Jackdaw won't cut energy bills

On 21 October, Energy Secretary Miatta Fahnbulleh signed off Jackdaw, a Shell-Equinor gas field in the North Sea. The government says it will lift domestic gas production by around 6% at its peak, add £2.9bn to the economy and safeguard hundreds of jobs. What ministers have not claimed is that it will make gas cheaper, because it can't. 

As gas is traded on international markets, British consumers remain exposed to global demand, geopolitical instability and international prices, regardless of where their gas originates. Jackdaw may increase supply, but it offers little reason to expect a meaningful reduction in household bills. Even the jobs argument looks thinner upon examination, with Adura's own environmental assessment only counting 27 new full-time roles at Jackdaw, with the remaining 273 being posts that already exist. The decision to sign off Jackdaw seems to be just politics. Jackdaw’s sign-off is hard to separate from Donald Trump’s repeated pressure, who spent months pressing former Prime Minister Keir Starmer to drill and called Jackdaw 'great news'. Whether or not Washington was a crucial driver of this decision, choosing increased drilling remains a strange definition of energy independence. 

It’s apparent that Jackdaw will have little impact on both energy prices and job security; the case for renewables remains strong. While wind and solar require substantial upfront investment, they do not require a continuous supply of fuel purchased at fluctuating market prices. Under the current system, the most expensive source of electricity needed to meet demand generally sets the price for all generators. Therefore, as renewables begin to make up a greater share of electricity generation, gas will be needed less frequently, reducing its impact on wholesale prices and lowering costs in the long term. However, achieving this requires more than just expanding renewable electricity generation, with greater investment in home insulation and heat pumps also needed to reduce dependence on fossil fuels.

Regardless, it is clear that the North Sea cannot be the UK’s long-term plan for energy security. UK oil and gas production peaked by 2000 and has since fallen by more than 70%. Despite this, ministers are still proposing to use North Sea revenues to finance the energy transition through a new £2bn Energy Wealth Fund. This is an incredibly reckless approach, as Britain's future energy system should not depend on revenues from an industry that is already in long-term decline.

Britain has seen this problem before. North Sea oil and gas has generated enormous wealth, but successive governments failed to transform enough of that windfall into a lasting national investment fund. The government's own estimate is that investing North Sea tax receipts since 1980 could have produced a sovereign wealth fund worth around £1 trillion today. The cost of failing to plan beyond fossil fuels is therefore far from abstract, particularly when there is no guarantee that future oil and gas revenues will be enough to finance the transition needed, and at some point in the future there will be no more gas or oil to extract from the North Sea. Britain cannot afford to repeat its past mistakes. Jackdaw will do little to bring down household energy bills, but sustained investment in renewables offers a unique opportunity to build both a cheaper and more secure energy system for the future.

Image: Wikimedia Commons/Gary Bembridge

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