New Consensus Notes #2: The Great Energy State
How can energy transformation create the basis of a new political consensus?
If you have not read the first New Consensus Notes, I recommend you do as it includes necessary caveats to the style of writing and ideas introduced in the series.
One note I forgot to mention was this series will use footnoting (not just hyperlinking) in order to retain the flow of the piece while being able to expand on details and sourcing.
Climate catastrophe and energy fragility are two all encompassing challenges to the security of the British state. Reorienting the country towards net zero is a mammoth task that requires revolutionary change across society. Every necessary green policy, regardless if it can be linked to a new consensus of security, cannot be synthesised into a single piece.1 But how, then, can we create a coherent new consensus of politics which recognises the need for shifting environmental policy without encompassing every policy needed to do so? The answer is in the foundations: the need to build an environmental policy on the secure basis of a renewable and secure energy state. The politics of energy will allow us to synthesise many political areas of debate around security into one idea. This piece will flow through several ideas around energy policy: looking at how we must reimagine energy in our world system, how that new imagination can secure and empower our politics through renewable energy transformation, what must be built to deliver those new policies and how our theory of the great energy state compares to others.
Reimagining Energy – Helen Thompson
Any starting point for the great energy state must begin with our attitudes and ideas on what energy means for Britain. Energy transition is the overture to net zero because it underpins our entire nation: whether economic growth or human acts within society – all of which is powered by the energy we use. Nations need energy like food – both to sustain themselves but also to grow. However, we are stuck on a bad diet: the junk food of oil and gas.2 While this junk food may be easy and accessible it is detrimental to our health (climate), has a very volatile price (see the Ukraine conflict) and must be mostly imported from undesirable junk-food nations (Russia or OPEC).
Helen Thompson put this comparison into international practice, contending in her work Disorder: Hard Times in the 21st Century, that what unites both economics and geopolitics is energy: whether determining economic growth, international price (in)stability / inflation or the politics of nations / war.3 Energy is essentially the overlooked element that catalyses the world system of politics and economics. It is, if you like, the food of the world system.
So why change our diet? Putting aside the obvious scientific or moral reasons for the need to reduce emissions, Britain has the unique opportunity to build a thriving energy industry that could guarantee energy security. British energy security would empower our political leaders in international politics, while possibly aiding national growth in industry. It also seamlessly underlines a consensus desire for more security in reaction to recent global insecurity. Reimagining energy is, therefore, an opportunity Britain must take – enabling it to find a meaning and purpose in a post-Europe, post-Empire nation. Energy should be seen not just as the basis of a green future, but a future of British prosperity, security and growth; one which is on renewable terms. Only through this positive reimagination can a great energy state be built.
The Mechanics of a Great Energy State – Powerbook
Britain Remade, an insightful think tank pushing a return to green economic growth recently published their bold Powerbook report. At its heart, Powerbook argues that with serious intervention Britain can transition from a net energy importer to energy self-sufficiency and even exporter by 2030 – eventually earning the UK up to £1.3bn in exports and saving billions on gas reliant energy bills (which increased by a staggering 400% in 2022). The crux of their argument is that because: “The price of solar, onshore wind, and offshore wind have fallen by 62%, 55%, and 75% respectively in under a decade” it is now more economically efficient to use green energy. Powerbook also stresses that British industry is in a uniquely strong position to build energy infrastructure but has lagged behind its early technological advantages, for instance: Britain built the first commercial Nuclear power station, but it's “been 27 years since we have built another”.
There is a huge opportunity for change. To make this change, Powerbook envisions a complete acceleration of renewable energy production of all sources through the transformation of the planning and delivery functions of the state. For example, it currently takes 13 years for planning and building of offshore wind, and over a decade to simply get a connection from a wind farm or battery facility to the National Grid. The development of modular nuclear reactors, as with most nuclear plants, have been blocked by the backwards politics of the Westminster logic in Britain. This is simply not good enough. The unclogging and upgrading of the diminished British state infrastructure is the precondition to unlocking energy security.
Using Powerbook’s strategy (or one similar to it) Britain could become completely energy-secure within 10-15 years. Not just that but an energy exporter. The geopolitical power Britain could gain by exporting energy to nations should not be understated. Reimagining energy in geopolitics as the food of the system – the enabler of all things – is pivotal. Doing so would allow energy to be directly linked to foreign policy and soft power, whether exporting green energy for developing nations or supporting those fighting wars against aggressors.
