Around the world, people, governments and labour movements are finding ways to provide energy that is affordable, democratic, and sustainable, showing that solutions to the climate crisis can not only help to meet basic needs but to improve people’s lives. The Labour government’s 2024 manifesto outlined plans for an ambitious new ‘publicly-owned company’, Great British (GB) Energy. Plans were reiterated in the King’s Speech where it was stated that GB Energy would create energy projects ‘owned by and for British people’, highlighting an understanding that the British public should start to benefit from energy projects, especially new renewables – the majority of which are publicly owned but by foreign states.
GB Energy’s aims are rolling out the ‘energy transition’ and reducing energy bills, through a mixture of approaches including providing investment through local authorities, and creating new jobs, and supporting community energy projects – now explicitly referenced in the Bill following sustained advocacy from Power for People and a cross-party group of MPs and Peers. However, many of the plans are yet to be formalised with some fearing that it will become an investment mechanism for private participation in the energy transition and fail to deliver on measures that could systematically redistribute the benefits (such as profits) to the public. Alongside these fears, it has been reported that the government may seek to reduce GB Energy’s budget, diminishing the impact that the project can make, bolstering concerns that if GB Energy fails to deliver on its promises, public support for the energy transition may dwindle.
So, why is energy so important?
The problem
In 2024, researchers around the world found that the planet had surpassed the 1.5 degrees of warming that signatories to the 2015 Paris Agreement had aimed to prevent. Flooding, coastal erosion, wildfires, crop failures, and many more impacts have been felt by communities everywhere, with citizens left wondering what can and, more importantly, will be done to protect future and current generations from the worst harms of further global warming. The energy transition has long been understood as an essential component for tackling climate change. For decades, governments have been focusing on policy that leverages the private sector to invest, develop new infrastructure, and ultimately lead the way towards decarbonisation. Yet here we are, decades later; renewables are cheaper but fossil fuel usage is higher than ever before and renewable energy transitions are stagnating. All the while tariffs are becoming increasingly unaffordable whilst energy companies continue to make huge profits.
Why is this happening? At the Transnational Institute (TNI) our years of research into electricity policy has found that the common logic underpinning a lot of energy policy is flawed. The core strategy has been to try to make the market more favourable for private investment in renewables. This has largely meant underwriting private profits, with guaranteed fixed returns or public subsidies. This model pours public funds into private purses, and once the subsidies dry up, so does the investment. In the meantime, public capacity and skills have been drained. In fact, relying so heavily on the private sector has stalled the transition. As our ‘Green’ Multinationals report found, in some cases some of the largest so-called green energy companies are actively working against climate-friendly policy.
The solutions
We need to speed up the transition to renewables whilst also ensuring energy tariffs remain affordable. So, what can be done? Nine out of ten countries leading the transition to renewables have a publicly owned renewable energy company that drives the process. And moreover, prices have shown to be 20-30% lower in systems with public ownership. As we argue in our recent report, Reclaiming Energy, we need system-wide public ownership. This means a state-coordinated energy system that is a mixture of state, community, and local authority ownership, to ensure accountability and democracy. This would mean local people can decide whether to spend profits from their local energy projects for improving homes or funding a nursery; and that state profits could go into upgrading energy infrastructure and keeping bills affordable.
Public ownership is not a silver bullet; there are many cases where public companies do not act in ways to reduce climate change. Some of the fastest growing fossil fuel giants, such as Aramco in Saudi Arabia, are state-owned and play an active role in stalling international climate action. There are also cases where public systems have experienced some form of marketisation (or corporatisation), meaning that decisions are still made to benefit company or shareholder profits – as was the case in Austria during the recent energy crisis, where shareholders decided to increase tariffs significantly despite being a publicly owned system. This was fiercely contested by local groups and campaigns such as Attak Austria, yet so far few amendments have been made to the overall system.