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Something went wrong while submitting the form.</div></div></div></div></div><article class="con-section fc4-article fc4-text-component fc4-text-component--has-footnotes"><div class="_12col-grid"><div id="top" style="background-image:url("https://cdn.prod.website-files.com/62306a0b42f386df612fe5b9/6489ce84fe3c75eae9f56cd1_solar-panels.jpg")" class="res-con-header-image w-node-_11f4a786-01eb-ae15-a9b3-bb3573d6f81f-f783b12c"></div><div class="res-con-header mobile"><div class="rc-header-medium"><div class="res-medium"><div class="medium-icon-wrapper"><img src="https://cdn.prod.website-files.com/62306a0b42f386df612fe5b9/63bd3d46378af4760299e76c_Report%20light_1.svg" loading="lazy" alt="" class="medium-icon"/></div><div class="res-medium-name">Report</div></div></div><h1 class="res-con-heading">Coordinating the Green Prosperity Plan</h1><div class="subtitles res-con">The UK stands at a pivotal juncture for addressing the most pressing challenges of our time: climate stabilisation and economic democratisation.</div><div class="res-con-coverage"><div class="button-1"><div class="coverage-button-text w-richtext"><p>See commentary in <a href="https://www.newstatesman.com/spotlight/climate-energy-nature/2023/06/achieve-net-zero-labour-needs-break-market-coordination"><em>The New Statesman</em></a></p></div><div class="coverage-button-arrow"></div></div></div></div><div id="w-node-_9d980fb6-97e4-2439-c83d-98020afe5f4c-f783b12c" class="rc-sb"><div class="rc-sb-stick false"><div class="sb-el-wrapper"><div id="w-node-_9d980fb6-97e4-2439-c83d-98020afe5f50-f783b12c" class="sb-el-heading label">Date</div><div id="w-node-_9d980fb6-97e4-2439-c83d-98020afe5f52-f783b12c" class="side-bar-el-text label">15.6.2023</div></div><div class="sb-el-wrapper"><div class="sb-el-heading label">Authors</div><div id="w-node-_2488c8ae-d52a-2b11-1b95-871c60950f2a-f783b12c" class="collection-list-wrapper-3 w-dyn-list"><div fs-cmsnest-collection="authors" fs-cmsnest-element="template-reference" role="list" class="res-con-authors w-dyn-items"><div role="listitem" class="rc-sb-pill-item w-dyn-item"><a href="/author/melanie-brusseler" target="_blank" class="pill authors w-inline-block"><div>Melanie Brusseler</div></a></div></div></div></div><div class="sb-el-wrapper sb-tags"><div class="sb-el-heading label">Tags</div><div id="w-node-c1ab79b7-b8ff-534e-c677-6da49d2a9fe5-f783b12c" class="collection-list-wrapper-4 w-dyn-list"><div fs-cmsnest-collection="tags" fs-cmsnest-element="template-reference" role="list" class="res-con-tags w-dyn-items"><div role="listitem" class="rc-sb-pill-item w-dyn-item"><a href="/tags/energy" target="_blank" class="pill tags w-inline-block"><div>Energy</div></a></div><div role="listitem" class="rc-sb-pill-item w-dyn-item"><a href="/tags/fossil-fuels" target="_blank" class="pill tags w-inline-block"><div>Fossil Fuels</div></a></div><div role="listitem" class="rc-sb-pill-item w-dyn-item"><a href="/tags/green-new-deal" target="_blank" class="pill tags w-inline-block"><div>Green New Deal</div></a></div></div></div></div><div class="sb-el-wrapper collaborators w-condition-invisible"><div class="sb-el-heading label collaborators">This research is published in collaboration with the following organisations:</div><div class="sb-orgs"><div class="collection-list-wrapper-5 w-dyn-list"><div class="w-dyn-empty"><div>No items found.</div></div></div></div></div></div><div class="sb-el-wrapper stick"><div class="rc-sb-icon-flex-wrapper"><div class="icon-font brands w-embed"><a class="icon-font brands" href="http://twitter.com/share?text=Coordinating the Green Prosperity Plan @cmmonwealth&url=http://www.common-wealth.co.uk/publications/coordinating-the-green-prosperity-plan" target="_blank"></a></div><div class="icon-font w-embed"><a class="icon-font" href="mailto:?subject=&body=:%20" target="_blank" title="Email" onclick="window.open('mailto:?subject=' + encodeURIComponent(document.title) + '&body=Coordinating the Green Prosperity Plan | Common Wealth %0D%0AThe UK stands at a pivotal juncture for addressing the most pressing challenges of our time: climate stabilisation and economic democratisation. %0D%0A %0D%0A' + encodeURIComponent(document.URL)); return false;"></a></div></div><a href="#" class="rc-sb-download-btn w-inline-block w-condition-invisible"><div class="label">Download PDF</div><div class="icon-font light"></div></a></div></div><div id="w-node-_9d980fb6-97e4-2439-c83d-98020afe5f60-f783b12c" class="res-con"><div class="res-con-header"><div class="rc-header-medium"><div class="res-medium"><div class="medium-icon-wrapper"><img alt="" loading="lazy" width="25" src="https://cdn.prod.website-files.com/62306a0b42f386df612fe5b9/63bd3d46378af4760299e76c_Report%20light_1.svg" class="medium-icon"/></div><div class="res-medium-name">Report</div></div></div><h1 class="res-con-heading">Coordinating the Green Prosperity Plan</h1><div class="subtitles res-con">The UK stands at a pivotal juncture for addressing the most pressing challenges of our time: climate stabilisation and economic democratisation.</div><div class="res-con-coverage"><div class="button _3"><div class="coverage-button-text w-richtext"><p>See commentary in <a href="https://www.newstatesman.com/spotlight/climate-energy-nature/2023/06/achieve-net-zero-labour-needs-break-market-coordination"><em>The New Statesman</em></a></p></div><div class="mini-arrow w-embed"><?xml version="1.0" encoding="utf-8"?>  <svg version="1.1" id="Layer_1" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink" x="0px" y="0px" viewBox="0 0 25 25" style="enable-background:new 0 0 25 25;" xml:space="preserve"> <style type="text/css"> .st0{fill:#00C0A3;} </style> <rect x="0.5" y="12.2" transform="matrix(0.7071 -0.7071 0.7071 0.7071 -6.359 12.0521)" class="st0" width="21.7" height="3.1"/> <polygon class="st0" points="20.7,22 17.7,21.9 18.2,6.8 3.1,7.3 3,4.3 21.3,3.7 "/> </svg></div></div></div></div><div id="exec-sum" class="res-con-exec-sum"><h2 class="label exec-sum-heading w-condition-invisible">Executive Summary</h2><div class="exec-sum---rt w-richtext"><p>The UK stands at a pivotal juncture for addressing the most pressing challenges of our time: climate stabilisation and economic democratisation. Public backstopping of a principally market-coordinated transition has induced renewables investments, but decarbonising the power sector this decade will require an investment sprint along with managed phase-out of fossil fuels that is different in kind — both quantitatively and qualitatively — from the current pace and scale of (dis)investment. More broadly, as the UK Climate Change Committee wrote in its 2022 “Progress in Reducing Emissions” report: “the policy framework is not yet fully in place to drive the large programme of delivery required within this decade” to meet the UK’s formal Nationally Determined Contribution under the Paris Agreement process.<sup>[1] </sup>Meanwhile, the UK economy is unique among developed-economy peers in the dire extent to which it suffers from interrelated issues of structural underinvestment, stagnation, (regional) inequality and material insecurity.<sup>[2]</sup> This situation creates economic capacity issues for market coordination of the transition and poses political obstacles to the project of decarbonisation. </p><p>The solution to both crises is a public-led investment push to accelerate decarbonisation and build shared low carbon prosperity. In transatlantic context, progressive governments have decidedly turned towards state-led green developmentalism to address inequality and the climate crisis.<sup>[3]</sup> Above all, the US’s recently passed Inflation Reduction Act (IRA) has unequivocally ushered in a new era of state-led transition planning. </p><p>Toward these ends, Labour has proposed a Green Prosperity Plan (GPP) underpinned by a decade-long £280 billion green investment programme matched to an active industrial strategy to decarbonise the economy and scale green sectors where the UK has potential. Compared to the £50 billion of low carbon investment per year by 2030 the Climate Change Committee called for in its Sixth Carbon Budget, this spending figure is still wanting. Nonetheless, it is an essential start for a deeper decarbonisation drive, and indispensable for resolving the UK’s current energy driven cost of living crisis and longer-term crisis of economic stagnation. <br/>‍<br/>Like the US’s IRA, the GPP’s public green funding commitment and rhetorical turn towards a more activist “green” state marks a potential pivot from the primacy of market-led investment. The content of the plan — its concrete funding allocation, design, and aims — will determine whether this potential is met. Moreover, both the content of the plan and its implementation strategy will also determine whether collective certainty can be established to guide the civil service, financial markets, and critical macrofinancial institutions such as the Bank of England towards investment, delivery, economic stability and much needed growth. This report explores why the design of the GPP must prioritise creating robust institutions of public investment and democratic coordination in key sectors, such as the proposed Great British Energy (GBE), to realise the full potential of decarbonisation and economic democratisation of this green spending commitment. </p><p>Transformation