Home Insulation and Heat Pumps Beat New Oilfields in Economic Benefits, Study Finds
A study by thinktank E3G shows Britain’s £15bn warm homes plan would cut energy bills and create far more jobs than developing new North Sea oil projects.
At a glance
- The £15bn warm homes plan would cut £1bn from annual energy bills and create 50,000 jobs, according to thinktank E3G.
- Developing the Rosebank oilfield would create roughly 1,100 jobs and could cause a £258m net loss to taxpayers via tax breaks.
- Decisions on the Jackdaw gasfield and Rosebank oilfield licenses remain pending under the UK energy department.
Investing in home insulation and heat pumps would generate significantly more jobs and deliver a larger economic boost than drilling new North Sea oilfields, according to research published by the thinktank E3G. The findings come as the UK government considers whether to approve major fossil fuel developments while reviewing potential spending cuts to its £15bn warm homes plan.
E3G's analysis revealed that executing the full warm homes scheme, which aims to insulate up to five million properties, would lower annual household energy bills by £1bn, concentrating relief on low-income families. The plan is estimated to boost gross domestic product by 0.08%, or £1.6bn each year, while creating around 50,000 jobs across thousands of local businesses. It is also projected to attract £15bn in private investment across the UK.
Contrasting North Sea Projects
In contrast, developing the Rosebank oilfield west of Shetland would create roughly 1,100 direct and indirect jobs, primarily concentrated in the North Sea and tied to two companies, including overseas investor Equinor. E3G's modelling estimated that Rosebank would lift GDP by an average of just 0.025% over its lifespan, assuming global oil prices settle around $70 a barrel.
Furthermore, research from WWF and Uplift indicated that state tax returns from new extraction projects remain minimal due to generous reliefs. While Rosebank's backers—Equinor, Shell, and Ithaca Energy—stand to make £1.5bn in profits over 25 years, the UK government faces a potential net loss of £258m because of subsidies and tax breaks. Additionally, UK taxpayers could face up to £12bn in decommissioning costs as aging North Sea infrastructure is dismantled.
Decisions on Pending Licences
Energy Secretary Miatta Fahnbulleh recently announced that an approval decision regarding the Jackdaw gasfield is imminent, with a ruling on Rosebank expected shortly after. While the government pledged in its 2024 manifesto to end new exploration licensing, both developments were already inside the licensing system.
Adura, the joint venture between Equinor and Shell backing the sites, argued that Rosebank represents £8.7bn in private investment and that North Sea projects could generate substantial value and tax revenue. However, critics point out that these company projections omit more than £2.4bn in available tax relief.
Opposition to new extraction remains broad. Ten major trade unions, dozens of Labour MPs, and 600 scientists have urged ministers to reject the Rosebank licence and maintain focus on energy efficiency.
Source: The Guardian Business.
Questions and answers
- How does the warm homes plan compare to the Rosebank oilfield?
- E3G found the warm homes plan would boost GDP by £1.6bn yearly and create 50,000 jobs, whereas Rosebank would create about 1,100 jobs and add an average of 0.025% to GDP.
- Why would new North Sea oil drilling fail to lower UK fuel bills?
- Experts note that oil and gas extracted from the North Sea are sold on international markets, meaning local production does not insulate UK consumers from global pricing.
- What financial risks do taxpayers face from North Sea drilling?
- Taxpayers face an estimated £12bn bill for decommissioning North Sea platforms, alongside potential losses on projects like Rosebank due to extensive tax relief and subsidies.
