‘Counteractive’ regulation and policy top net-zero worries for sector

A Utility Week poll of sector leaders has identified the effects of counteractive regulatory regimes as the most likely factor to derail delivery of net-zero carbon goals.

A research report, produced in association with global technology consultancy and services firm TCS, showed 67.3% of respondents felt regulatory drivers making it hard to allocate organisational resources to meet these decarbonisation commitments was a challenge. Some 29% described it as a “huge” challenge. When it came to the same drag being applied by policy frameworks, 50% viewed it as a challenge and 19.2% as a huge one.

The report presents a sub-sector breakdown of sentiment, which shows energy suppliers feeling particularly worried about the impact of policy and regulation.

One retailer respondent observed: “Ofgem is the biggest blocker. How can we invest in a net zero future when we all operate under a price cap that means no supplier has turned a profit from its energy business since 2019? It is lamentable.”

Regulated utilities meanwhile, tended to be more positive about the direction of travel in their regulatory and policy environment and contributions from commentators chimed in with this sentiment.

Aillen McLeod, SSEN’s director of business planning and commercial, was interviewed for the report and said: “Government policy is crystal clear, the targets are clear, and the policy support is coming in behind. Ofgem’s commitment to net zero is also welcome, it’s something we’ve been saying is needed for quite some time. Now they just need to follow through in terms of big decisions. Its call for evidence on transmission charging is welcome, that’s been a barrier for net zero for networks.”

Despite concerns about the potential for regulation and policy to scupper net-zero commitments, the overwhelming majority (79%) of respondents said they “somewhat” confident that their organisation’s decarbonisation plans will be delivered in a timely and affordable way.

The full report, Beyond Zero Carbon: Lessons in Business Transformation, includes further insight into the survey results, including how  approaches to decarbonisation link to wider business change and ways different sectors are tackling scope 3 emissions.