New analysis from the University of Oxford’s Smith School of Enterprise and the Environment suggests that a complete transition to renewable energy could deliver significantly greater savings for UK households compared to maximising oil and gas extraction from the North Sea. The study characterises claims that North Sea drilling would substantially reduce household energy bills as “sheer fantasy.”
The research indicates that a UK energy system powered entirely by renewables, incorporating clean electricity sources and technologies like electric heat pumps for home heating, could save households up to £441 annually on their bills.
In stark contrast, even a maximalist approach to North Sea oil and gas extraction would yield annual savings of only £16 to £82 per household. And even these modest savings would only occur if the government redistributed all tax revenues collected from fossil fuel companies directly to families to offset energy costs.
Without such direct redistribution of tax revenues, analysts conclude there would be “no discernible benefit” to consumers, as international markets dictate oil and gas prices.
Dr. Anupama Sen, co-author and head of policy engagement at the Smith School of Enterprise and the Environment, commented on the findings:
“The idea that draining the North Sea would make the UK more energy secure or significantly save on household bills is sheer fantasy. We show that regardless of the remaining lifetime of North Sea oil and gas, a ‘drill baby drill’ approach to extraction would actually cost households more money versus continuing on our path to clean energy.”
The analysis emerges amidst a period of soaring energy prices, which the report attributes to the “US-Israeli war on Iran which has closed the Strait of Hormuz – a key shipping route for oil and gas supplies – roiling energy markets.” The study notes that its savings estimates are based on energy prices from January, prior to this escalation, making them “conservative” assessments of renewable energy’s benefits.
In response to fluctuating fossil fuel prices, the UK Government has reportedly reinforced its commitment to clean energy, announcing measures such as making plug-in solar panels available and accelerating auctions for renewable electricity contracts, including solar farms and offshore wind.
However, there have been calls from some political figures, including elements within the Conservative and Reform UK parties, to increase North Sea oil and gas supplies and reverse policies supporting a “net-zero” economy. Former US President Donald Trump has also publicly criticised wind power and advocated for increased North Sea drilling.
The Smith School report further detailed the potential savings, explaining that full exploitation of North Sea resources with a “realistic” tax take redistributed to households could save £82 on an average bill. This figure would drop to just £16 if the government were to scrap the windfall tax on North Sea oil and gas company profits.
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Conversely, widespread adoption of renewable energy could reduce bills from £105 to £441, depending on the extent of electrification and bill design. If renewables dominate electricity generation, they would set the price of power, unlike the current gas-led pricing, potentially cutting dual-fuel bills by £105. Electrifying homes with technologies like heat pumps could save an additional £330 annually, while rebalancing electricity bills by shifting policy costs to general taxation could deliver savings of approximately £441 per year.
Co-author Cassandra Etter-Wenzel emphasised the need for support, stating: “Achieving this requires upfront investment – especially for heat pumps and insulation – and therefore depends on effective subsidy and financing mechanisms, particularly for low-income households.”
Dr. Sen highlighted the efficiency of heat pumps, which produce around three units of heat for every unit of electricity consumed, significantly more than gas boilers.
