Pioneer Research Paper: How Can the UK Feasibly Reach Its Renewable Energy Targets Given Current Fiscal Constraints and Continued Investment into Fossil Fuels?

Under the new Labour leadership, the U.K. has set ambitious targets for renewable energy transition, aiming for 100% clean electricity by 2050. The government has pledged to establish a new publicly owned GB Energy company for electricity generation, raise windfall taxes on large oil and gas companies, and create a National Wealth Fund dedicated to government investment in energy transition. This paper demonstrates the economic benefits of energy transition, using regression models to analyze the role of a country’s renewable energy adoption in reducing household electricity costs and minimizing volatility in energy prices, finding a moderate correlation between these variables across the European Union markets. The larger goal of this paper is to explore how the U.K. government can reach renewable energy targets, given the country’s current budgetary constraints, while maintaining long-term economic stability. To achieve this, the paper simulates the impact of different renewable energy strategies on the U.K.’s budget deficit, before offering recommendations on the government’s energy transition approach. The paper concludes that increased government spending from pledged renewable energy initiatives could lead to an unsustainable budget deficit that is detrimental to the U.K.’s long-term economic health. Therefore, the government should consider greater reliance on private sector investment to drive energy transition efforts. The U.K.’s ability to navigate fiscal constraints while stimulating renewable energy adoption serves as a model for how increased renewable investment can benefit an economy.