Investing in the mass insulation of British homes and the widespread adoption of heat pumps would yield significantly higher economic returns, job creation, and household savings than the pursuit of new North Sea oil and gas projects, according to new research.
The findings, published by the thinktank E3G, arrive as the UK government weighs the future of its £15bn “warm homes plan.” Despite being a cornerstone of efforts to lower energy costs, the initiative is currently under threat as ministers hunt for budget savings. The E3G analysis suggests that fully funding the plan would slash £1bn annually from household energy bills—with the greatest benefits reaching low-income families—while providing a £1.6bn yearly boost to the national economy and supporting approximately 50,000 jobs across thousands of small, locally-based businesses.
In contrast, the proposed development of the Rosebank oilfield west of Shetland is estimated to create only 1,100 direct and indirect jobs, largely concentrated in the North Sea and dominated by overseas investors such as Equinor. While proponents argue that new drilling is vital for economic growth and tax revenue, experts contend that such projects will do nothing to lower fuel prices for consumers, as oil and gas are traded on international markets.
Moreover, the financial case for new drilling is increasingly being challenged. Research from WWF and the campaigning group Uplift suggests that tax revenues from projects like Rosebank will be severely limited by generous industry concessions. While the companies involved—Equinor, Shell, and Ithaca Energy—could see total profits of £1.5bn over the field’s 25-year lifespan, the UK government faces a potential net loss of £258m when factoring in tax breaks and incentives. Furthermore, as the North Sea basin enters a period of steep decline, decommissioning costs for aging infrastructure could land taxpayers with a bill of up to £12bn.
Comparing the macro-economic impact, E3G estimates that the full delivery of the warm homes plan would boost GDP by 0.08%. Conversely, AI modelling suggests that Rosebank would add an average of only 0.025% to GDP over its lifetime—a gain that would be entirely wiped out if the government assumes the responsibility for decommissioning costs.
James Huw Dyson, a senior researcher at E3G, warned that the government’s focus may be misplaced. “When the first cold snap rolls in, the public aren’t going to thank the government for cutting home insulation while giving big oil tax breaks to drill for polluting energy that keeps our bills high,” Dyson said. “If the government is serious about tackling the cost of living, and investing across the country, it should focus its attention on insulating homes and rolling out clean energy.”
The debate comes as Energy Secretary Miatta Fahnbulleh indicated that a decision on the Jackdaw gasfield is “imminent,” with a verdict on Rosebank expected to follow. While the Labour government pledged to halt new oil and gas licensing in its 2024 manifesto, both projects remain potential exceptions as they were already in the pipeline.
The prospect of proceeding with these sites has met with fierce resistance. A coalition of ten major unions has formally written to the government to oppose the Rosebank licence, joined by hundreds of scientists and a significant portion of the Labour backbench. Industry voices are also expressing concern over the current policy uncertainty. Dhara Vyas, chief executive of Energy UK, warned that watering down insulation commitments or shifting strategies sends “mixed signals” to a market already struggling to maintain momentum.
While the joint venture behind the projects, Adura, claims the developments will generate £35.3bn in total economic value through 2035, critics point out that these figures rely on optimistic assumptions regarding supply chains and do not account for standard Treasury discount rates or the substantial tax reliefs available to operators. As the government faces these conflicting paths, the choice between short-term fossil fuel extraction and long-term energy efficiency remains a defining test of its commitment to both the economy and the climate.
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