of our fossil-based economy cannot but transform individual and shared life, from patterns of consumption to structures of economic decision-making and undertaking. Thus, to deliver and manage deep decarbonisation this decade, it is necessary to move beyond the current market coordination of the transition, premised on private investment, market-based governance, and private profitability. The prevailing market-coordination approach suffers from structural underinvestment and incoherent and asynchronous coordination that will impose grave socio-economic costs and physical bottlenecks as decarbonisation deepens. Malcoordination delays investment and divestment, making both activities more costly in pecuniary terms and more difficult in physical terms. Decarbonisation entails simultaneous transformation of structures of supply and structures of demand; malcoordination will produce issues such as inflation and breakdowns in physical production. </p><p>Against this backdrop, the public investment proposed by the Green Prosperity Plan is necessary for the UK’s decarbonisation. Institutionalising public coordination and green prosperity is imperative to properly deliver investment in both quantitative and qualitative terms and to manage the transition on macroeconomic and social terms. Compared to market coordination, public coordination would: more effectively deliver necessary decarbonisation investment; by cohering both the real and financial aspects of new system buildout and fossil phase-out, ensure economic stability through the transition relative to the disruption and inflationary pressures likely to emerge from market coordination; and foster economic democratisation, which is both an end in itself and a critical means for building political support for decarbonisation. Institution building is imperative to build state capacity, coordinate investment and democratically negotiate it in spatial, temporal, sectoral, enterprise and class terms, and to ensure iterative planning and policy experimentation across the coming decades. </p><p>Therefore, design of the GPP should be founded on chartering public coordination institutions to allocate funding. The strategic force of GPP funding should focus on key sectors that will require significant intervention (investment) to decarbonise and which have the power to transform individual lives and thus cohere broad coalitions of support. These four core areas are: </p><ul role="list"><li>A great homes upgrade, from a new generation of net zero public housing to retrofitting existing housing stock and heating systems; </li><li>A clean energy sprint anchored by the rapid expansion of public power through GB Energy; </li><li>Upgrading the UK’s public transport infrastructure, with a priority on underserved communities;</li><li>An active green industrial strategy to decarbonise production, scale key industries and build public stakes. </li></ul><p>Labour’s plan will also include investments and policy around agricultural systems decarbonisation and nature restoration, but this report focuses on investment in and coordination of energy system decarbonisation.</p></div></div></div></div><div class="full-report-sec"><div class="pattern-break"><div class="label full-report0heading">Full Text</div></div><div class="_12col-grid"><div id="w-node-_0df36372-33f5-db92-cb24-cfa3651fd2f3-f783b12c" class="rc-sb fullreport"><div class="rc-sb-stick"><div class="sb-el-wrapper chapter-contents"><div class="rc-sb-ft-heading label">Coordinating the Green Prosperity Plan</div><div><a href="#ch-1" class="rc-sb-chapter-nav">Market Coordination vs Public Coordination </a><a href="#ch-2" class="rc-sb-chapter-nav">Public coordination and building green prosperity </a><a href="#ch-3" class="rc-sb-chapter-nav">The Green Prosperity Plan </a><a href="#ch-4" class="rc-sb-chapter-nav">Coordinating and Democratising the Green Prosperity Plan</a><a href="#ch-5" class="rc-sb-chapter-nav w-dyn-bind-empty"></a><a href="#ch-6" class="rc-sb-chapter-nav w-dyn-bind-empty"></a><a href="#ch-7" class="rc-sb-chapter-nav w-dyn-bind-empty"></a><a href="#ch-8" class="rc-sb-chapter-nav w-dyn-bind-empty"></a><a href="#footnote-content" class="rc-sb-chapter-nav">Footnotes</a><a href="#top" class="rc-sb-ft-backtotop w-inline-block"><div>Back to the top</div></a></div></div></div></div><div id="w-node-_0df36372-33f5-db92-cb24-cfa3651fd31b-f783b12c" class="res-con"><div class="res-con-full-report"><div class="res-con-line-break"></div><div id="full-text" class="res-con-chapters"><div id="ch-1" class="ch-1"><div class="rich-text-styling full-report w-richtext"><h2>[.green]1[.green]Market Coordination vs Public Coordination</h2><p>Decarbonisation is a project to transform and expand fixed capital and infrastructure stocks through investment and divestment. Although it is clear enough that such investment and divestment must be undertaken rapidly and at a spectacular volume, delivering and managing this process is not a simple endeavour, especially as we embark upon deeper and more rapid decarbonisation this decade. Private investment and market coordination are incapable of delivering and managing this process well, even with heavy public subsidisation or backstopping. </p><p> </p><h3>Structural limits to market coordination and private investment </h3><p>Rapidly and comprehensively undertaking necessary climate investments and divestments in line with target decarbonisation timelines mean that such action must be done often against the grain of existing capital depreciation and expenditure cycles, and crucially, without primary concern for private profitability. For example, steel production — a vital but currently carbon intensive input — must move away from coke-fired blast furnaces regardless of the remaining lifetimes of the existing stock of capital equipment and of whether investing in and using green production equipment is profitable for private companies in the near term. The imperative to profit is of course constitutive of private investment, but so too is what John Maynard Keynes called “the liquidity preference”: in the face of fundamental uncertainty, private investors structurally exercise caution, choosing to hold assets which can be easily exchanged for cash, rather than invest in fixed capital or new ventures.<sup>[4]</sup> This in turn results in structural underinvestment relative to potential at the enterprise, sectoral and macro levels, even in times of relative private investment-led growth.<sup>[5]</sup> The structural obstacles that the profit imperative and the liquidity preference pose to productive investment in general are more acute when targeted investment is necessary to meet real, urgent and time-bound objectives. Further, the profit imperative in particular is a barrier to divestment and the winding down of the existing fossil capital stock. </p><p>The UK is not in a time of relative private investment-led growth; by contrast, it has suffered decades of relative stagnation, driven by underinvestment.<sup>[6]</sup> Rapidly delivering a targeted investment push at necessary speed and scale in the context of a prolonged economic downturn thus makes reliance on private investment a non-starter. </p><p>Given the volume and perpetual nature of public funding necessary to subsidise private renewable investment, direct public investment is preferable for lowering both consumer and macroeconomic costs.<sup>[7]</sup> Public ownership of generation would entail an immediate capital expenditure for a revenue-generating asset, as opposed to the ongoing contingent liabilities of “de-risking” while maintaining low consumer electricity consumption costs. While de-risking in theory simply absorbs tail risks on either side by providing investor certainty, in practice these are invariably highly asymmetrical, amounting to a de facto subsidy and thus higher average return paid for by state fiscal spending.<sup>[8] </sup>Payments by generators under the UK’s Contracts for Difference (CfD) scheme during the latest energy crisis totalled £1.1 billion, paling in comparison to the £7.2 billion cumulative payments they have received since the scheme launched in 2016 (and even the £4.4 billion since 2021). Meanwhile, this year CfDs have already returned to being a net subsidy. </p><p>Direct public investment and ownership would create more macroeconomic room for manoeuvre, as productive industry would benefit from the cheapest possible electricity and balance of payments would not suffer from outflowing rents to foreign owners. Common Wealth estimates that 86 per cent of offshore wind revenues in 2022 (including net CfD income) was attributable to foreign-owned farms (45 per cent to foreign-SOE-owned farms).