What does the King’s Speech mean for energy?

The King has set out the new government’s plans for its term of office. What actions will it be taking in relation to energy?

Great British Energy

The creation of a state-owned energy company was one of Labour’s flagship manifesto pledges. Now the government is introducing a bill to set up Great British Energy as promised. It will develop, own and operate renewable energy assets. This is intended to accelerate the decarbonisation of the UK energy sector as well as securing energy independence and cutting household bills.

The plan is to attract private investment as well as pledging £8.3 billion of new money.

Although the electricity arrangements for Northern Ireland are separate from the rest of the UK, Great British Energy will operate UK-wide. The official briefing for the King’s Speech says that the UK government will work closely with the Northern Ireland executive on how it applies to Northern Ireland.

National Wealth Fund

Another key manifesto pledge for Labour was the creation of a National Wealth Fund. This will invest in infrastructure and technologies designed to boost the economy and deliver net zero, such as ports, factories, clean steel and carbon capture. The overall aim is to galvanise private investment. The target is to generate £3 of private sector investment for every £1 of public money.

We already have the UK Infrastructure Bank, with a track record of attracting private capital, and the British Business Bank, which offers finance for SMEs. The National Wealth Fund Bill, announced in today’s speech, will combine them under one banner to create a more cohesive offer for investors.

The government is putting in £7.3 billion of public money in the current term.

Planning and infrastructure

The Planning and Infrastructure Bill, announced today, will “modernise” and “accelerate” the building of houses and infrastructure. There are currently serious barriers to the development of new renewable assets, including planning permission issues and grid access delays.

The previous government drew up a Connections Action Plan in November 2023 and used this year’s Spring Budget to launch a taskforce. The Planning and Infrastructure Bill intends to continue and accelerate this work. We wait with interest to see how the new Bill tackles the problem of “zombie connections”.

One of the key decisions in this area is to allocate more budget to the national body that operates local planning services, which has been operating with a funding shortfall.

Sustainable aviation fuel

UK flights (international and domestic combined) account for about 8% of UK total emissions. The true impact on climate change is somewhat worse, because planes change the make-up of other gases in the atmosphere as well as emitting CO₂.

Many European countries recognise that the fastest way to reduce aviation emissions is to cut flights. France’s ban on short-haul flights where quick rail alternatives exist has been criticised as symbolic rather than practical. But other countries have followed suit – Austrian Airlines replaced its Vienna-Salzburg route with a train and Spain is working on a ban on short-haul flights.

The previous UK government’s “Jet Zero” strategy shied away from demand management and instead relied on technology, chiefly sustainable aviation fuel (SAF). It met with some scepticism because this is not yet operating on a commercial scale. Sunak’s government were exploring ways to help it scale up, supporting development of SAF through a revenue certainty mechanism.

The new government continues with the Conservatives’ strategy, designed to encourage investors to take a chance on UK-based SAF plants. The King’s Speech briefing estimates that SAF production could support over 10,000 new jobs and help to make the UK a “clean energy superpower”.