Institutional and governance reform forms a major part of the energy white paper. Industry commentators have proposed various ideas, including popular concepts such as a system architect. This was backed by attendees of Cornwall Insight’s ‘Financing net-zero business forum’, who agreed that the energy sector needs a system architect.
When asked whether we need an energy system architect or is it better to leave the initiative to the market? 75% of the 127 opted for “energy system architect”, with only 25% choosing “the market” option.
Gareth Miller, CEO of Cornwall Insight, said: “This poll highlights the need for clarity and consistency in terms of the direction of travel that the market alone is not capable of delivering. However, before the sector creates more governance layers and institutional responsibility, the industry needs to assess what it is looking to solve.
“Those favouring institutional creation suggest that this is necessary because the pursuit of net-zero requires “whole systems thinking”. This will need the combination of deep expertise and a long term and non-party political perspective to unlock. This assumes that efficient whole systems outcomes require an “intelligent designer” or a group of such actors working together to define the roadmap to net zero.
“However, does our experience of innovation, ingenuity and evolution in other complex systems really bear this out? Or are we being seduced by the idea of institutionalising innovation or transformation because it makes the monumental task feel less daunting?
“There is some doubt that a new institution is the best way to achieve low-carbon innovation in the consumers’ interest. Such an institution risks setting too much regulation and will end up stifling innovation in the market.
“Instead, would the courageous move now be to reduce the number of institutions and rollback the regulation’s frontiers? Perhaps the focus should be on sharpening the economic costs for emissions and the incentives for low-carbon solutions and then focus on reducing complexity and increasing transparency and accessibility of both regulation and industry data.
“This institutional and regulatory “decluttering” and unleashing the power of data would make it easier for businesses who are delivering exceptional outcomes to consumers through digital platforms to enter the market.
“In this world, we would accept that once the policy ambition is set, as it has been by net zero, regulation and institutions should ensure acceptable levels of equity and fairness, efficient system operation, and maximising competition and innovation.
“Perhaps we would be better advised to start the conversation on regulatory and governance reform now, rather than default directly to adding to the institutional complexity that already characterises the sector just because it makes us feel like we have more control.”