<sup>[9]</sup> This means the status quo role of state subsidy is fiscally inferior to direct public investment from the perspective of how much risk and cost vs reward and control is borne by the public balance sheet. Further, from a macroeconomic perspective, this arrangement provokes the question of what value private capital provides that would otherwise justify the deadweight loss of higher cost of capital and shareholder payouts paid for by higher prices by everyday people and productive businesses. Given the absence of any private capital-led process of market discovery, the answer is none. </p><p>In terms of managing the transition, rapid and far-reaching changes to the economy — the physical and social networks that compose the productive apparatus, consumption patterns, and products of production itself — must be synchronised and managed in order to maintain relative socio-economic functioning, as opposed to the turbulence that unmanaged and unsynchronised action would bring. Economic turbulence not only threatens political support for decarbonisation — it can also physically impede it, should the productive apparatus suffer malfunctioning or breakdown. </p><p>The economic crises induced by Covid-19 and the Ukraine war are illustrative of this issue. As the economist Isabella Weber’s work has shown, economic frictions are often experienced as price increases; some economic sectors or prices are systemically significant for overall price stability and broader economic functioning, including energy and basic production inputs; economic stability therefore “requires institutions and policies that can target these systemically significant sectors.”<sup>[10]</sup> Reliance on the price mechanism to deter carbon consumption is thus anathema to a stable transition. Market coordination is inherently asynchronous, constituted by predominantly uncoordinated private decision-making and undertaking, done in the face of the profit imperative and fundamental uncertainty. As economist at the Roosevelt Institute J.W. Mason has argued, “The faster and farther-reaching the changes in production, the harder it is for a decentralised market system to maintain coherence.”<sup>[11]</sup> </p><p>This means that while private investment is difficult to induce to satisfy macro, sectoral, and even firm level targeted capital expenditure and infrastructure needs as a general principle, market coordination of deep decarbonisation will pose further obstacles to even publicly subsidised or regulated private investment. Moreover, there are fundamental issues posed by unmanaged private divestment. </p><p>A large and growing body of literature has discussed the implications for financial system stability of rapid fossil divestment from the perspective of financial asset valuations, and the resulting need for management of this divestment.<sup>[12]</sup> As or more important, however, is the need to publicly manage the decline of real fossil assets. Failure to do so implies two outcomes: first, it would exacerbate regional inequality — one of the UK’s structural economic weaknesses — in a manner reminiscent of the unmanaged decline of the coal industry. Second, it threatens major upheaval and instability in the real economy regardless of credit conditions, as the price and physical supply of energy and fossil fuels underpins physical production and price stability.<sup>[13]</sup> Further, a failure to publicly manage the decline of fossil assets, such as fossil gas electricity generation and its supporting infrastructure, or heating, would mean failure to actively curtail fossil fuel capacity in exact and simultaneous alignment with real economy and decarbonisation needs. </p><p>There are three possibilities for private fossil divestment; none are optimal. Either private actors drop assets before green capacity is online to replace it; private actors continue to expand currently profitable fossil fuel investment beyond carbon budgets; or private actors sweat their assets, profiting from price increases that can threaten price stability and physical economic functioning in other sectors. None can guarantee precise alignment of capacity maintenance and retirement with economic and transition needs.<br/>‍<br/>On the whole, the renewables system and fossil-based system are incongruous: there will not be a moment of perfect, market-delivered equilibrium between the ramp up of investments in the former and the divestment of the latter. Only the collective risk-bearing capacity and unique capacity for action of the state can undertake and manage fossil phase-out and undertake the targeted yet comprehensive investments needed to build a green economy.</p></div></div><div id="ch-2" class="ch-2"><div class="rich-text-styling full-report w-richtext"><h2><strong>[.green]2[.green]Public coordination and building green prosperity</strong></h2><p>Public coordination through institutions of public investment, asset ownership, enterprise, and decision-making would ameliorate these issues by undertaking essential activities and investments, coordinating among public institutions and private actors, and actively intervening in private markets and enterprise to deliver investment and divestment in alignment with coherent and iterative pathways.</p><h3>Public investment is more effective</h3><p>The current macro-paradigm of UK climate policy is predicated on the assumption of a private investment boom and steady private divestment of fossil assets through market coordination. Here, the state largely serves a background role to provide some regulatory pulls and penalties and to subsidise private renewable electricity investment.<sup>[14]</sup> This is an issue with respect to the several more general reasons discussed above. In addition, however, specific to the UK context are the persistent issues of stagnation and regional development. As the Resolution Foundation has shown in stark terms, the British economy is marked by systemic slowdown, with growth, investment and profitability stagnant and historically weak.<sup>[15]</sup> While worsened by austerity and the impacts of Brexit, the downturn predates these shocks in terms of declining decade-on-decade dynamism dating back to the 1970s, with temporary exceptions. Indeed, the two main engines of UK growth after the 1970s — extraction of the North Sea and financial services — have been exhausted. The economist Cederic Durand rightly refers to this issue as an “investment famine”, and the Financial Times columnist Martin Sandbu, an “investment drought.”<sup>[16]</sup> This structural underinvestment is driven by public austerity and the politics of rentierism, which is to say: there is not a wave of pent-up private capital waiting to be unleashed upon green sectors; nor is private investment an unstoppable laser beam to be redirected by the state from fossil fuels to green sectors. As Employ America has succinctly put it, “achieving the level of investment required to decarbonise and electrify our economy will likely require something more than the everyday operation of capital and commodity markets.” <sup>[17]</sup> Direct public investment — as opposed to primarily public subsidies to coax stubborn private investment — is essential. </p><p>Compared to private investment, public investment is subject to neither the profit imperative nor the liquidity preference. Therefore, public investment can be undertaken and planned in accordance with more diverse ends, at a more rapid and comprehensive scale, and in a distinctly (especially temporally) coherent manner. Fiscal spending can be constrained by politics; but so too can private investment as regulatory and fiscal spending regimes change. </p><p>Critically, robust institutions of public investment can ensure continuity and scale of investment against business and political cycles. Although public subsidisation of private investment can ameliorate some of its structural issues — and thereby coax investment — such policies ultimately leave critical investments at the project, enterprise, sectoral and macro levels to the discretion of fragmented private decision-making. Moreover, compared to its private cognates, direct investment by public actors will face structurally lower costs of debt financing and will not face the same imperative to generate maximally high equity returns. This means public investment and the resultant consumer costs of economic activity or services are cheaper. Further, institutions of public investment can serve as vital nodes of coordination with and of private investment, as well as sites of democratic deliberation. Such institutions can also facilitate experimentation and iterative planning as we embark on an inherently uncertain multi-decade transformation. </p><p>Overall, to plan and deliver decarbonisation investment, it is imperative to build public institutions which are able to act upon and in the productive and distributive apparatus, by undertaking direct investments and coordinating with other similar public and private actors, including by producing and sharing economic knowledge. For example, a National Wealth Fund mandated to support industrial decarbonisation can use its equity stake in firms in vital industries to shape transparency and facilitate inter- and cross sectoral coordination around economic data, technological implementation, capacity, and investment plans.