Bright Blue has called for an obligation on gas suppliers to meet a gradually increasing share of demand using low-carbon gases such as biomethane and hydrogen.
In a new report titled Pressure in the Pipeline, the conservative thinktank says the requirement is necessary to drive forward the decarbonisation of heating and should be introduced to coincide with the beginning of the next set of RIIO price controls for gas networks in 2021.
Among other things, the report also recommends that Ofgem increase the amount of funding available through the Network Innovation Competition and Network Innovation Allowance.
It says safety rules should be amended to allow hydrogen to be injected into gas networks at much higher proportions than the 0.1 per cent allowed currently, and that Ofgem should establish a dedicated unit for regulating heat networks to protect consumers from uncompetitive pricing.
“UK gas must be completely decarbonised during the coming three decades if this country is to meet its current and likely future legal emissions reduction target,” said report co-author and senior researcher at Bright Blue, Wilf Lytton.
“But existing gas regulations that were designed decades ago, and a lack of investment and incentives, are hampering deeper decarbonisation”.
“Now, with time running out, the government and Ofgem should approach the task of decarbonising gas with the same fervour as it has applied to delivering low-carbon and affordable electricity,” he added.
“It is an urgent priority to ensure that Ofgem’s next price control framework from April 2021 includes stronger incentives and greater investment to support deeper decarbonisation.”
Lytton said a low-carbon gas obligation would allow the UK to decarbonise heating at the lowest possible cost and without subsidising alternatives to natural gas or distorting the market.
The report was sponsored by the Energy Networks Association, whose chief executive, David Smith, said: “Britain’s extensive gas network infrastructure means that the public and the wider economy are able to access the energy they need quickly and reliably throughout the year, as and when they need it.
“It’s vital that we decarbonise the gas we are using so we can reach our climate change targets, whilst still being able to take advantage of those important attributes.
He added: “Gas network operators have led the way in developing the technology we need to do that, but we need government to make a clear decision on the long-term future of Britain’s gas networks so they can continue that work.
“What is concerning is that the regulator is now planning to change the way they are funded due to that lack of clarity, putting at risk the progress made in recent years.”
Energy and clean growth minister Claire Perry, said: “Through rapid progress in decarbonising power generation, the UK has grown its economy whilst cutting carbon faster than any other country in the G7.
“But if we are going to build on this success, we need to get serious in tackling heat. This welcome report points to policy solutions that build on the strength of our natural gas sector where we are a world leader, and the hugely valuable assets of our gas networks.”