Salmon, Katrina; Watson, Jim; (2025) Preparing to decommission the GB gas distribution system. UCL Institute for Sustainable Resources: London, UK.

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Abstract

Reaching the UK’s 2050 net zero target requires transitioning the majority of homes from natural gas cooking and heating to a low-carbon alternative. Electrification is likely to be the most cost-effective pathway, necessitating the decommissioning of large portions of the gas network. This briefing 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. The key conclusion from this review is that there remain significant unanswered questions about how this transition will be managed and funded, and how the regulatory framework for the gas distribution network will need to be changed. The longer action to resolve these questions is delayed, the less time there will be to address these issues before the 2050 net zero deadline. Without adequate planning, full impact of these costs could land on a dwindling number of vulnerable gas customers who cannot afford to electrify. Planning is currently underway for the next gas distribution network price control, which will cover the period from April 2026 to March 2031. Within this period, there is an opportunity to integrate more detailed preparations for declining gas demand and eventual decommissioning of parts of the network. The analysis in this briefing leads to six recommendations: • Review the regulatory framework. The government’s review of Ofgem’s mandate and remit should revisit the regulator’s purpose in the context of the energy transition. It could be prudent to enable Ofgem to modify future price control methodologies to better integrate the costs and wider implications of decommissioning. This could also include asking gas network companies to develop plans for disconnection and decommissioning. • Provide more guidance to Ofgem. The government could also provide more direction to Ofgem about decommissioning planning, e.g. by enabling Ofgem to create a network decommissioning fund. • Use the next gas network price control. Ofgem has an opportunity to scrutinise the gas distributors’ business plans for the next price control to assess their preparation for potential reductions in demand during the next price control, and over the longer-term. • Estimate decommissioning costs, and who could pay them. The government and Ofgem should work with industry to develop detailed estimates of decommissioning costs and examine options for how these costs could be paid for. This includes the implications of different stakeholder groups bearing these costs. • Review experience from other energy infrastructures. To inform this assessment of costs, the government and Ofgem could review the experience of how decommissioning of other energy infrastructures such as nuclear power, coal mines, and oil and gas platforms is financed, and draw lessons for gas network decommissioning. • Lead public discussions about decommissioning. The government could also be more proactive about increasing awareness of the need to transition from gas heating and the potential for gas network decommissioning – both with industry stakeholders and with the wider public.

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