</p><h3>Public institutions to macromanage the transition</h3><p>Robust institutions of public investment and public coordination are critical not just for delivering investment, but also for maintaining macroeconomic and macrofinancial stability through the transition. As this report has stressed, public coordination is preferable to market coordination precisely because it can deliver synchronised investments and divestments. Asynchronicity can cause issues like inflation, unemployment, and physical breakdowns in productive systems. Public institutions capable of planning investments — both their own undertakings and coordinating with other public and private actors — can prevent these issues. </p><p>More broadly, it is necessary to build general state capacity to deliver the transition, from economic knowledge production, to economic activity undertaking, to coordination across levels or offices of government. And, it is necessary to build macrofinancial arrangements between public institutions that are capable of supporting rather than stymying a high capital expenditure and reallocation environment. For example, current macrofinancial arrangements in the UK rely upon interest rate hikes in the face of inflation. This blunt tool can only affect inflation by weakening aggregate demand by curbing demand for credit and devaluing assets on private sector balance sheets. But this holds chiefly for firms and sectors where credit constraints bind, as opposed to where productive constraints persist or where disaggregated demand may need to be reduced. </p><p>Moving away from a paradigm of macro-deflation to address inflation is critical both for decarbonisation and building socio-economic resilience to climate change: private investment in renewable energy in particular is sensitive to interest rates;<sup>[18]</sup> the price and supply instability climate destabilisation will bring cannot be met with setting an untargeted macro-lid on economic activity. To both ends, the primacy of central banks’ macroeconomic planning authority — setting limits to the level of investment, employment, output, and macroeconomic activity — must more robustly give way to alternative public macro and meso-economic planning and coordination arrangements. </p><p>Such development would come through the implementation of targeted central bank credit guidance and build-out of the administrative and fiscal state to manage significant prices or sectors — through price, consumption, and investment policies — without resort to attempting to curb economic activity at the macro-level by raising interest rates. For example, consider the UK system of wholesale market marginal pricing — a regime designed around coordinating the bidding behaviour of fragmented private actors — which unavoidably sets prices way above average cost. Constraining this price pressure through strategic intervention would have eliminated the greatest source of UK inflation without constraining UK growth as recent Bank of England Rate increases have done.<sup>[19]</sup> The UK government did implement a price policy through its price guarantee. But this policy irrationally sought to simultaneously set (a still untenably high) consumer energy price cap, subsidise the profits of private suppliers, and leave market pricing intact. Moving forward, having mechanisms and robust institutions to govern structurally significant prices, such as through public renewable electricity generation, will maintain price and productive stability in tandem.</p><h3>Deploying the risk bearing capacity of the state through public and mixed ownership</h3><p>It is worth expanding on the unique capacity for collective risk-bearing and action of the state as it applies specifically to the concept of “mixed-ownership” economies and what the economist Yakov Feygin calls “public options” for capital investment. The state enjoys singular powers and capacities compared to private actors — even asset manager titans.<sup>[20]</sup> The state is by definition a socially collective form or body, which makes it singularly able to take decisive action and more broadly absorb risk. From this capacity stems three important reasons for public or mixed ownership of assets, enterprise and vital sectors to deliver and constitute a decarbonised economy.</p><p>First, because the renewables and fossil based productive systems are incongruous, there are many sector level transformations that face “chicken and egg” problems. Consider green hydrogen: although its potential use is often overhyped, it is indispensable for agricultural and industrial decarbonisation and other “unavoidable” uses. Yet, the expectation of useability through the transition is not sufficient to induce private investment towards building the productive capacity of the sector. As the <em>Financial Times</em>’s Lex column notes, spending on green hydrogen lags behind project announcements and decarbonisation targets, “Lex calculates that a net zero energy system might require 500mn tonnes of hydrogen annually, which would entail some $20tn of investment by 2050. That means we are only about 0.15 per cent of the way there.” <sup>[21]</sup> Until green hydrogen is cheap, available and transportable though infrastructure, there will not be private demand for it. Yet, unless there is sufficient demand, private actors will not invest in its production and supporting infrastructure. Moreover, it is not guaranteed that green hydrogen production in line with economy-wide decarbonisation targets will ever have a profitable and stable business model as purely private enterprise. Here, public fiscal subsidy may induce investment. But this is less effective at directing near term investment and in the longer term building a functioning clean economic productive apparatus than public ownership tools such as mixed ownership models through partial equity or full public enterprise to simply undertake the necessary activity. </p><p>Second, the state’s singular risk absorption and investment undertaking capacities mean that bringing particular sectors into a public-owned utility model or providing systemic public options are a crucial cudgel for de-risking private investment in interrelated production networks and for subsidising industry as part of a green industrial strategy. Because private investment in fixed capital is inherently unstable, public options for capital investment in capital-intensive but essential or “bottleneck” industries such as electricity or housing are critical for maintaining essential activities and stabilising investment by other actors within interconnected production networks.<sup>[22]</sup> Public electricity generation is an example of this. </p><p>Although the Contracts for Difference model in the UK has induced private investment in renewable generation at lower prices than the previous Renewables Obligation Scheme, private generators have in turn pushed their input suppliers to lower their prices. In the face of recent inflation and interest rate hikes, wind turbine manufacturers have warned they cannot invest in maintaining or expanding their productive capacity, as their profits have been eroded. In the face of input cost increases, private generators are calling for further subsidisation.<sup>[23]</sup> Public renewable generation would ameliorate this issue, as a public company freed from the burden of furnishing a maximal shareholder dividend could purchase inputs at higher prices while still maintaining lower consumer electricity costs than a profit-maximising private generation system. In this sense, public ownership de-risks private investment in green production networks without falling into the model of socialising risks and privatising profits. </p><p>In a similar manner, electricity generation is an important example of how public utilities and public options in key sectors can subsidise private industry in other sectors as part of a green industrial strategy. For example, structurally cheaper public renewable energy generation can systemically subsidise manufacturing sectors such as green hydrogen, green steel, or battery production. Likewise green hydrogen production is another such example: if its production proves difficult to make privately profitable, public options or mixed-ownership models can still support decarbonisation of other private industrial activity. </p><p>Third, and more abstractly, the transition entails spectacular reallocations of capital, labour and physical inputs. It also entails utter transformations of socio-technical systems. And this process must be undertaken in the context of locked-in climate destabilisation. In holistic and not yet fully predictable ways, various risks and economic frictions will have to be absorbed by the state (and its balance sheet) as it is the only actor capable of bearing them. On resilience building specifically, as the Berggruen Institute has described in reference to the progressive supply-side turn in transatlantic context “Resiliency is, in this case, defined as the ability of the capital stock to withstand the uncertainty generated by shocks like pandemics which will only accelerate with climate change and be able to achieve de-carbonisation goals without excess inflation or unemployment…to achieve this, policy needs to identify and prioritise key capacities within value chains and encourage redundancy and stability.”<sup>[24]</sup> We can expect resiliency of some value chains or sectors to require public ownership or other very direct forms of public risk-bearing and capacity maintenance. Building robust institutions and state capacity now will lay the foundations for resilience and stability down the line. </p></div></div><div id="ch-3" class="ch-3"><div class="rich-text-styling full-report w-richtext"><h2><strong>[.green]3[.green]The Green Prosperity Plan</strong></h2><p>The Labour party has committed to moving away from a paradigm of market-led transition coordination, premised on the primacy of private investment and market-based economic governance. It has invoked the US’s green state-led transition or developmentalist turn under the Biden Administration in its proposal for a Green Prosperity Plan (GPP). The GPP would be a decade-long green investment and active industrial strategy programme to decarbonise the economy and scale manufacturing in green sectors where the UK has potential, with investment scaling to £28 billion annually by midway through the next Parliament, through to the mid-2030s. </p><p>Shadow Chancellor Rachel Reeves has invoked the turn to “modern supply side economics” as an alternative to stagnation and inequality that a Labour government intends to pursue.