Numerous policy wonks or even some in the National Grid have mused that if energy infrastructure is increased the nation could also use the excess energy produced to supercharge or subsidise British industry on a large scale. The classic, and very realistic, example used is the Port Talbot Steel which sits right beside the large Swansea wind farm. There is currently no connection between both. A strategy could be constructed to supercharge the plant at points of the day when it needs to use high energy – ensuring energy is used efficiently, reducing costs for British business and relieving the excess energy strains on National Grid infrastructure. Energy subsidy / supercharging policy could be used in a broader sense to align with areas of national strength / security – for instance semiconductor plants, or simply as a carrot to entice international businesses to invest in Britain (knowing a % of energy will be subsidised relative to their investment in the nation). Industry will of course have to adapt their infrastructure and production tools so they can use these new forms of energy, but with a consistent industrial strategy from the state it is workable.
The other key technicality is the unlinking of renewable energy from oil and gas allowing prices to rapidly fall for customers – thereby demonstrating to the population the cheap costs of green energy. This is potentially the most salient part of the new energy security consensus electorally: cheaper bills and lower long-term inflation.
The mechanics of an energy state will be dependent on a large upfront cost. But, if anything has confirmed the absolute need for state capacity it is inflation. The UK in its current inflation bout cannot easily invest or build because of constant rising costs. Budget management and protecting real term cuts is prioritised over new capital spending projects which, if initiated, could balloon in costs if inflation continues to run between 5-10% over the next few years. So, the cost is significant – but inflation only increases the necessity to build energy security for the rainy days of global energy price instability.4
As Jack Higgins (National Grid ESO) argued recently at the NewStatesman conference, ensuring the infrastructure to transfer energy across the country for strategic purposes will require around £54bn of upscaling in the National Grid to form a ‘Holistic Network Design’.5 The benefits are staggering: 168,000 jobs, targeting energy surges for business and ensuring 23GW of wind is linked into our energy system. However, this is a long way from the great energy state’s needs to accommodate 70-110GW of energy by 2030.6 There are serious problems of scale to overcome, but only by initiating the creation of a great energy state now can it ever reach its potential as the foundation of a new security consensus.
The more pressing question you may be asking is how could this actually be delivered?
The Politics of a Great Energy State - Adam Tooze
The immense power of America’s Inflation Reduction Act (IRA) should both excite and worry the UK. The $369bn of green subsidies, grants and investment has already reshaped the market – and will continue to do so over the next decade.7 It is also unlikely to be substantially unpicked by any Republican, even Presidential hopeful Donald Trump, if the Democrats lose 2024/8 elections. So what can the UK learn from the US in building the beginnings of a great energy state?
Over several
“the Biden folks are serious about climate. On this front as well they do not believe that things can go on as before. So, as Mason and others argue, it matters very much how the carrots are directed and what kind of investment is unleashed. Furthermore, though the use of tax benefits may be indirect, there is real expertise being built in the Department of Energy. Not a big green state perhaps, but in the hands of figures like Jigar Shah, director of the loan office at the Department of Energy, a little green state is taking shape.”
Britain must look to do the same. Many words have been spilled on the need to destroy or reimagine the spending department (Treasury) in the UK – known for suppressing key capital spending in the country, specifically on net zero policy. However, the optimum political strategy would be to empower the new Department of Energy Security and Net Zero (DESNZ) rather than fight a war of institutional destruction in Whitehall. The young age and political importance of DESNZ allows for a unique Civil Service and political restructuring through three preliminary steps:
1. The transfer of over a hundred of the Treasury’s youngest and best economists to DESNZ who all share a desire to do something rather than just manage balance sheets. The department needs the power of longevity and the energy of new blood to become a serious force in Whitehall.9
2. The creation of an Energy Task Force in No.10 (like the Vaccine Task Force)10 with direct access to the prime minister and clear authority in Whitehall to streamline delivery and support the department.
3. The recruitment of the best leaders and experts from the energy industry to work in the task force and the department itself – creating connections and stakeholder buy-in, while avoiding the perennial mistakes of big-state government.
A mix of government experience, industry knowledge and delivery / policy expertise is required to build a great energy state. The real focus must be the delivery of energy infrastructure projects, R&D of new technology and resource procurement.11 The politics should be left to No.10. The real fight for the nascent energy state will be against the entrenched powers of the Treasury brain, the flawed Westminster logic and unsurprisingly rattled City of London.12 Proving the energy department / Task Force can work is the simplest way to subdue the institutional forces against them. Only then can the journey of Britain’s energy state begin, but as Tooze rightly argues it must be ‘little’ before becoming big. Labour’s current plan for a part-nationalised ‘Great British Energy’ could also be workable, but must build expertise and have the political / fiscal backing of No.10. If it becomes a political football in an argument of control / power between Blairites, Brownites and Milibandites it will cease to be useful.
