The Queen’s Speech and the Energy Security Bill

May 2022
Region: Europe

The Energy Security Bill, announced in the Queen’s Speech, will form an essential component of the government’s programme for establishing large-scale low-carbon industrial clusters. The bill will provide the legislative base for the provision of financial support underlying the new business models that BEIS has been developing for carbon capture, transport and storage and low-carbon hydrogen production. The government’s briefing note on the bill indicates that it will also include measures to:

  • Give government new powers to give directions to, require information from, and provide financial assistance to, core fuel sector businesses to ensure resilience and continuity of fuel supply.
  • Appoint Ofgem as the new regulator for heat networks, tasked with securing that consumers are provided with a reliable heat supply at a fair price. BEIS’s press release indicates that these measures will include powers to impose a price cap.
  • Introduce competition in Britain’s onshore electricity networks, an initiative that BEIS claims could result in savings of up to £1 billion by 2050 on projects tendered over the next 10 years.
  • Establish a publicly owned Future System Operator, providing strategic oversight across electricity and gas systems, including, according to BEIS, their integration with emerging technologies such as hydrogen.
  • Enable the first-ever large-scale hydrogen heating trial.
  • Extend the energy price cap beyond 2023.
  • Create a new pro-innovation regulatory environment for fusion energy.
  • Facilitate the safe and cost-effective cleanup of the UK's legacy nuclear sites.

The Queen’s Speech promised an Energy Security Bill “to deliver the transition to cheaper, cleaner, and more secure energy [which] will build on the success of the COP26 Summit”. It is hard to discern the coherent vision required to achieve such an ambitious outcome. On the one hand, interventionist measures extending the gas and electricity price caps beyond 2023 and enabling government to give directions to fuel sector businesses and provide them with financial assistance look set to undermine competition in the energy sector. On the other, steps will be taken to introduce competition into Britain’s onshore electricity networks, but under the direction of a new public body, the Future System Operator. Curiously, BEIS’s press release makes no mention of measures to support the development of nuclear fusion or the cleanup of legacy nuclear sites.

Even so, the bill will at least enable the government to move forward its ambitious programme for the development of industrial clusters delivering carbon capture and storage and hydrogen production facilities. The announcement of a separate bill to formally establish the UK Infrastructure Bank with £22 billion of financial capacity and the objectives of supporting regional economic growth and delivering net-zero is also to be warmly welcomed.