Recommendations & Conclusions
3 items
6
Conclusion
Thirty-Seventh Report - Decarbonising h…
Rejected
DESNZ’s work to test hydrogen for heating has been beset with problems, with key trials cancelled. DESNZ has committed to deciding on the role of hydrogen for heating in 2026. Major trials intended to support its decision have been cancelled or delayed due to local opposition and insufficient supply of …
Read more
DESNZ’s work to test hydrogen for heating has been beset with problems, with key trials cancelled. DESNZ has committed to deciding on the role of hydrogen for heating in 2026. Major trials intended to support its decision have been cancelled or delayed due to local opposition and insufficient supply of hydrogen. It has not tested the role of hydrogen in non-domestic properties. At the time of our evidence session in April 2024, an announcement on a successful bidder for a hydrogen town, planned for the end of this decade, had been delayed by 13 months. Since then, DESNZ has announced that it will not progress work on a hydrogen town pilot until after 2026, thereby meaning information on the pilot will not feed into its decision on hydrogen’s role due in 2026. Overall, this absence of the evidence needed to support any decision is also creating uncertainty for industry to plan and invest on a wider scale and could hamper overall progress. Early planning for any decommissioning of the gas networks, if it is decided that hydrogen has a limited role and electricity becomes the main energy source, is vital to manage costs that we have seen passed to the taxpayer with decommissioning in other sectors, such as nuclear, and oil and gas. Recommendation 6a: DESNZ should, as part of its Treasury Minute response, set out how it will test hydrogen for different types of properties, including domestic and non-domestic properties, so it can make an informed decision on the role of hydrogen for heating. Recommendation 6b: DESNZ should, by end-June 2025, set out how it will undertake any required decommissioning of the gas networks, including how it will be funded.
Show less
Government response AI summary
The government explicitly disagrees with the recommendation to set out decommissioning plans by June 2025, stating that a full assessment will require more time due to the complexity and uncertainty of future energy scenarios.
Read full response →
HM Treasury
34
Recommendation
Thirty-Seventh Report - Decarbonising h…
Rejected
Hydrogen UK and the National Audit Office reported that there was also uncertainty over the future role of the gas networks, if it is decided that hydrogen has a limited role and electricity becomes the main energy source.69 This included questions over who will pay for the networks to either …
Read more
Hydrogen UK and the National Audit Office reported that there was also uncertainty over the future role of the gas networks, if it is decided that hydrogen has a limited role and electricity becomes the main energy source.69 This included questions over who will pay for the networks to either continue in service if there is a decreasing customer base, or to be decommissioned. We asked DESNZ about potential funding options, including whether decommissioning would be funded by the taxpayer, the gas networks or a levy on customers or other energy users. DESNZ recognised that “there are all sorts of things you could look at” and that it would need to strike a balance between “current and future, and timing decisions”. In October 2023, the National Infrastructure Commission estimated that the cost of decommissioning the gas networks would be £25 billion. DESNZ said that it will be examining the costs as part of its strategic decisions on hydrogen.70
Show less
Government response AI summary
Government explicitly rejects the recommendation for a full assessment on the future of gas networks and decommissioning costs, stating it requires more time, while acknowledging ongoing work to understand scenarios and funding.
Read full response →
HM Treasury
35
Recommendation
Thirty-Seventh Report - Decarbonising h…
Rejected
Although DESNZ clarified that gas networks will be needed for some considerable time, it accepted that it needed to increase its work to look at future decommissioning. The NAO found that DESNZ’s work on the costs and feasibility of gas network decommissioning was in the initial stages, and its understanding …
Read more
Although DESNZ clarified that gas networks will be needed for some considerable time, it accepted that it needed to increase its work to look at future decommissioning. The NAO found that DESNZ’s work on the costs and feasibility of gas network decommissioning was in the initial stages, and its understanding was therefore limited. DESNZ indicated that it had a consultation underway with Ofgem to identify the early issues around decommissioning the gas network.71 Our previous reports have demonstrated that a limited upfront understanding of the costs of decommissioning in other sectors such 63 DHH0050 64 DHH0053 65 DHH0003 66 Q 94; C&AG’s Report, para 2.10 67 Qq 94, 98 68 DHH0036, DHH0046, DHH0050; C&AG’s Report, para 24c 69 DHH0036; C&AG’s Report, paras 12, 2.20 70 Qq 104–105; National Infrastructure Commission, Arup - Future of Great Britain’s gas network, October 2023, p.11 71 Qq 103–103; C&AG’s Report, para 2.20 20 Decarbonising home heating as nuclear and oil and gas have required more taxpayers’ money to meet significant additional costs. In the nuclear sector, for example, taxpayers had to top up the cost of decommissioning seven nuclear stations with £10.7 billion, as existing funds did not keep up with the increased costs.72 Decarbonising power generation
Show less
Government response AI summary
The government explicitly rejects the recommendation for a full assessment of gas network decommissioning costs and feasibility, stating it would require more time. However, it acknowledges the importance and describes ongoing work with regulators and industry to understand decommissioning needs in different scenarios.
Read full response →
HM Treasury