<sup>[25]</sup> Delivering and democratising green prosperity should be the aim of a Labour government. Decarbonising the economy is dependent upon democratisation of economic life and decommodification of provision. Building and sharing green prosperity requires transforming individual lives and our ways of living in common with each other: organising work on transformed bases; providing the means of dignified life outside the confines of the market; and making the purpose and practice of production subject to meaningful democratic negotiation. Building and mobilising broad based support for green economic transformation requires articulating a policy programme and shared agenda centred on delivering on this vision. </p><p>To meet the twinned aims of inaugurating democratic coordination of the transition and building shared green prosperity, the strategic force of GPP funding should focus on key sectors that will require significant intervention (investment) to decarbonise and which have the power to transform individual lives and thus cohere broad coalitions of support. These four core areas are: </p><ol start="" role="list"><li>Building net zero public housing and retrofitting homes and heating systems;</li><li>A clean energy sprint anchored by GBE; </li><li>Upgrading public transport infrastructure; </li><li>An active green industrial strategy that nurtures key sector niches. </li></ol><p>The design of the GPP should be founded on chartering and robustly capitalising public institutions able to undertake and coordinate investments in and across these sectors. It is essential that the design of the GPP concentrate resources and state capacity to undertake and coordinate investment in these key sectors, rather than spreading committed funds too thin — dilution risks under-investment (by both public and private sectors) and thus under-delivery. It is imperative that these institutions undertake and coordinate investment, rather than simply offer subsidies whose use is still subject to private decision-making. An ambitious design of the GPP is the best way to deliver on the promise of Labour’s funding and decarbonisation commitment through it, and in doing so, actively transform and improve the economy and how ordinary people experience it. </p><p>The Inflation Reduction Act is a useful comparison against which to measure the GPP’s ambition — and thus ability to drive decarbonisation and deliver green prosperity. First, the forces key to designing and delivering the Inflation Reduction Act championed the bill as a tool to deliver climate, jobs and justice. This political economic strategy is widely seen as key to the bill’s passage. To deliver on this vision, it is imperative that the strategic force of the £280 billion investment programme focusses on key sectors or infrastructures fundamental to decarbonisation that will require significant intervention to change and on everyday areas which are universally experienced. </p><p>Second, as Common Wealth has discussed <a href="https://www.common-wealth.co.uk/perspectives/transitioning-systems-coordinating-the-green-transition" target="_blank">elsewhere</a>, although the large-scale public funding of private investment in green sectors through the IRA marks a turn away from market coordination, coordination problems are already emerging in the still early stages of implementation. Political constraints have thwarted the creation of new institutions and the buildout of state capacity to coordinate the allocation of IRA funding. At many critical points the actual undertaking of private investment funded by the IRA will be subject to further public investment and coordination institution building. Similarly, while the public investment proposed by the Green Prosperity Plan is necessary for the UK’s decarbonisation, it is not sufficient. A Labour government should take heed of the coordination problems already emerging in the immediate wake of the IRA’s passage and prioritise creating robust institutions of public investment and public coordination in order to realise the full decarbonisation potential of this green spending commitment. </p></div></div><div id="ch-4" class="ch-4"><div class="rich-text-styling full-report w-richtext"><h2><strong>[.green]4[.green]Coordinating and Democratising the Green Prosperity Plan</strong></h2><p>A democratically coordinated transition, premised on institutions of public investment and coordination — public asset ownership, enterprise, financing institutions, and pluralistic decision-making apparatuses — would decarbonise economic life by simultaneously democratising and decommodifying it. Institutions capable of undertaking green investments freed from the profit imperative and liquidity preference can restructure provision towards decommodification, universality and the security of a social guarantee. By instantiating public coordination to guide and directly do what the transition demands, rather than just nudging the market in the hope it acts, we can build generative green enterprise and new patterns of both economic consumption and decision-making that support social wealth and democratic political life. </p><p>The power, transport, housing, agricultural and industrial sectors are essential for decarbonisation but also for economic democratisation towards shared green prosperity. They are where a large proportion of people work, and they intimately pattern their day to day lives. The GPP should inaugurate public coordination institutions for each sector as well as establish an institution capable of reciprocally coordinating among them. </p><h3>Great British Energy to deliver energy democracy and a rapid investment sprint in the power sector</h3><p>Labour has already committed to creating a public coordinating institution to deliver on its committed target of decarbonising the power sector by 2030: Great British Energy (GBE). GBE would be a new publicly owned energy company mandated to become the UK’s largest renewable power generator, investing in and owning at scale a broad range of green assets, both frontier and proven technologies. It would also aim to anchor the transition to a 100 per cent low carbon grid by 2030. If ambitiously designed and implemented, GBE would accelerate the decarbonisation of the UK electricity sector and more assuredly deliver it through its investment coordination power. Coordination could help fast-track the planning process: planning alone usually takes 2.5 years on average for offshore wind, according to the Government’s Net Zero Review, and meanwhile the combined capacity of onshore wind projects already refused planning permission amounts to 4.8GW, equivalent to one third of the capacity the country’s currently operational capacity.<sup>[26]</sup> With the right design and accompanying wholesale market reform, it can also help build green energy democracy: where electricity provision is socially guaranteed; where electricity costs truly reflect the zero-marginal costs of renewable generation — which only public ownership can enable — and where the common wealth of the wind, tide and sun, which could not be harnessed without public investment, is democratically stewarded for collective benefit and through collective decision-making. </p><p>As <a href="https://www.common-wealth.co.uk/publications/explainer-how-britains-energy-system-works">Common Wealth has shown</a>, every aspect of the UK’s energy system is privatised, which has led to structurally higher <a href="https://www.common-wealth.co.uk/publications/wholesale-transformation-evaluating-electricity-market-reform" target="_blank">prices</a> and a deficit of public planning power over its management and development. Subsidies for renewables are untargeted: private investment is backstopped; but not planned against the targeted needs of a grid in transition. Already, malcoordination between the buildouts of renewable generation capacity and nationwide transmission capacity has led to £2 billion in constraint costs paid in 2022 by the National Grid ESO to participating generators, funded through higher bills. Investment in renewables at the pace and scale required to hit the UK’s clean energy targets will require a decade-long sprint followed by a longer marathon to increase electricity capacity to meet the electrification that decarbonisation of other sectors will require. As Common Wealth will discuss further in a forthcoming report, while there is 6.7GW of offshore wind capacity in the pipeline, the construction of the vast majority of the UK’s requisite renewable infrastructure for 2030 and 2050 targets is not yet underway. Meaning, the task of undertaking such rapid, spectacularly scaled, but also planned investment surge in the power sector is different in kind — both quantitatively and qualitatively — from current pace of publicly-backstopped private investment. The Climate Change Committee estimates that the cumulative investment in low carbon generation required to maintain a net zero system by 2050 - based on the Government’s Energy Security Strategy — is over £200 billion in renewables and nearly £100 billion in nuclear and dispatchable low carbon generation.