Source · Select Committees · Public Accounts Committee
Recommendation 34
34
Rejected
Uncertainty surrounds future of gas networks and significant decommissioning costs.
Recommendation
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
Government Response 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.
Government Response
Rejected
HM Government
Rejected
6.3 The government disagrees with the Committee’s recommendation. 6.4 The department disagrees with the recommendation as a full assessment will require more time than proposed by the former Committee. However, the department acknowledges that there are a range of scenarios which achieve net zero by 2050 with differing implications for the gas system and are currently exploring ways to facilitate the transition to a secure, affordable, low-carbon gas system in these scenarios. 6.5 This work involves understanding the likely supply and demand needs of natural gas in the future and identifying what this means for the gas system and infrastructure, including the extent to which decommissioning is required for parts of the gas network that cannot be used or repurposed. 6.6 This work will also consider how to lead the system through the decommissioning process, the technical aspects required to deliver decommissioning, and how to pay for it. 6.7 Modelling and understanding these different scenarios is complex given the number of variables at play (for example, uncertainty regarding the supply and demand for hydrogen, carbon capture, usage and storage (CCUS) and biomethane), and will depend in part on policy decisions yet to be made. For example, on the use of hydrogen for heat. 6.8 The department will continue to work with regulators and industry to understand what decommissioning will be needed in different scenarios, and how best to deliver it.