A £15bn home insulation programme that would cut household bills by £1bn a year and add £1.6bn annually to the economy, versus new North Sea oilfields whose backers face mounting questions over how much tax revenue they would actually deliver. That is the stark comparison at the heart of new research on Britain’s energy choices.
The analysis, by the thinktank E3G, lands at a sensitive moment for investors and policymakers alike. The government’s warm homes plan, a £15bn commitment to insulate up to 5m homes, is under threat of cuts as ministers hunt for budget savings. Yet E3G argues the programme would more than pay its way, drawing in a further £15bn of private investment spread across the country rather than concentrated in one region or a handful of companies. The scheme would also support about 50,000 new jobs across thousands of small businesses, with the bill savings concentrated on low-income households.
Additional reference context is available at https://www.theguardian.com/environment/2026/oct/18/heat-pumps-insulation-warm-homes-plan-beat-new-oilfields-cutting-uk-cost-of-living-study.
The full delivery of the plan would lift GDP by 0.08%, according to E3G. By contrast, AI modelling cited in the research suggests the Rosebank oilfield, west of Shetland, would add only about 0.025% to GDP on average across its lifetime, and that assumes oil prices falling back to $70 a barrel from recent highs. If the taxpayer ends up footing decommissioning bills, that modest gain would be wiped out entirely.
The employment arithmetic points in the same direction. Rosebank would create roughly 1,100 direct and indirect jobs, the analysis found, concentrated in the North Sea and in two companies, one of which, Equinor, is an overseas investor. Equinor itself previously estimated 3,500 jobs at peak for Rosebank and the Jackdaw gasfield combined.
The fiscal case for new drilling, often invoked by its proponents, looks thinner under scrutiny. Related research by WWF and the campaign group Uplift suggests tax revenues are likely to be limited given the concessions drillers can expect. While total profits for Rosebank’s backers, Equinor, Shell and Ithaca Energy, could reach £1.5bn over its 25-year lifespan, the UK government faces a potential loss of £258m through tax breaks and incentives. North Sea tax revenues stood at about £4bn in 2025-26, but upstream tax relief and support measures amounted to an estimated £3.26bn, leaving a narrow net contribution. With the basin in steep decline, revenues are projected to fall to about £100m by 2030, while taxpayers are likely to be asked for £12bn to dismantle the North Sea’s ageing infrastructure.
Experts have repeatedly noted that new North Sea oil and gas would not lower fuel prices or ease supply constraints linked to the Iran war, because oil and gas are traded on international markets.
The decision points are close. The energy secretary, Miatta Fahnbulleh, said on Wednesday that a ruling on Jackdaw was “imminent”, with a decision on Rosebank to follow a little later. Labour pledged in its 2024 manifesto to halt new oil and gas licensing, but both fields could proceed as exceptions because they were already in the licensing system.
Industry has pushed back. A spokesperson for Adura, the joint venture between Equinor and Shell that owns Jackdaw and Rosebank, said approving Rosebank and other planned North Sea developments would support £35.3bn in UK economic value between 2026 and 2035, with Rosebank alone representing £8.7bn of private sector investment, three quarters of it spent in the UK, and the two fields together contributing £4.1bn in additional tax revenue over the next decade. Those figures, however, take in the companies’ wider operations beyond the two fields and rest on assumptions about the supply chain and employee spending that are uncertain. They also do not account for large tax reliefs estimated at more than £2.4bn, and, contrary to standard HM Treasury practice, do not appear to apply a discount rate to future income.
Opposition is organising on multiple fronts. Ten major unions wrote to the government on Thursday opposing a Rosebank licence, scores of Labour MPs are against the move, and 600 scientists urged a rethink over the summer.
James Huw Dyson, a senior researcher at E3G, framed the choice in cost-of-living terms: “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. 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, which will cut bills and create good jobs across Britain at the same time.”
Dhara Vyas, chief executive of Energy UK, which represents the energy industry, warned against policy drift: “We need government to stick to its ambitions on electrification. Watering down the warm homes plan or making further changes to the zero emissions vehicle mandate sends mixed signals to a market that has been in a state of flux for far too long. These businesses cannot easily ramp up production again, and sadly for too many have already had to close.”
The Department for Energy Security and Net Zero declined to comment on E3G’s findings or the future of the warm homes plan. For investors watching both sides of the ledger, the signal is that the returns on insulation are broad, distributed and measurable, while the returns on new drilling are concentrated, contested and, on the evidence assembled here, heavily subsidised.