Energy Bill

Summary of key components and amendments of relevance to industrial decarbonisation

Background

The Energy Bill, initially called Energy Security Bill, aims to provide the necessary legislative foundation for key policy measures relating to energy security and energy transition, including for industrial decarbonisation, as outlined in the British Energy Security Strategy in April 2022 and other energy-related government strategies, policy documents, consultations. The bill is the largest piece of primary legislation concerning energy since the Energy Act 2013.

The Enerby Bill was introduced to the House of Lords on the 6^th July 2022. After the resignations of Boris Johnson and Liz Truss as Prime Ministers, it was reviewed and updated in December 2022. On 25^th April 2023, the Energy Bill was introduced in the House of Commons, where it has entered the committee stage on 23^rd May with further debates scheduled throughout May and June 2023.

More info on the parliamentary stages of the bill can be found here.

Key measures

The Bill is based on three pillars:

• Leveraging investment in clean technologies (parts 1, 2 and 3).
• Reforming the UK’s energy system and protecting consumers (parts 4 to 9)
• Maintaining the safety, security and resilience of the energy systems across the UK (parts 10, 11 and 12).

It proposes 26 measures, including several measures of critical relevance to industrial decarbonisation:

• Establishing an economic regulation and licensing regime for CO₂ transport and storage with the Office of Gas and Electricity Markets (Ofgem) as the economic regulator. More details can be found in the factsheet on the CO2 transport and storage
• Enabling the Government to implement and administer hydrogen and carbon capture business models including introducing a new hydrogen levy. See also: factsheets for H2 and industrial carbon capture business models and H2 T&S business models
• Establishing a new independent system operator and planner (ISOP) (formerly future systems operator), which would coordinate and plan Great Britain’s energy system. The ISOP would have responsibility for planning the development of the electricity and gas transmission systems and operation of the electricity transmission system, with potential future roles in planning new systems for hydrogen and CCUS. The Bill would transfer many powers currently carried out by licensed operators owned by National Grid plc. See also: factsheet on the Future Systems Operator
• The Bill will also provide the legislative foundation of the ‘British Industry Supercharger’ announced in February 2023 to reduce the long-term electricity price gap between UK and competitor countries for energy intensive industries. The Bill will provide the Secretary of State with the enabling powers to, through secondary legislation, implement and modify a compensation scheme for eligible energy intensive industries for a portion of their network charging costs. See also: factsheet on the network charging compensation scheme.

Main debates and amendments so far

As the bill progressed through the House of Lords, several issues of relevance to industrial decarbonisation were debated and received amendments, for example:

• Purpose of the Bill. During Lords committee stage there was some debate about the Bill’s overall purpose. Amendments were tabled calling for the Bill to be more closely linked to the UK’s climate objectives, or to go further in securing the UK’s energy supply. However, these amendments were either withdrawn or not moved.
• Hydrogen levy. Scepticism around the role of hydrogen in domestic heat, more consensus on the role of hydrogen for industrial applications. But Government plans to introduce a hydrogen levy have been met with scepticism from some stakeholders who feel it would place an unfair economic burden on consumers during increasing energy and living costs. An opposition amendment which would remove the Secretary of State’s power to impose a levy on gas and hydrogen suppliers was added to the bill.
• Net-zero remit for Ofgem. Peers backed a Labour-tabled amendment to incorporate within the energy regulator’s general duties a “specific requirement to have regard to meeting the UK’s net zero emissions target”. This was also a recommendation by the Net Zero Review.
• Powers for the North Sea Transition Authority to regulate the carbon storage sector, including by requesting information and samples from carbon storage license holders to develop a map of the underground geology to support strategic decision-making.

Other amendments include

• a ban the opening or licensing of any new coal mines in the UK (maintained with the support of Liberal Democrats, Labour and crossbencher peers). May be overridden by another amendment in the Commons.
• tighter targets on routine flaring with 2025 set as the end date

All amendments may yet be overturned by amendments in the House of Commons.

The House of Commons Library has produced research briefings on the various parts of the bill which provide more info on the debates and amendments, HERE.

As the bill progresses through the House of Commons, we will update this summary on an ongoing basis.