Government must plan for the decommissioning of gas networks as UK moves towards Net Zero

The shift away from gas

Reaching the UK’s 2050 net zero target will likely require most homes to transition from gas cooking and heating to low-carbon alternatives. Electrification via heat pumps is expected to be the most cost-effective pathway, leading to a decline in gas network usage.

This shift raises two major challenges: fewer households will be left paying for the safe operation of gas networks, and large sections of the network will eventually need to be decommissioned. The energy regulator, Ofgem, is currently setting funding plans for gas networks between 2026 and 2031. This presents a key opportunity to begin planning for declining demand over the medium and long term.

A call for government action

A new policy briefing, authored by Katrina Salmon and Jim Watson, reviews current plans for gas network decommissioning and the extent to which the industry, regulator, and government are preparing for the consequences of declining gas demand, including evaluating options for paying for the costs of decommissioning.

Key recommendations 

The briefing recommends urgent government action and the analysis leads to six recommendations:

• Review the regulatory framework – Reviewing Ofgem’s purpose in the context of the energy transition and enabling it to modify future price control methodologies to account for decommissioning.
• Provide clearer government guidance – For example, directing Ofgem to create a network decommissioning fund.
• Use price control reviews – Ensuring gas distributors prepare for lower demand and long-term network changes.
• Estimate decommissioning costs, and who could pay them – Working with industry to understand costs and explore payment models, with consideration for implications of different stakeholder groups bearing these costs.
• Learn from experience of other energy infrastructures – Review and draw lessons from how decommissioning was managed for nuclear plants, coal mines, and oil platforms.
• Lead public discussions about decommissioning – Engaging the public and industry stakeholders and raising awareness about the gas phase-out and its implications for households.

Read the policy brief: Preparing to decommission the GB gas distribution system

Authors

Katrina Salmon (Research Assistant in ISR) led the research and writing of this policy briefing, which is based on her UCL EPEE MSc thesis (2024). Jim Watson contributed by commenting on drafts and advising on drafting of the policy briefing and recommendations.

Links

• View Jim Watson’s profile
• Discover ISR’s other publications