Labour’s £28 Billion A Year Green Energy Plan
By Paul Homewood
Labour’s ‘bonkers’ green energy plans will drive up mortgage rates and make Britain more reliant on foreign oil and gas, ministers warned last night.
Treasury analysis suggests that the idea of investing £28billion a year in tackling climate change could increase interest rates by 0.75 per cent, piling misery on millions of homeowners.
The study said a rise of that level would see the standard interest payments on a £200,000 home loan go up by £83 a month, almost £1,000 a year.
Quizzed about the proposals, Labour hinted the pledge could be scaled back, with a spokesman saying the final plan would be ‘subject to our fiscal rules being met, which includes getting debt falling.’
The Treasury’s analysis warns the unfunded spending would leave the Government and Bank of England ‘pulling in opposite directions’ over inflation.
‘The Bank of England will offset looser fiscal policy with higher interest rates, weighing on the recovery,’ it states.
‘If interest rates go significantly higher, it could cause financial and market stability risks that lead to a recession.’
The green spending plan was announced in 2021 before global inflation took off – and interest rates followed. Senior Labour figures are debating whether it will have to be scaled back to reflect the more straitened economic circumstances.
The warning emerged as Keir Starmer came under fire from all sides over his move to halt new investment in North Sea oil and gas.
The Labour leader faced criticism from both business and unions after confirming he would ban new extraction licences in the North Sea – a key demand of the campaign group Just Stop Oil.
Offshore Energies UK, which represents the industry, warned the plan would see the UK’s reliance on fossil fuel imports rise. And unions called on the Labour leader to adopt ‘plans, not bans’ amid fears for jobs.
Sir Keir will try to placate the unions today by offering to strengthen their role if Labour wins power.
In a speech to the GMB, he will say: ‘Labour in government will work with unions. We will always see the fight for working people as our driving purpose. We will strengthen the role of trade unions in our society, and I want to see Amazon and businesses like it recognise unions.’
A Labour spokesman dismissed the Government’s criticism of its ‘Green Prosperity Plan’, saying: ‘Labour will invest in the long-term productive capacity of our economy, boosting growth and strengthening the public finances.
‘Delaying investment in the low-carbon transition will simply mean higher costs in future.’
But a Cabinet source described the Labour proposal as ‘stark raving bonkers’, and warned that it would increase carbon emissions and threaten energy security by making the UK more reliant on imports. David Whitehouse of Offshore Energies UK said it made no sense to halt investment in the North Sea while domestic demand for oil and gas remained high.
‘In the UK today, 75 per cent of the energy – what drives our cars, our boilers, our energy – is from oil and gas,’ he told BBC Radio 4’s Today programme.
‘We domestically produce about 50 per cent of that. If we choose now to eliminate further investment that means that 80 per cent will have to be imported by the end of the decade.
‘That has real-world implications for our energy sector. It means choosing to import oil and gas from countries that do not share our climate goals, and it means exporting the jobs and skills we need to secure our energy transition.’
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NOT A LOT OF PEOPLE KNOW THAT 
This is Milliband. Starmer has beliefs but if you don’t like them, he has others.
Apologies to Marx (Groucho)
They are clueless.We had a labour MP Ashworth on Radio 4 wittering on about the hundreds of thousands of good,skilled green jobs that this money pissing will produce by magic .All this expenditure will do is boost the coffers of China and any others who make the kit .They will then let in millions more”skilled” immigrants to work for low wages to install this stuff .All at the taxpayers expense .
Nett zero is Nett Madness for us all and the country
Follow up new post as a test.
Here is the money angle on Labour’s policy from the Guardian “Last year, Unite and the GMB each gave Labour about £1.2m.”
https://www.theguardian.com/environment/2023/jun/05/keir-starmer-gmb-union-energy-policy-north-sea-oil-gas
Think about it, Dale Vince (Ecotricity) on his own gave the Labour Party £1.5 million and there are lots of other Green troughers pumping way more in. So whose tune are Labour going to dance to?
Here is a long shot…. how about the unions shift their funding from Labour to solely the Co-Operative party (4th largest in the UK government with 26 MPs – not a lot of people know that!!!) and both they and the Co-Op break their long term allegiances to Labour?
https://party.coop/people/mps/
Interesting times ahead.
This policy is driven by pure ignorance in the real world.
Sir Keir Starmer seems so bent on pushing Green ideas that he has lost sight of reality.
His barmy ideas will drive up costs significantly as we will be forced to import oil and gas from overseas making happy Frackers in the US and happy Drillers in the Middle East.
The only good news is that this policy is so crazy it may keep him our of number 10.
If you think any of Labour’s policies – or most of the Tory’s – are rooted in reality, you haven’t been paying attention! We have stagnant growth, rising prices, rising taxes, rising debt, declining public services. We are failing virtually everywhere, yet our “leaders” sail blithely on to lands of even greater delusion.
Presumably this is the plan from the World Empire of Fascism as they soon got Truss replaced when she threatened – albeit ineptly – a plan for growth.
Socialism works until socialists run out of your money.
As I predicted:
“Keir Starmer said oil and gas would remain a part of Britain’s energy mix ‘for decades to come’ and that he would ‘never’ allow ‘a repeat of what happened in coal mining where an industry came to an end and nobody had planned for the future’. He was speaking to the GMB Congress, where Labour’s plan to stop issuing new licences for oil and gas production in the UK came under fire.” (Spectator)
We have got to do something about our two faced politicians. They cannot be allowed to continue making grand announcements them qualifying them later when challenged.
These morons must be held to account for what they say and do. Starmer has panicked the markets then blithely says “I was only kidding”.
