In a report published yesterday, the SDC argues that the reform would bring the regulator’s 17 year-old remit into line with the UK’s climate goals. It complains that Ofgem’s “institutional culture and approach does not reflect the imperative of sustainable development, particularly climate change”.
While Ofgem has been very successful at opening up the energy markets to competition and cutting prices for consumers, the SDC argues that the tagging on of sustainable development to its remit in 2004 has not worked. It says that “the majority of staff do not appear to take sufficient account of social and environmental issues in their work” and complains that the environment team is “severely under-resourced”.
Once Ofgem’s remit is changed, the SDC suggests that the regulator should explain how it interprets the duty and proposes to deliver on it. Meanwhile, the government should clarify the existing social and environmental guidance to the regulator and ensure that it explicitly addresses the environmental impacts of policies.
The SDC also recommends practical measures to reduce the carbon footprint of the UK energy system, including reforms to the charging systems and incentive packages offered to suppliers, to make it easier for small generators and combined heat and power to have access to the market.
The SDC is annoyed that, in the past, Ofgem has used a low social cost of carbon in its cost benefit analyses. It also calls for energy and environmental policy to be made the responsibility of a single secretary of state “at the next opportunity”.
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