The Department of Energy Security and Net Zero - What Does it Mean for Net Zero Strategies?

The department, which was promised in the PM's campaign for party leadership last year, hopes to seize on the UK's already considerable strengths.

Due to the energy uncertainty in the UK and Europe, the UK government has established a new department of government: the Department for Energy Security and Net Zero.

Among the remits of the new department are embedding the government’s net zero strategy into law; seizing on the economic and social benefits of the green energy transition; seeing that the Energy Bill gets passed; fixing energy market infrastructure; helping the country meet evolving energy efficiency targets; and seeing that cross-departmental collaboration improves.

According to the government’s website, this new department, “has been tasked with securing our long-term energy supply, bringing down bills, and halving inflation.”

Impact on Net Zero Strategies

July 2022 saw the High Court ruling that the UK Government’s Net-Zero Strategy, published in late 2021 in the run-up to COP26 in Glasgow, is unlawful. The Court sided with Friends of the Earth and ClientEarth as they argued that the Strategy does not contain the level of funding or detail needed to be aligned with net-zero by 2050, nor with the UK’s interim carbon budgets.

Promisingly, DESNZ has stated that one of its priority outcomes is ensuring that the UK is on track to meet its legally binding net-zero commitments. It does state that its plans for doing so involve “significantly speeding up the delivery of network infrastructure and domestic energy production”.

The UK's plans involve “significantly speeding up the delivery of network infrastructure and domestic energy production”.

This will involve an acceleration of Net Zero strategy implementation and homogenisation in both the public and private sectors, and will require private companies to play their part. It is not yet declared whether new legislation will be brought in to mandate carbon reporting and decarbonisation activities, but it is likely that this may occur.

Acceleration of Net Zero strategy implementation and homogenisation in both the public and private sector.

It is also argued that the creation will help to capitalise on the socio-economic benefits of net-zero, with increased recognition of the ways in which the low-carbon transition can create well-paid jobs in all regions and shield the nation from future fossil fuel price spikes.

Prioritising Social & Economic Benefits of Net Zero

Multiple academic reviews have concluded that the government's existing approach is not joined-up enough, nor ambitious enough, to actualise the whole scale of the social and economic benefits from a low-energy and Net Zero transition. It has been concluded that the UK should make some immediate alterations to its approach to climate policy in order to meet its targets.

This new department has been set out explicitly to confront some of these challenges, and to seize the economic benefits of Net Zero, including the jobs and growth created in emerging industries. The creation of this department implies an increased recognition of the ways in which the low-carbon transition can create well-paid jobs in all regions and shield the nation from future fossil fuel price spikes.

Shake up of the Energy Market

The Government is continuing in 2023 he long process of implementing its REMA, badged as the biggest shake-up to energy market design in a generation. Initial REMA consultations opened last summer and the progress of the review has doubtless been slowed by two changes in Prime Minister since its launch. Under the REMA, the Government is proposing measures to de-couple global wholesale gas prices from wholesale electricity prices for electricity generated in the UK. This link, it has been argued, is becoming less and less sensible as Britain brings more renewable electricity generation capacity online and seeks to close the impending nuclear gap. Other key changes proposed under the REMA include:

• Evolving the Contracts for Difference (CfD) auction scheme for low-carbon generators.

• Introducing locational pricing.

• Having separate markets for ‘firm’ and ‘variable’ power.

Reshuffling Departmental Structure

The Energy Security and Net Zero Department, in essence, replaces the former Business, Energy and Industrial Strategy (BEIS) Department, which will be split into the Energy Security and Net Zero Department.

As much as it could be a good thing to give net-zero its own seat at the Cabinet table, the extent of the Department’s influence and success will ultimately lie in its ability to work well with other Departments more than its name. Poor cross-departmental collaboration has been raised by the CCC and in the Skidmore Review previously, as well as by the Public Accounts Committee (PAC).

What the Government Says

The Government website states:

"The Department for Energy Security and Net Zero will provide dedicated leadership focused on delivering security of energy supply, ensuring properly functioning markets, greater energy efficiency and seizing the opportunities of net zero to lead the world in new green industries".

"This year, the department will focus on easing the cost of living and delivering financial security by bringing down energy bills and keeping them down - better insulating consumers from external impacts. Longer term objectives include ensuring properly functioning energy markets, coordinating net zero objectives across government and bringing external delivery expertise to bear on its portfolio of major projects".

"The Department for Energy Security and Net Zero is focused on the energy portfolio from the former Department for Business, Energy and Industrial Strategy (BEIS)".