The UK Prime Minister appointed Grant Shapps to oversee the new Whitehall office which will be responsible for securing the country's future energy supply and transitioning from fossil fuels to renewables.
No 10 Downing Street said the establishment of the department recognises “the need to secure more energy from domestic nuclear and renewable sources as we seize the opportunities of net zero”.
It is one of four new or redesigned government departments set up by the Sunak administration.
As part of his reshuffle just over 100 days into his time in No 10, Mr Sunak appointed Greg Hands as chairman of the Conservative Party and Minister without Portfolio.
He replaces Nadhim Zahawi who was sacked last week for breaching the ministerial code regarding his tax affairs.
Responding to his new appointment, Mr Shapps tweeted: “Delighted to become the first Secretary of State for the new Department for Energy Security & Net Zero. My focus will be securing our long-term energy supply, bringing down bills and thereby helping to halve inflation.”
Kemi Badenoch, former trade secretary, has been given the new title of Secretary for Business and Trade as part of the merging of the two departments. She will retain responsibility for trade negotiations, including the prospect of a UK-GCC free-trade agreement.
A dedicated Department for Science, Innovation and Technology will be overseen by Michelle Donelan in an effort to “drive the innovation that will deliver improved public services, create new and better-paid jobs and grow the economy", No 10 said. George Freeman was named as a minister in the department.
Lucy Frazer has been appointed Secretary for Culture, Media and Sport to oversee a department that previously included the digital agenda. Graham Stuart has been named as a minister in the department. His previous title was minister for energy and climate at the Department for Business, Energy and Industrial Strategy (BEIS).
Nusrat Ghani, who has previously claimed the Tory Party is institutionally Islamophobic, has been given the roles of Minister of State jointly in the Department for Business and Trade and the Cabinet Office. She previously served as minister for industry and investment security at BEIS.
During the Conservative leadership race last summer, Mr Sunak pledged to re-establish a stand-alone Department for Energy to secure the UK’s future power supply.
Energy security has been drawn into focus across Europe and the wider world since Russia’s invasion of Ukraine.
In a message posted on Twitter, Mr Sunak said: "The Department for Energy Security and Net Zero will focus on giving the UK cheaper, cleaner, more secure sources of energy — cutting bills, cutting emissions, and cutting our dependence on international energy supplies, like those of Putin’s Russia."
He said the creation of new departments would help focus on issues that are important to the British people and "build a better future for our children and grandchildren".
No 10 said the issues of net zero and energy security were closely linked.
Asked if the creation of the new department would signal greater prioritisation of reaching the zero emissions target, the Prime Minister’s official spokesman said: “I think the public will judge us by our actions and our continued approach on net zero.
“We do think it’s right to more clearly pull out the government’s focus on that linkage to long-term energy security because the two very much go together.
“Seeking to achieve net zero is, in part, obviously about the importance of keeping 1.5°C alive, but equally it’s about making sure we have energy security, whether that’s offshore wind or nuclear.”
He said the creation of the new departments was not expected to incur additional costs. They are expected to be up and running from Tuesday, he added.
The Liberal Democrats claimed the reshuffle would cost £60 million.
Party spokeswoman Christine Jardine said Mr Sunak's “rudderless reshuffle” added weight to the claim he was “looking weaker by the day”.
“This reshuffle will cost the public millions while failing to change the trajectory of this government in crisis,” she said. “Rather than fritter away tens of millions of taxpayers’ cash on costly vanity projects, Sunak should spend the money where it’s most needed. This cash could fund 25 million free school meals.”
Mr Hands took to Twitter to post a photo of himself and the Prime Minister to celebrate his new role. He said he was “excited” to chair the Conservative Party after joining in 1986, and called his new position “an honour”.
“The work starts right away,” he wrote.
Lee Anderson was appointed deputy party chairman.
Lisa Fischer, an energy expert at climate-change think tank E3G, said the creation of an energy department with a transition focus could harness change.
“A separate energy department if linked with climate can give useful prominence and focus to the energy transition,” she said.
Sam Richard, founder and chief executive of Britain Remade, a pro-growth campaign group, said the creation of the Department for Energy Security and Net Zero was "broadly pointless — unless the government is willing to overhaul the planning system at the same time".
"You can’t make the UK energy secure — or hit our net-zero targets — when it takes up to 13 years to build a new wind farm," Mr Richard added. "Only by reforming our broken planning system can we deliver the clean energy Britain needs and secure the thousands of well-paid jobs across the country that come from speeding up building new clean energy infrastructure.”
The reshuffle came hours after oil giant BP announced profits had hit record highs as the company benefitted from runaway energy prices caused by the war in Ukraine.
Last year BP’s profits more than doubled to £23 billion ($27.56 billion).
The company also said it had scaled back emissions reduction targets by a third, and would produce much more oil and gas by the end of the decade than previously thought.
Taxes on Britain’s oil and gas sector sit at 75 per cent — among the highest in the world.
Asked if the Prime Minister would consider increasing taxes on energy companies, his spokesman suggested there would be no change.
“We think we are striking the balance on [offering] cost-of-living support for families and businesses, whilst encouraging investment in the North Sea to boost things like the UK’s energy security,” the spokesman said on Tuesday.