To meet the UK’s 2050 climate targets cost-effectively, it is likely that the heat sector will need to be close to completely decarbonised. This will have significant – and currently uncertain – consequences for the future role of the gas sector. Our latest research for the Department for Business, Energy and Industrial Strategy (BEIS) focuses on the potential future role of low carbon gas.

The report, published today, aims to identify what market models and regulatory frameworks could look like in a 2050 steady state under a range of scenarios for a low carbon gas system, and assesses the strengths and weaknesses of alternative options. It also looks at risks, uncertainties and barriers in the transition to a low carbon gas system, and presents options how these may be managed or overcome.

Our research finds that in a 2050 steady state, market and regulatory structures could looks similar to today’s. Competitive markets for gas production and storage could exist, alongside regulated networks. At the same time, new retail models could emerge, particularly where end use technologies are more complex, or there are benefits from fuel switching between gas and electricity.

The research also finds that there are major challenges to overcome in the transition to a low carbon gas system. Our report suggests a range of options for overcoming these challenges, focusing on investment in information and in keeping options open, dealing with policy risk and protecting and incentivising consumers.

Frontier regularly advises government departments, regulators and private companies on issues around energy, climate change, decarbonisation.

For more information please contact media@frontier-economics.com, or call +44 (0)20 7031 7000