<sup>[27]</sup> If investor owned, renewables may provide clean power but they will also provide a steady stream of dividend income from households to shareholders for decades to come. </p><p>If ambitiously designed and capitalised, GBE would undertake this investment sprint and coordinate the broader decarbonisation of the UK economy — much of which is dependent upon the planned and rapid rollout of renewable power — and support UK green industrial strategy. As <a href="https://www.common-wealth.co.uk/publications/wholesale-transformation-evaluating-electricity-market-reform#ch-6" target="_blank">Common Wealth has shown</a>, a public electricity enterprise would offer the cheapest possible and abundant clean electricity to industry and stabilise and expand investment in related production networks, such as wind turbine manufacturing. Not only would the public energy generator lower consumer costs, it would also ensure that the wealth created by common resources is shared in common.</p><h3>A National Green Housing Authority to coordinate housing decarbonisation and decommodify housing provision</h3><p>Housing in the UK is the site of multiple crises: what should be a socially guaranteed human right — a right to a home — housing in the UK suffers from a mounting affordability crisis driven by rentierism and financialisation, which in turn has led to the assetisation of housing, unequal and incoherent distribution of existing housing stock, and insufficient investment in public housing. Meanwhile, decarbonising and retrofitting the existing housing stock is essential not only to meet climate targets but also to immediately ameliorate the energy cost crisis that is currently set to continue well into this decade. The GPP should aim to decarbonise the housing stock and decommodify housing provision through the chartering of a National Green Housing Authority (NGHA). Given housing is a wholly devolved function, each nation of the UK should establish an NGHA. </p><p>Each NGHA should be tasked with coordinating housing decarbonisation and the provision of housing as a social guarantee. Toward the first goal, the NGHA should be capitalised through the GPP to lead a public investment push in housing retrofits, including coordinating its supply chain alongside other public actors. There have been various schemes to incentivise investment in housing decarbonisation and retrofitting in the UK. Each have suffered from a lack of coordination and reliance on subsidising private investment rather than public undertaking. The former risks physical bottlenecks to real economic action; the latter risks dangling incentives that are not maximally used nor which allow for real consumer cost reductions. To deliver necessary investment in housing decarbonisation, the NGHA would directly invest and coordinate with other institutions such as the UK Infrastructure Bank and local councils and combined authorities to plan and subsidise the overall investment programme. It would coordinate a public delivery of the retrofit push by training, coordinating and mobilising a unionised labour-force and planning a supply chain of inputs, such as by coordinating with the National Wealth Fund on heat pump manufacturing or negotiating prices for key materials. Such coordination would work to prevent inflation or labour shortages as multiple sectors undergo rapid shifts and increase in investment or construction activity. A rapid and comprehensive public-led retrofit push would drastically lower consumer energy bills, which is both critical to ending the current cost of living crisis and cohering a broad-based coalition behind ambitious public-led decarbonisation efforts. <br/></p><p>As a recent study “Pathways for meeting England’s housing needs without transgressing national climate and biodiversity goals” stressed, while nearly eight million people in the UK currently experience some form of unmet housing needs, the UK has structurally underutilised housing stock and underinvestment in public housing.<sup>[28]</sup> Building more private housing — both for rental and private owner-dweller market — will not address this crisis of housing affordability and will brush up against climate and biospheric limits. Instead, the NGHA should be mandated to support a UK wide programme of socially guaranteed green housing provision by: investing in new green social housing, coordinated along with the economic programme of retrofitting existing housing stock; taking empty housing or housing which owners refuse to undertake decarbonisation investment into public ownership to be repurposed as social housing; funding and coordinating the proliferation of public land trusts to structurally lower land rents, recapture land value for further green reinvestment, mitigate the macrofinancial instability wrought by the land and housing value cycle and democratically steward land for social and ecological needs; and coordinating with macrofinancial institutions such as the Bank of England to guide the development of credit policies that definancialise housing and steer credit towards subsidising this green investment push. </p><p>The National Green Housing Authority would facilitate democratic planning and provision of green housing. As a national actor, it would coordinate with other major public institutions from the Bank of England to the National Wealth Fund while maintaining the vitality of democratic local planning by coordinating with local and regional authorities. And, it would manage the input reallocations, labour deployment and supply chain construction needed to simultaneously deliver a decarbonisation of existing housing stock and development of green social housing. By aiming to decommodify housing, the National Green Housing Authority can deliver green prosperity.</p><p> </p><h3>A National Transportation Authority to coordinate public transit, sectoral transformation of UK auto manufacturing, and just transition for Labour</h3><p>Ground transportation is not only a vital pillar of a necessary UK decarbonisation programme, it also is central to the UK’s manufacturing economy, and deeply affects the everyday life of most people. Mobility is a means of freedom and the critical infrastructure of daily life from commuting to work, to seeing loved ones, living in community, and performing essential household tasks. Decarbonising ground transport in line with biospheric limits and towards the ends of shared prosperity necessitates building out a robust network of multi-modal public transportation. Such a programme would in turn necessitate a nationally coordinated public transportation push and a managed sectoral transformation of the UK auto manufacturing sector. Such a coordinated programme would plan the development of a comprehensive green and multimodal transit system in the UK as well as the concurrent industrial strategy to develop domestic manufacturing capacity in the electric bus, car, rail and micro-mobility sectors. The Green Prosperity Plan should charter a National Green Transit Authority to coordinate this buildout with other public bodies, such as councils, regional transit authorities and public infrastructure enterprises such as Great British Railways. The NGTA should also be mandated to coordinate this industrial strategy with the National Wealth Fund and Great British Energy. One mechanism of coordinating with the National Wealth Fund, could be the creation of a Just Transition Fund to be jointly governed in a partnership of both public institutions and unions in the sector. Such a fund would use its stake and say to ensure the retention of UK automotive employment while also democratising its returns and green development work to workers. </p><p>The decommodification of transit — from free local buses and local light-rail to universally affordable long-distance train travel — would not only reduce the burdens of private car dependence but also increase wellbeing, ease cost of living concerns and enhance the positive economic spillovers associated with improved mobility. It would also facilitate democratic supply chain development in global context. </p><h3>A Green National Wealth Fund to decarbonise industry and democratise investment </h3><p>With its proposed National Wealth Fund (NWF), Labour has also already committed to a coordinating institution for industrial decarbonisation and building green enterprise as part of a green industrial strategy. Designing the institution to most effectively deliver on decarbonisation investment goals goes hand in hand with designing it to democratise investment: by replacing financial market discipline over capital investment with pluralistic concerns such as regional development, coordinating decarbonisation, commoning social surplus and creating generative and resilient green enterprise. </p><p>Under Labour’s plan, the proposed NWF would be capitalised with an initial £8 billion, taking public stakes in energy and climate investments