Source · Select Committees · Scottish Affairs Committee
Recommendation 6
6
Ofgem is considering net zero targets in their planning.
Recommendation
Ofgem is considering net zero targets in their planning. However, we are convinced by significant evidence to suggest that more emphasis should be put on net zero and this should be made explicit and formalised within Ofgem’s remit. We recommend that the UK Government amend Ofgem’s statutory duties to consider net zero targets in all its decision making, alongside the duty to protect the interests of existing and future consumers. (Paragraph 24) Renewable energy in Scotland 23 Supply chain and funding for renewable energy
Government Response
Acknowledged
HM Government
Acknowledged
Ofgem’s statutory duty to protect consumers’ interests includes their interests in the reduction of emissions of targeted greenhouse gases, which means the updated Climate Change Act target of 100%. Government and Ofgem are aligned on the interpretation of the primary objective in that Ofgem should support and promote the delivery of net-zero initiatives considering the cost to consumers. As we transition to net-zero, with new services and technologies, Ofgem will have an important role to play, and its regulatory remit will likely expand. However, the Government has no plans to amend Ofgem’s statutory duties to include a separate net-zero duty. To provide strategic guidance to Ofgem on its net-zero responsibilities, the Government committed in the Energy White Paper to consult on a Strategy and Policy Statement for Ofgem (SPS) in 2021. The SPS will set out the strategic priorities and policy outcomes of the Government’s energy policy, and net-zero will be a driving theme in the SPS. Once the SPS has been designated, it will impose a legal obligation on Ofgem to have regard to the strategic priorities and policy outcomes when exercising its regulatory functions. Ofgem will be required to report on how it intends to implement the SPS at the outset, and then report annually on its performance and its plans for the coming year. This creates a clear source of legal accountability where Ofgem must consider net-zero related strategic priorities and policy outcomes when making regulatory decisions.