Lords defy government over Ofgem net zero duty

The House of Lords has defied the government and backed calls for Ofgem to be given a statutory obligation to meet the UK’s 2050 net zero emissions target.

By 208 votes to 182, peers backed a Labour-tabled amendment to the government’s Energy Security Bill, which would incorporate within the energy regulator’s general duties a “specific requirement to have regard to meeting the UK’s net zero emissions target”.

Baroness Hayman, opposition environment spokesperson in the Lords, said during an earlier debate on the amendment that the move would bring Ofgem into line with the government’s remit for the Future Systems Operator, which is being established under the bill.

Energy minister Lord Callanan, responding on behalf of the government, said he had been reassured by Ofgem chief executive Jonathan Brearley that the proposed duty is not “necessary” because the regulator sees the net zero transition as a “fundamental” part of its work.

The minister also warned that enshrining a duty in primary legislation increased the risk of legal action.

“If the House wants to give yet more work to their learned friends—of course, all the costs of that are ultimately borne by consumers—then the House is free to do that,” Callanan added.

However, Hayman said that Ofgem’s existing duty is “limited” because it only refers to reducing greenhouse gas emissions by an “unspecified amount over an unspecified timescale” and is not linked to the net zero target that has been enshrined in UK law since 2019.

The Lords vote, which the government can reverse with its majority in the House of Commons, has been widely welcomed across the energy sector.

Lawrence Slade, chief executive of Energy Networks Association, said: “Yesterday’s vote in the Lords reinforced the shared view of industry and civil society, that we must have a regulator which is fully aligned with net zero.

“As we build the energy system of the future, it’s critical that we all pull in the same direction to secure the scale of investment needed in everything from heat pumps to hydrogen and turbines to pylons.”

Nathan Bennett, head of public affairs at RenewableUK, added: “Reforming Ofgem’s mandate to consider net zero in every decision takes is long overdue. We’re glad that the House of Lords has listened to calls from across the energy sector to make this vital change and hope that MPs will support it when the Energy Bill goes back to the Commons in the weeks ahead.

“The change would empower Ofgem to ramp up the pace and scale of investment in new grid infrastructure, in turn enabling the roll out of more wind, solar and tidal stream projects. At the moment some wind farms are waiting for more than ten years to get a connection. This reform would allow us to build a grid that’s fit for purpose for the twenty-first century.

“Refreshing Ofgem’s mandate so that it better enables the UK’s shift to clean energy is ultimately in the interest of billpayers, as renewable projects are our cheapest source of new power, lowering energy bills as well as strengthening Britain’s energy security.”

Ruth Herbert, chief executive at the Carbon Capture and Storage Association, said: “This amendment will be particularly critical for CCUS, to enable the roll-out and expansion of significant CO2 infrastructure this decade – to ensure we can meet the government’s ambition of capturing and storing 20-30 million tonnes of CO2 per year by 2030 which will be essential if we are to remain on the path to net zero.”