Queen’s Speech unveils landmark Energy Bill

The UK’s first Energy Bill in over a decade will be brought before Parliament in 2022, with the aim of building a more secure, cleaner and affordable homegrown energy system.

The Bill was outlined in the Queen’s Speech, which marks the annual State Opening of Parliament and sets out the legislation the government plans to progress in the months ahead.

Energy Bill

The aim of the Bill is deliver the government’s commitments in the recently announced Energy Security Strategy and the older Ten Point Plan for a Green Industrial Revolution.

The Energy Security Strategy was produced in response to the rising cost of energy crisis and concerns around the reliance on Russia for energy. The Strategy sets out plans to significantly expand homegrown offshore wind, nuclear and hydrogen energy, but it has been criticised for not putting enough emphasis on energy efficiency.

In addition to the headline measure of extending the energy price cap for consumers, some of the core elements of the Bill include:

• Introducing state-of-the-art business models for Carbon Capture Usage and Storage, low carbon hydrogen and industrial carbon capture which will “fire the starting gun” on new, low carbon technologies for industrial sectors
• Supporting industry to step up investment in growing the consumer market for electric heat pumps by providing for a new market standard and trading scheme, which should support innovation and help to lower the costs of heat pumps over time
• Enabling the first ever large-scale hydrogen heating trial to inform the role of hydrogen in heat decarbonisation in 2026 – with Ellesmere Port in Cheshire one of two towns in the running to host the trial
• Establishing a new nationalised ‘Future System Operator’ to provide strategic oversight of the UK electricity and gas system to drive progress towards net zero, energy security and minimising consumer costs.

Commenting on the announcement, Gareth Miller, CEO at energy consultancy Cornwall Insight, said the Energy Bill was a “logical conclusion of policy development” since the UK’s net zero commitment was first made in the summer of 2019. “It accommodates support for the government’s preferred [energy] production technologies alongside more recent plans to address security of supply,” he added.

Infrastructure Bank Bill

Also featuring in the Queen’s Speech was a UK Infrastructure Bank Bill, which will finalise the creation of a new state-owned Infrastructure Bank, which was announced in the 2021 Budget. The bank’s mandate will be to use its £22 billion financial capacity to invest in infrastructure projects that support the UK’s transition to net zero emissions, such as power, heat and transport networks.