including eight new battery factories, six clean steel plants and nine renewable-ready ports. Although this is a welcome start, this proposed initial capitalisation is insufficient for building a decisive force for scaling the industries of the future and driving decarbonisation — especially compared to the recent suite of US industrial strategy bills such as the IRA and CHIPs. Yet, this commitment to build the institution is a recognition that a critical swathe of decarbonisation investments cannot be undertaken by private capital at all, let alone at the pace and in the targeted sequencing necessary, without not only public funds but, in the equity instrument, the risk-bearing capacity of the state itself. It is imperative that we, through the state, have not just a stake, but a <em>say </em>in investment: control and governance rights are indispensable. </p><p>If ambitiously designed and implemented, with £8 billion, a downpayment on a much more substantive capitalisation over time, the National Wealth Fund could democratically coordinate necessary decarbonisation investments from the transformation of steel production to the rapid expansion of electricity grid infrastructure. As an institution, it would be both an actor of democratic coordination and a site of democratic negotiation over which industries to prioritise and what plans or pathways to pursue. Maintaining equity in critical firms would also work towards democratising corporate governance, re-politicising enterprise itself. The fund could grow public wealth by bringing to life new green enterprise and democratising it through regional development planning. Returns on its investment would pass not to private shareholders but to the public through reinvestment and broader democratisation of green prosperity through the collectivisation of the social surplus.   </p><p>This vision of the National Wealth Fund depends upon its design as an active investor and coordinator of capital and labour. The NWF should strategically invest in industrial decarbonisation and scaling systemic green sectors such as green steel, battery production, heat pumps, green hydrogen, green concrete, <a href="https://www.common-wealth.co.uk/publications/owning-the-gigafactory" target="_blank">gigafactories</a>, manufacture of transportation infrastructure, and frontier clean technologies. It should also invest in sectors that will garner returns that can be recycled for further decarbonisation investments, such as in public computing power and pharmaceuticals. Moreover, the NWF should exercise its stake and say in coordinating public and private investment with democratic and decarbonisation aims: for example, steering technological progress while ensuring compliance with the material limits of a power grid in transition in coordination with Great British Energy. By acting within and upon the productive apparatus, the NWF can serve as a critical coordination institution both across sectors and public and private actors. And, through its exercise of the risk bearing capacity of the state, the NWF can support economic resilience through the transition and in the wake of locked-in climate destabilisation. </p><h3>A Green Prosperity Economic Development Council: coordination among institutions</h3><p>Although it is critical that the Green Prosperity Plan charter coordinating institutions that are both responsible for and deeply embedded in the green transformation of each of these major sectors, a national level institution, such as a Green Economic Development Council would serve as the cornerstone of coordination of the Green Prosperity Plan. Such a GEDC would set and reciprocally assess national and sectoral decarbonisation pathways, coordinate among public institutions, the national public service bureaucracy, and interests such as labour unions. It would also be mandated to manage the implementation of the Green Prosperity Plan from a macroeconomic and macrofinancial stability perspective. This Council would both constitute and further assess and implement the buildout of the administrative and fiscal state to manage significant prices or sectors — through price, consumption, and investment policies. There are historical precedents for such an institution, such as the post-War National Economic Development Council. In current context, several peer countries have created similar institutions from the German Climate and Economy Ministry to the Biden Administration’s Invest in America Cabinet. </p><p> </p><h3>Worker-led Coordination of the Green Prosperity Plan</h3><p>The world will not be rebuilt on a green, transformed basis without labour. The well-being and power of labour is thus the hope of stabilising our climate and shared planetary life. The Labour Party has committed to using Fair Pay Agreements to transform “our economy so that it works for working people and the people who create our nation’s wealth are able to get their fair share of it.”<sup>[29]</sup> Fair Pay Agreements convenes tripartite bargaining between workers, employers and the government to establish minimum terms, conditions, and pay. This would not only set a “floor” in each sector; sectoral bargaining with broader support for the self-organisation of labour through trade unions, also constitutes a vital institution of economic coordination for the transition. In a macro-sense, sectoral and broader trade union bargaining allows for worker-led coordination by negotiation over consumption, and thus allocations of inputs and demand across sectors, allocation and training of labour, and potentially the democratisation of economic decision making and social surplus. </p><p>As <a href="https://www.common-wealth.co.uk/publications/stagnant-and-unequal-how-the-uk-is-an-outlier-in-corporate-governance-and-why-that-matters">Common Wealth has shown</a>, the current UK corporate governance regime features profit-maximising shareholder primacy and low participation of labour in decision-making. This regime is both product and productive of the UK’s prevailing political economy of stagnation and inequality. Democratic transformation of the corporation — giving a real stake and a say to the workers and varied stakeholders that make up the company— can increase investment and wages, support innovation and productivity increases in production, seed new green and generative forms of enterprise, and ensure production is compatible with rapid and just decarbonisation. As Common Wealth has argued, such a transformation does not only imply reintroducing sectoral bargaining and union representation, but also exceeding it: by reorienting fiduciary duties away from maximising shareholder value and toward serving the interests of multiple stakeholder groups; by including workers in the governance of their workplace through the exercise of employee representation and power on boards and in company membership; through new institutions to guarantee employees share fairly in the profits they create, such as worker and sectoral ownership funds through the National Wealth Fund; and through innovative tools to decarbonise corporate activity, such as green veto powers for external stakeholders and green golden shares for the public, democratic enterprise can both constitute and build a more dynamic and inclusive green future for the UK economy. </p></div></div><div id="ch-5" class="ch-5"><div class="rich-text-styling full-report w-dyn-bind-empty w-richtext"></div></div><div id="ch-6" class="ch-6"><div class="rich-text-styling full-report w-dyn-bind-empty w-richtext"></div></div><div id="ch-7" class="ch-7"><div class="rich-text-styling full-report w-dyn-bind-empty w-richtext"></div></div><div id="ch-8" class="ch-8"><div class="rich-text-styling full-report w-dyn-bind-empty w-richtext"></div></div></div><div id="footnote-content" class="fn fc4-margin-top-xl"><div class="label footnoes-heading">Footnotes</div><div class="rich-text-styling footnotes w-richtext"><p>[1] UK Climate Change Committee, “2022 Progress Report to Parliament”, 2022. Available <a href="https://www.theccc.org.uk/publication/2022-progress-report-to-parliament/">here</a>. </p><p>[2] Resolution Foundation, “Stagnation Nation”, 2022. Available <a href="https://www.resolutionfoundation.org/events/stagnation-nation/">here</a>. </p><p>[3] UK Climate Change Committee “The Sixth Carbon Budget”, 2020. Available <a href="https://www.theccc.org.uk/publication/sixth-carbon-budget/">here</a>.</p><p>[4] Max Krahé, “The Whole Field”, <em>Phenomenal World, </em>04/30/2022. Available <a href="https://www.phenomenalworld.org/analysis/climate-planning/">here</a>. </p><p>[5] Ibid.</p><p>[6] Resolution Foundation, <em>Stagnation Nation.</em></p><p>[7] Although many subsidies for renewables, including the UK’s Contracts for Difference are time-limited in the first instance, in practice we can assume that as Power Purchase Agreement contracts are renegotiated, renewal will be dependent upon the continuation of subsidies fiscal subsidies. Therefore, private renewable generation can be said to require public fiscal subsidisation across the life of the physical asset.</p><p>[8] In a forthcoming report, Common Wealth presents this original analysis.