the threat to their own jobs and skeptical about finding alternatives in renewable energy or elsewhere. Unite, one of the largest unions in Britain, and usually a key supporter of the Labour Party, has even organized small protests in Aberdeen against Mr. Starmer’s planned curbs on the oil industry.

“The lads don’t see any other option apart from the oil and gas industry,” said Kyle Griffiths, a union official who cleans and paints oil tanks on an offshore platform.

To help stimulate investment, Mr. Starmer has promised to set up a government company called Great British Energy, with headquarters in Scotland, to fund new renewable initiatives like mounting turbines on floating platforms.

The 8.3 billion pounds that Mr. Starmer intends to put into the new company over five years is relatively small, but its impact could be multiplied through partnerships and loans.

“We’ve got lots of projects we could partner with them on,” said Alistair Phillips-Davies, the chief executive of SSE, a utility based in Scotland that is one of Britain’s largest green energy developers.

Britain may be a leader in offshore wind generating capacity, but it has fallen short in securing jobs that make the equipment, analysts said. Aside from the Hull factory, there is only one other comparable offshore wind site in Britain — a blade factory and test center operated by Vestas, the Danish turbine maker, on the Isle of Wight.

“Unrivaled wind installation programs in the U.K. have mainly benefited producers in neighboring European countries, notably Germany and Denmark,” Simone Gasperin and Joshua Emden wrote in a study that was recently published by the Institute for Public Policy Research.

While the Hull plant may be controlled by a foreign company and producing blades designed elsewhere, it is at least supporting relatively well-paid jobs in an area that could use them. When the company was staffing up a decade ago, it received 28,000 applications, Mr. Sykes said.

Stanley Reed reports on energy, the environment and the Middle East from London. He has been a journalist for more than four decades. More about Stanley Reed

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