Has the BBC and the Guarduan reported what he said to the GMB? If so, where in terms of headlines compared with the ban announcement?
The media collude in these lies. Labour and even mire so tge LibDems say one thing to one constituency and the opposite to another but the media play along.
I’ve finally had an answer to the queries I sent the LCCC. I asked for confirmation of how the data in the CFD payment database is treated, and got the following responses:
a) Generation is recorded regardless of the market reference price, including when CFD compensation is zero because of a period of 6 or more contiguous hours of negative prices (although this will change with AR5 to being any period with negative IMRP);
Yes, generation is recorded regardless of the Market Reference Price.
b) Generation excludes any curtailed generation;
The generation figures only include actual generation, so any curtailed volumes are not included as they do not constitute a basis for CfD payments.
c) Payments recorded reflect the fact that the maximum paid is the strike price when IMRP is negative;
Yes, payments recorded reflect the fact that the maximum payable difference is equal to the full Strike Price and it cannot be exceeded.
d) Payments recorded are zero for periods of 6 or more contiguous hours of negative prices (which may be split over 2 calendar days);
Yes, payments recorded are zero in case the negative price clause applies to each specific CfD (note not all CfDs include such clause).
e) Weighted IMRP calculations reflect actual IMRPs hour by hour, even when they are negative, rather than e.g. counting them as zero when negative
No, in the calculation of the Weighted IMRP, the IMRP is assumed equal to 0 during negative hour periods so that the CfD Generation × (Strike Price – Weighted IMRP) still total to the correct daily CfD payment amount.
Probably no surprises in any of that, but good to have it confirmed. The interesting bit was the responses about curtailment.
I wrote:
I am trying to understand what is now happening with curtailment. It used to be the case that curtailment was a very rare event for CFD contracts, because they would essentially lose their whole strike price in revenue, and would be compensated by the strike price even if they had to offset a negative market price, meaning that it was always cheaper to curtail something else unless d) above applied – in which case they would (if they were awake!) curtail voluntarily. Hornsea 1 appears to have curtailed on 23rd May 2020 because d) applied, but other wind farms appeared not to have read their contracts closely enough and carried on generating for a negative income. However, by some time since about March 2021, curtailment of CFD generators started taking place in the Balancing Mechanism. For example I have evidence that in the year to March 2022, Beatrice Wind Farm was paid an average of just over £60/MWh to curtail approximately 540GWh of output from BMRS records. However, such payments are clearly inadequate compensation when they could have earned £164.73/MWh by carrying on producing. Moreover, their accounts show somewhat higher revenue. Therefore I conclude they and others are now getting curtailment compensation under their CFDs.
I would therefore like to confirm my understanding that
f) Curtailment compensation is only payable under a CFD (as opposed to via the Balancing Mechanism) once a period of Qualifying Curtailment (or Partial Qualifying Curtailment) has occurred – and then only after a year has elapsed and the submission of a report detailing claims during the year;
Correct – the generator must submit a report detailing any qualifying curtailments in that year.
g) Qualifying Curtailment only occurs if there has been a change in UK law since the CFD contract was signed that has the effect of no longer requiring that grid costs are to be minimised as an objective of the Balancing Mechanism (plus other additional conditions precedent)
What were the changes in law that triggered Qualifying Curtailment, and when was that effective?
We have never had a change in law that would result in a qualifying curtailment.
h) the consequent entitlement to compensation is Defined Curtailment Compensation, which comprises
1. Revenue forgone from market price sales, plus any sum that would have been due to the generator because IMRP for the period was less than the strike price, plus any operational costs of implementing the curtailment (small in the case of wind farms), plus
2. Imbalance charges under the Balancing Mechanism where they are incurred as a result of the curtailment
Less
3. Payments received for curtailment under the Balancing Mechanism, plus operational cost saving from not generating (again very small for wind farms)
It appears that under 1. in the event that market prices were above the strike price the compensation would be based on the market price (because there is nothing about payments due to the CFD Counterparty when market prices are above strike prices), while if they were below the strike price (including if they were negative), compensation would essentially amount to the strike price. This is further topped up under 2., albeit that this is reimbursement for a cost incurred – but for other generators I believe it is the case that they are expected to cover their costs from the bids they make to curtail, rather than securing a top-up. In present circumstances curtailment frequently occurs due to grid constraints, resulting in wind farms being constrained off while other generators closer to demand centres are fired up in their place: market prices can therefore be strongly positive, rather than being close to zero or negative as they would be in a more general supply glut of the kind we saw not infrequently in 2020 when demand was low.
See above. (Slightly disappointed that they didn’t comment on my understanding of the basis of calculation of curtailment payments under CFD terms)
I have noted more recently Balancing Mechanism curtailment payments to CFD generators running at much higher values – over £150/MWh in some cases (still below the CFD strike price), and several different wind farms being involved. I can find no details on your website concerning any curtailment payments, yet presumably they must be accounted for and recovered from retailers etc. Therefore I would like to know
j) How are curtailment costs factored into the ILR and TRA and subsequent reconciliations?
We are looking into this. Astonishing – they don’t even have a procedure to recover the costs from retailers.
k) Where can data on amounts paid be found, and in what level of detail?
We have no such data as we have never had a qualifying curtailment claim.
So the Beatrice mystery deepens…
‘Treasury analysis suggests that the idea of investing £28billion a year in tackling climate change’
What’s the ROI? They are lying; they are just spending it. “Friends of Labour” will get it.
And ‘tackling climate change?’ Wrestling it to the ground? Spending £28billion a year on sports metaphors? I might go along if they spend £28billion a year to knock it out of the park.
If Labour’s spending pledges are dependent on debt falling, then literally none of them can happen.