Sector regulators have a significant contribution to make to the green transition and the decarbonisation of sectors including water, energy, transport and e-communications. When appropriately empowered and enabled, regulators can increase how much environmental sustainability is considered in the choices of both operators and consumers. However, not all regulators currently have the tools they need or the governance arrangements in place to contribute effectively to this area.
Sector regulators need to have appropriate mandates and objectives if they are to support carbon mitigation efforts. There is currently no standard approach to defining the role of economic regulators in the green transition. Only 41% of economic regulators have environmental sustainability objectives explicitly defined in legislation while 36% have no such objectives at all (Figure 8.12).
To support emission reductions and the green transition, regulators also need appropriate legal powers to consider environmental sustainability in their regulatory decisions. Regardless of their statutory objectives, 42% of economic regulators lack the legal power to consider environmental sustainability in decision making (Figure 8.13). These powers are most widely held by regulators in the energy (86%), water (77%), and air transport (72%) sector. However, most regulators in rail transport (30%) and e-communications (29%) lack such powers.
Even where powers are provided, these may not extend to the full range of regulators’ functions, nor the full range of environmental issues. Only 21% of regulators have powers to consider the full range of environmental issues, including greenhouse gas reduction, decarbonisation, biodiversity, and water and air pollution (Figure 8.14). The most common environmental issues that regulators have the power to consider are greenhouse gas reduction (held by 65% of regulators with such powers) and decarbonisation (65%). However, only a minority can consider waste management (33%) or biodiversity (31%).
A broadened remit that includes sustainability requires regulators to balance multiple objectives. Around 43% of regulators have encountered or anticipate trade-offs between environmental and other policy objectives (Online Figure J.5.1). For 37% of regulators, these trade-offs relate to improving cost effectiveness, and for 27% they relate to protecting consumer welfare or social inclusion. Co-ordination can be enabled by establishing clear roles and responsibilities, and guidance on managing competing priorities. However, 60% of regulators lack formal co-ordination mechanisms to connect them with public authorities for environmental sustainability issues (Online Figure J.5.2).