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Energy market regulation in the UK needs to be overhauled to meet the challenges of carbon reduction and renewables targets, according to Government advisory body the Sustainable Development Commission. In a report published yesterday, the Commission argues that reducing greenhouse gas emissions, should be made central to Ofgem's remit in order to meet the needs of future consumers.

The report, "Lost In Transmission - The role of Ofgem in a changing climate", highlights some of the ways in which Ofgem could play a long-term role in reducing carbon emissions from electricity and heat production.

Bernie Bulkin, Commissioner for Energy at the Sustainable Development Commission, said:
"Ofgem was created in the 1990s to ensure an efficient, affordable and secure energy supply, and it has been very successful in this role. However, today's energy industry faces very different challenges, and the next decade will be a crucial time for making the changes needed to eliminate carbon from the system by 2050.

"The potential for Ofgem to contribute to re-shaping the UK energy system for a sustainable future is huge. We'd like to see Ofgem's primary duty changed so that its central focus is on creating a sustainable system which costs as little as possible, rather than making a low cost system as sustainable as possible."

The Sustainable Development Commission's recommendations include:

• Introducing a greenhouse gas incentive package into the Price Control Reviews for the distribution and transmission industries
• Providing consumers with better information through smarter metering and billing to help them make decisions about their energy consumption
• Changing the current market arrangements to make it easier for smaller, low-carbon generators and suppliers to compete in the market
• Increasing innovation spending on networks and addressing transmission issues in order to speed up the connection of renewable technologies and reduce losses from the system
• Re-thinking heat provision to move to low-carbon networks across towns and cities