Ministers are considering abandoning one of their key environmental commitments to cut energy costs, sources have told the Guardian.
Government insiders say Keir Starmer is prepared to miss its own target of eliminating almost all fossil fuels from the UK's electricity supply by 2030 if it turns out to be much more expensive than building a gas power station.
The problem will reach its climax within a few weeks as Ed MilibandThe energy minister is deciding how much renewable energy to put into operation over the next few years. Allies say Miliband is willing to buy fewer than experts say is needed to meet the 2030 target if paying for them would push energy bills well above their current levels.
There is growing concern in Downing Street that the cost of living is fueling the rise of the Reform UK party, which is leading in national polls and predicted that he would take The Welsh Senedd seat of Caerphilly in this week's by-election.
One government insider said: “There is a choice as to what price you are willing to pay for the next [renewables] auction round, which is key to achieving 2030. If there is a choice between meeting a goal and overpaying or not achieving it and reducing costs, we will skip it.”
Officials pointed to comments Miliband made last week when he spoke at an energy industry conference: “We will not buy at any price. And if specific technologies are not competitive, we will look elsewhere. We will take long-term decisions to provide the right amount of capacity at the right price for the country.”
In his report last year, Starmer pledged to achieve his clean energy target. “plan for change”. The Prime Minister said at the time that the plan would “make the UK a clean energy superpower and accelerate it to net zero”.
Experts say achieving the target will require Miliband to bring on stream a record 8 gigawatts of new power generation in the current auction round. The government sets subsidy levels by asking renewable energy companies to apply and then commission those projects that promise the cheapest clean energy.
The Energy Secretary is in talks with Chancellor Rachel Reeves over how much to spend on commissioning.
But energy industry insiders say high interest rates and the huge amount of electricity that needs to come on line will likely push prices beyond the cost of building an equivalent amount of gas power.
Dieter Helm, professor of economic policy at Oxford University, said Miliband was “misguided” if he thought he could lower energy bills by pushing for clean energy by 2030.
State-owned energy system operator NESO, which manages the grid, recently warned: “In a short and shrinking time frame, speed must be the primary goal. However, this cannot come at the expense of public consent or excessive costs, as this would mean that the clean energy goal is doomed to failure.”
Report published on Thursday The Blair Institute argues that the government should abandon the 2030 target altogether, while sticking to a long-term commitment to achieving net-zero emissions.
Tone Langengen, author of the report, said: “Launched at the height of the gas crisis and in an environment of low interest, Clean Energy 2030 was right for its time, but circumstances have changed.”
Institute was criticized over its founder's links to the fossil fuel industry, but its reports are taken seriously in Downing Street, where several of its former employees work.
Some officials in Downing Street and the Treasury want the Prime Minister to publicly abandon the 2030 target, signaling to both voters and the energy industry that he is unwilling to allow bills to rise, having previously promised to cut them by £300.
Starmer has resisted this and is instead seen as willing to simply miss the target rather than outright disavow it. One government aide said: “The prime minister has made this the centerpiece of one of his missions. He's not going to give it up now.”
Another insider said: “It would be foolish to publicly change the target – even if we acknowledge the higher risk, it won't be achieved.”
Green experts also warn that abandoning this goal – quietly or publicly – will reduce business confidence.
Jess Ralston, energy analyst Energy & Climate Intelligence Unit said: “Renewables provided about half of our electricity last year, and we have the world's second-largest offshore wind market. Abrupt policy changes could threaten these investments and these jobs, as we have seen in the US.”
Miliband's allies insist that even if he doesn't bring all 8GW of electricity online in January, there will be other ways to ensure the grid is almost completely carbon-free by 2030. They include building more batteries and encouraging people to use less electricity during peak hours to reduce the amount of new capacity that needs to be built.
However, industry insiders say the 2030 target will be virtually unattainable without additional renewables, which they say are due to come online in January. One said: “There are other ways to add up the numbers, but unless you get close to 8GW of new capacity this round, you're unlikely to hit the 2030 target.”
A Government spokesman said: “The Government is fully committed to delivering clean energy by 2030 because this is how we create a system that can lower bills for consumers.”