</p><p>[9] Mathew Lawrence, “Power to the People: The Case for a Publicly Owned Generation Company”, Common Wealth, 2022. Available <a href="https://www.common-wealth.co.uk/publications/power-to-the-people-the-case-for-a-publicly-owned-generation-company">here</a>. </p><p>[10] Isabella Weber, Jesus Lara Jauregui and Lucas Teixeira, “Inflation in Times of Overlapping Emergencies: Systematically Significant Prices from an Input-output Perspective”, University of Massachusetts-Amherst Economics Department Working Paper Series, 2022.</p><p>[11] J.W. Mason, “Yes, Socialists Should Support Industrial Policy and a Green New Deal”, <em>Jacobin, </em>04/06/2023. Available <a href="https://jacobin.com/2023/04/svb-dylan-riley-green-new-deal-capitalism-socialism">here</a>. </p><p>[12] See Hughes Chenet, Josh Ryan-Collins and Frank van Lerven “Climate-related financial policy in a world of radical uncertainty: towards a precuationary approach”, UCL Institute for Innovation and Public Purpose, 2019. Available <a href="https://www.ucl.ac.uk/bartlett/public-purpose/publications/2019/dec/climate-related-financial-policy-world-radical-uncertainty">here</a>. </p><p>[13] Isabella Weber, Jesus Lara Jauregui and Lucas Teixeira, “Inflation in Times of Overlapping Emergencies: Systematically Significant Prices from an Input-output Perspective” University of Massachusetts-Amherst Economics Department Working Paper Series.</p><p>[14] Daniela Gabor, ”The (European) Derisking State,” <em>SocArXiv Papers</em>, 05/15/2023.</p><p>[15] Resolution Foundation, <em>Stagnation Nation</em>.</p><p>[16] See Tristan Auvray, Cédric Durand, Joel Rabinovich and Cecilia Rikap, “Financialization's conservation and transformation: from Mark I to Mark II”, CEPN Working Papers, 2020. See also Martin Sandbu, “The investment drought of the past two decades is catching up with us”, <em>Financial Times</em>, 07/20/2022. Available <a href="https://www.ft.com/content/3a8731bc-aad3-42ca-b99e-b3a553974ccf">here</a>. </p><p>[17] Alex Williams, “Towards Macroprudential Fiscal Policy”, Employ America, 2023. Available <a href="https://www.employamerica.org/researchreports/towards-macroprudential-fiscal-policy/">here</a>. </p><p>[18] Asker Voldsgaard, “Can we avoid green collateral damage from rising interest rates?”, <em>UCL IIPP Blog, </em>06/20/2022. Available <a href="https://medium.com/iipp-blog/can-we-avoid-green-collateral-damage-from-rising-interest-rates-1259ea94c9ea">here</a>. </p><p>[19] Donal Brown, Chris Hayes, Mathew Lawrence and Adrienne Buller, “A Wholesale Transformation: Evaluating Proposals for Electricity Market Reform”, Common Wealth, 2023. Available <a href="https://www.common-wealth.co.uk/publications/wholesale-transformation-evaluating-electricity-market-reform">here</a>. </p><p>[20] Benjamin Braun, Adrienne Buller, “Titans: Tracing the rise and the politics of asset manager capitalism”, <em>Phenomenal World, </em>11/6/2021. Available <a href="https://www.phenomenalworld.org/analysis/blackrock-asset-manager-capitalism/">here</a>. </p><p>[21] Camilla Palladino, “Lex in depth: the staggering cost of a green hydrogen economy”, <em>Financial Times, </em>05/28/2023. Available <a href="https://www.ft.com/content/6e22930b-a007-4729-951f-78d6685a7514">here</a>. </p><p>[22] Yakov Feygin, “Public Options as Industrial Policy”, <em>Building a Ruin, </em>06/22/2022. Available <a href="https://building-a-ruin.ghost.io/public-options-as-industrial-policy/">here</a>.</p><p>[23] Will Mathis, “Renewable Power’s Big Mistake Was a Promise to Always Get Cheaper”, <em>Bloomberg, </em>11/07/2022. Available <a href="https://www.bloomberg.com/news/articles/2022-11-07/wind-giant-rues-promise-that-renewable-power-could-be-free">here</a>. </p><p>[24] “Coordinating the Supply Side: Creating a Systemic Industrial Policy for the 21st Century”, Berggruen Institute, 2023. Available <a href="https://www.berggruen.org/ideas/articles/coordinating-the-supply-side-creating-a-systemic-industrial-policy-for-the-21st-century/">here</a>.</p><p>[25] Rachel Reeves, “A New Business Model for Britain”, Labour Together. Available <a href="https://labourtogether.uk/report/new-business-model-britain">here</a>. </p><p>[26] “Review of Net Zero”, Department for Energy Security and Net Zero and Department for Business, Energy & Industrial Strategy, 09/26/2022. Available <a href="https://www.gov.uk/government/publications/review-of-net-zero">here</a>.</p><p>[27] “Net Zero Electricity Market Design (Expert Group)”, UK Climate Change Committee, 2022. Available <a href="https://www.theccc.org.uk/publication/net-zero-electricity-market-design-expert-group/">here</a>. </p><p>[28] Sophus zu Ermgassen, Michael P. Drewniok, Joseph W. Bull, Christine M. Corlet Walker, Mattia Mancini, Josh Ryan-Collins and André Cabrera Serrenho, “A home for all within planetary boundaries: Pathways for meeting England's housing needs without transgressing national climate and biodiversity goals”, <em>Ecological Economics, </em>vol. 201, 2022.</p><p>[29] “Labour sets out plans for Fair Pay Agreements to deliver New Deal for Working People”, Labour, 09/24/2021. Available <a href="https://labour.org.uk/press/labour-sets-out-plans-for-fair-pay-agreements-to-deliver-new-deal-for-working-people/">here</a>.</p><div class="w-embed w-script"><script> // Function to replace footnotes notation with links function generateFootnotes() { var execSumContent = document.getElementById('exec-sum'); var fullTextContent = document.getElementById('full-text'); var footnoteContent = document.getElementById('footnote-content'); // Regular expression to match [n] notation var regex = /\[(\d+)\]/g; // Helper function to replace footnote indicators with links in the given content function replaceFootnoteIndicators(content, prefix) { if (content) { content.innerHTML = content.innerHTML.replace(regex, function(match, number) { var footnoteId = 'footnote-' + number; var contentId = prefix + '-footnote-' + number; var footnoteLink = '<a id="' + contentId + '" href="#' + footnoteId + '" class="footnote">' + match + '</a>'; return footnoteLink; }); } } // Replace footnote indicators in exec-sum and full-text replaceFootnoteIndicators(execSumContent, 'exec-sum'); replaceFootnoteIndicators(fullTextContent, 'full-text'); // Find all footnotes in the footnote content and replace with links back to the respective content if (footnoteContent) { footnoteContent.innerHTML = footnoteContent.innerHTML.replace(regex, function(match, number) { var execSumId = 'exec-sum-footnote-' + number; var fullTextId = 'full-text-footnote-' + number; var footnoteId = 'footnote-' + number; // Check if the footnote is in exec-sum or full-text var execSumLinkExists = document.getElementById(execSumId) !== null; var contentLink = execSumLinkExists ? execSumId : fullTextId; var contentLinkAnchor = '<a href="#' + contentLink + '" class="footnote">' + match + '</a>'; return '<span id="' + footnoteId + '">' + contentLinkAnchor + '</span>'; }); // Move the footnotes to be visible at the end of the full-text content footnoteContent.style.display = 'block'; if (fullTextContent) { fullTextContent.appendChild(footnoteContent); } } // Add an event listener to adjust scroll position when a footnote link is clicked document.querySelectorAll('.footnote').forEach(function(link) { link.addEventListener('click', function(event) { event.preventDefault(); var targetId = this.getAttribute('href').substring(1); var targetElement = document.getElementById(targetId); if (targetElement) { // Get the current scroll position var currentScrollPosition = window.pageYOffset || document.documentElement.scrollTop; // Calculate the target scroll position var targetScrollPosition = targetElement.getBoundingClientRect().top + window.pageYOffset; // Scroll to the target element with adjusted position window.scrollTo({ top: targetScrollPosition, behavior: 'smooth' }); // Stop event propagation event.stopPropagation(); } }, { once: true }); }); } // Ensure the function runs on window load window.onload = generateFootnotes; </script></div><p> </p></div></div></div></div></div></div></article><div class="con-section"><div class="_12col-grid"><div id="w-node-d1d43f1f-a253-4eb1-a3d5-4932ec1e6aa1-f783b12c" class="res-con"><div class="staycon-text"><div class="subscribe-heading"><img src="https://cdn.prod.website-files.com/6230685a281e800745998189/63037e3c43a9126658152b3f_mail.svg" loading="lazy" alt="" class="icon mail"/><h1 class="email-heading">Get the latest updates, publications and more straight to your inbox</h1><div class="contact-us_method"><div class="label">Follow us on<br/>social media</div><div class="sm-icons"><a href="https://twitter.com/cmmonwealth" class="icon-font brands"></a><a href="https://www.instagram.com/CmmonWealth/" class="icon-font brands"></a></div></div></div><div class="subscribe-form"><div class="form-block w-form"><form id="email-form" name="email-form" data-name="Email Form" method="get" class="email-sign-up" data-wf-page-id="65d4cba054f0cd77f783b12c" data-wf-element-id="3daf53f9-c4a5-40dc-3230-9e86b4316ea6"><input class="text-field label w-input" maxlength="256" name="Name" data-name="Name" placeholder="Name" type="text" id="Name-3"/><input class="text-field label w-input" maxlength="256" name="Email" data-name="Email*" placeholder="Email Address*" type="email" id="Email-4" required=""/><input type="submit" data-wait="Please wait..." class="button w-button" value="Subscribe"/><div class="small-text max-50ch sign-up-disclaimer">Fields marked with an asterisk are required. 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