Going too big, too soon without the correct mechanics for efficient delivery will only lead to the forces of the status quo destroying the energy state before it begins.
The Green New Deal Counter – Ann Pettifor
‘But, is the planet not burning? Are we not going to all die in a few years?’ These are the arguments of many, and they are understandable. Impending doom pushes humans to, fairly, rely on irrationality or unworkable actions because of our complete feeling of powerlessness.
Some proponents of a ‘Green New Deal’ (GND) are of this exact ilk.13 Now, Ann Pettifor’s The Case for a Green New Deal is fascinating and worth reading simply for its creativity and ingenuity. But it is no way workable. The staggering costs of green transition must be attacked in a politically strategic way – one which could possibly enable a referendum victory on the ‘net zero’ question in the next few years if forced by a populist insurgency (Nigel Farage or otherwise). The best way to promote green policy is through energy security as the ground zero structure of a new British state. Reduced energy costs and a return to economic growth through energy export / subsidy will secure the popularity needed and feed into a wider feeling that a degree of national control (not sovereignty) must be regained in the face of a globalised market. Take back control of our power (energy)!
Pettifor’s musings on the GND are nonetheless insightful. The argument that some monetary change (whether capital flows, investment requirements, interest rate control, international structures or borrowing methods / national QE) should be introduced in order to facilitate a green revolution is potentially correct.14 The answer is never in one policy, nor is it just a question of fiscal policy. However, substantial change usually starts through the success of a singular example which catalyses progress in the entire policy area. The part of Pettifor’s argument most relevant to the security consensus is on the importance of the nation-state:
“Global institutions are weak, largely unaccountable and lack political leadership. International cooperation built on [...] the authority of the nation states is needed”15
The revival of a powerful and innovative nation-state will be the source of a green revolution. Pettifor’s promotion of the security of the nation against the insecurity of the global market system is significant. The security and revival of the nation is dependent on how secure it’s foundation is as an energy state – especially considering the unpredictabilities of future energy supply, its sources and the general deterioration of Earth’s conditions. It’s in this agreement on security that those across the energy / environmental policy spectrum can build the beginnings of a consensus.
Regardless of some conceptual alignment, the GND is overall too scattershot – aiming to help solve racial injustice, arguing for UBI and a post-growth style closed loop state all while decarbonising the whole economy in a mere few years.16 Whatever your opinions on these areas there is no realistic path nor desire (for some) to use green policy as a sledgehammer to solve these policy topics. Instead, the energy state must be targeted and stable – meaning it must be built on a consistent industrial strategy to allow business to plan / invest around (and in) British energy. Targeted spending does not mean ‘no / little money’ rather creating specific areas of substantial investment to catalyse transition to renewable energy.17 The energy state will spend billions every year but should only increase spending in one policy area at a time – building expertise, creating consensus and delivering results before moving onto another. Ground zero of net zero must be energy security and growth.
A Final Destination?
A successful energy state is key to transforming the British state and economy and, therefore, founding a new consensus. Only by ensuring energy security and transforming economic growth through export and investment can the new consensus expand into other areas. It is the crux of our security capitalism. The recent climate report should make you question why ‘no progress’ is being made in one of the few areas that could enable British economic security and growth.18
This current government’s failure confirms that the state can only move onto the next stages of green policy once it has successfully delivered the basics of energy reform. Housing insulation, heat pump promotion and transport electrification (etc) are necessary and must be promoted simultaneously. But can we really do that immediately? The answer is emphatically no. There is no British state / department infrastructure that can successfully deliver and procure on the scale needed for transition in over ten major policy areas, nor is there funds to do so all at once. The great energy state must begin small, demonstrating its ability to transform Britain’s position by making it energy self-sufficient and then building economic growth through export and subsidy. Winning these gains will produce the political capital to both win popular opinion in a possible hostile referendum (which will focus on costly / harder aspects of green transition in behaviour change) and also allow the energy state to expand in Whitehall – becoming the basis of the new security consensus.
However, while energy policy may be the foundation of a new consensus (and underpinning all aspects of growth and every policy area’s future as the food of the country) it is by no means the only part, as we will cover the next instalment of New Consensus Notes.
