The UK government has updated the duties of Ofgem, the energy regulator, to include a focus on net zero. This means that Ofgem will now have to consider how its decisions can help the government achieve its net zero targets.
The amendment to Ofgem's duties was included in the recently introduced Energy Security Bill. It specifically applies to the Gas Act 1986 and Electricity Act 1989 (both a part of the Climate Change Act 2008), meaning Ofgem's wording around their responsibility to reduce greenhouse gas emissions will be altered, referencing the Climate Change Act directly.
The government's decision to update Ofgem's duties reinforces the importance of the net zero targets and carbon budgets outlined in the Climate Change Act 2008. It aims to align Ofgem's decision-making process with the government's net zero ambitions, establishing a synchronized approach.
The amendment builds upon Ofgem's existing duty to consider the reduction of greenhouse gases. One of Ofgem's key objectives currently is to protect the interests of both current and future consumers, ensuring their interests in reducing greenhouse gas emissions are taken into consideration.
How will giving Ofgem a net zero duty impact the UK?
Ofgem already has a duty to reduce greenhouse gas emissions. However, updating its duties to specifically mention the net zero targets and five-year carbon budgets in the Climate Change Act 2008 will mean that Ofgem must now consider how its decisions can help the Secretary of State meet the UK's net zero targets and carbon budgets, as part of its everyday regulatory duties.
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