Thus the piece will obviously be incomplete policy wise. The significant omission will be with regards to mitigation strategy (see private-public companies like Flood.re.) Estimates range that mitigation costs, currently around 1% GDP, will balloon to 3.5% in 2050 and 7% in 2100. Other policies are mentioned in the ending subheading.
And sometimes even coal: https://www.theguardian.com/environment/2023/jun/12/uk-heatwave-prompts-order-to-fire-up-coal-plant-to-meet-aircon-demand
Helen Thompson, Disorder: Hard Times in the 21st Century, CUP, 2022, see Chapters 1, 2 & 3.
Over the last decade when inflation was low and borrowing relatively cheap the UK failed to strategically invest and is paying the price – specifically see the era between 2010-19 triggered by Cameronite austerity. Capital Spending only begun to be increased from Boris Johnson’s government onwards under the direction of Dominic Cummings but even this was minimal, see Anthony Seldon and Raymond Newell, Johnson at 10, Atlantic, 2023, Chapter 6 on Dominic Cummings & 7 on Domestic policy, specifically Green investment pp. 352-356 Science pp. 309-310 and social care pp. 335-340.
See
for the NewStatesman’s Substack or the NS’ Harry Lambert on his Substack.See Powerbook’s estimates on energy needed to become self-sufficient and an exporter. https://www.britainremade.co.uk/powerbook
Note that this figure is the total aimed implementation – many estimate around $150bn of this money has been spent (Powerbook and others). The rest will be released over the next few years and will move with the changes in green technology / trends.
The piece quoted from is worth reading in full. It analyses the idea of a new consensus / political hegemony of politics has moved towards green politics. Tooze also examines the discourse behind the gigantic US departments of the FED and National Security (Homeland, FBI etc) and how each powerbase is reacting to the power-department of Energy. https://adamtooze.substack.com/p/chartbook-221-the-ira-and-the-fed
This will also ensure the Treasury loses its frankly unfair recruitment power over the best economists joining the Civil Service. Breaking that ‘joining the best team’ cycle is comparable to Manchester City’s dominance in the Premier League – victory / power becomes a self-reinforcing cycle. The energy state must begin to break that, and become one of, if not the hegemonic department.
See Johnson at 10, Chapter 5 - COVID, Kate Bingham, The Long Shot, Oneworld, 2022, and Dominic Cummings’ 2021 Committee appearance: particularly Q1113 and Q1138-1141 https://committees.parliament.uk/oralevidence/2249/html/
Lithium, Cobalt and other resources will likely become the new ‘oil’, however new technologies will change resource demand dramatically. Recycling / resource extraction technology will also become lucrative in response to resource scarcity. It is up to any new energy department to utilise their links with the companies of the nation / world to build better procurement strategies. The PM will also need to use the task force and their weight to help the department on a foreign level securing resources needed. See Jeremy Cliffe’s piece for more: https://www.newstatesman.com/world/asia/2021/09/lithium-will-be-as-era-defining-as-oil-and-china-is-dominating-its-supply
See my piece on the options of new parties from the subheading ‘Will a new party happen’ https://thepoliticalinquiry.substack.com/p/state-of-play-15-end-of-the-party or my previous work on the structure of groupthink and elites in https://thepoliticalinquiry.substack.com/p/power-and-elections-3-undercurrent
There are many interesting areas in the GND, as well as serious academics / politicians. There are also several variations and thus it is unfair to loop everyone who argues for the GND into one group of irrationality, but some undeniably are.
Ann Pettifor, The Case for a Green New Deal, 2020, Verso, pp.124-153 for a fascinating discussion on debt / MMT and new techniques for borrowing. This will be explored in a future New Consensus Notes on Monetary policy and regulation.
Pettifor, The Case for a Green New Deal, p. 23.
Pettifor, The Case for a Green New Deal: racial injustice p. 77, UBI pp. 101-102 and closed state economics pp. 94-118.
While also pooling state risk to become the guarantee / investor of last resort. This could also include several levels of fiscal and monetary policy alignment – although this will be talked about in an NCN on monetary policy. Mariana Mazzucato argues that this really functions as the state becoming ‘investor of first resort’, see The Entrepreneurial State: Debunking public vs. Private sector myths, Penguin, 2018.
The Climate Change Committee, setup through Ed Miliband’s 2009 Green Energy Act, is probably the best example of setting up institutional structures to politically enshrine / push green policy in the UK. The report is published every few years and is objectively fair. It will be an important element of measuring the reformed energy department’s progress.