Insulating homes and heat pumps would boost UK economy more than new North Sea oil, study finds

Research by E3G contrasts £1.6bn yearly economic gain from government warm homes plan with limited jobs and tax returns from Rosebank and Jackdaw fields

By LineZotpaper

Published18 October 2026

Read Time2 min

A new study from the thinktank E3G has found that the UK government’s proposed £15bn warm homes plan, focused on insulation and heat pumps, would deliver greater economic benefits than developing new North Sea oilfields such as Rosebank and Jackdaw. The plan would cut household energy bills by £1bn a year, boost the economy by £1.6bn annually and create around 50,000 jobs, according to the analysis. In comparison, the Rosebank oilfield would generate about 1,100 direct and indirect jobs, with tax revenues likely limited after accounting for industry reliefs and decommissioning costs.

The research, published by E3G, comes as ministers consider budget cuts that could threaten the warm homes plan. Energy secretary Miatta Fahnbulleh said on Wednesday that a decision on the Jackdaw gasfield is “imminent”, with a decision on Rosebank to follow later.

The study estimates that the warm homes plan would reduce annual household energy costs by £1bn, with savings concentrated among low-income households. It would also provide a £1.6bn yearly boost to the UK economy and create approximately 50,000 jobs, mostly across small businesses.

By contrast, the Rosebank field west of Shetland, backed by Equinor, Shell and Ithaca Energy, would create about 1,100 direct and indirect jobs, the analysis found. Equinor has previously estimated 3,500 jobs at peak for both Jackdaw and Rosebank combined. However, experts have repeatedly noted that new North Sea oil and gas would not lower UK fuel prices because oil and gas are sold on international markets.

Tax revenues from North Sea drilling are also in question. While the total profits from Rosebank over its 25-year lifespan could reach £1.5bn for its backers, the UK government could face a net loss of £258m due to tax breaks and incentives, according to research by WWF and the campaigning group Uplift. Tax revenues from the North Sea were about £4bn in 2025-26, but upstream tax relief and support measures amounted to an estimated £3.26bn. As the basin declines, tax revenues from drilling are projected to fall to about £100m by 2030, with taxpayers likely facing £12bn in decommissioning costs for offshore infrastructure.

Analysis

Why This Matters

The comparison between green home upgrades and new oilfields is central to UK energy policy and the government’s net-zero targets.
A decision to cut the warm homes plan in favour of drilling would directly affect household energy bills and employment in green sectors, particularly for low-income households.
The study challenges the economic justification for new North Sea licensing, which Labour pledged to halt in its 2024 manifesto, though Jackdaw and Rosebank may proceed because they were already in the licensing system.

Background

The warm homes plan, announced by the Labour government, was intended to improve energy efficiency in UK homes. However, it is reportedly under threat as ministers seek budget savings from other departments. The North Sea is a mature basin in steep decline, and the government already spends billions on tax relief for oil and gas companies. The decision on Jackdaw and Rosebank will be a test of the government’s climate and economic priorities.

Key Perspectives

Supporters of new drilling: They argue that North Sea developments provide economic stimulus, tax revenues, and jobs, with Equinor estimating 3,500 peak jobs for the two fields combined. Some also see domestic oil and gas as enhancing energy security. Critics of new drilling: E3G and environmental groups counter that the jobs and tax benefits are far smaller than those from energy efficiency investments, and that oil prices are set globally, so new fields do not lower UK bills. They also highlight the eventual decommissioning costs falling on taxpayers. Government and investors: Ministers face a balancing act between fiscal constraints, climate commitments, and energy security. Industry backers like Equinor, Shell and Ithaca Energy point to the profits available from fields such as Rosebank.

What to Watch

The imminent decision on the Jackdaw gasfield, expected from Energy Secretary Miatta Fahnbulleh.
The later decision on the Rosebank oilfield, which has been linked to broader UK-US political dynamics.
Any announcement on cuts to the warm homes plan, and the extent to which the E3G study influences government thinking.

Sources

Heat pumps and insulation would cut UK living costs more than new oilfields, study suggests · Business | The Guardian

Checked

11 claims in this story checked against 1 source: 10 supported.

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SupportedInsulating homes and heat pumps would boost UK economy more than new North Sea oil, study findsBusiness | The Guardian: “would do more to cut the cost of living, create jobs and boost the UK’s economy than drilling for new oil”
Partly supportedResearch by E3G contrasts £1.6bn yearly economic gain from government warm homes plan with limited jobs and tax returns from Rosebank and Jackdaw fieldsBusiness | The Guardian: “The Rosebank oilfield... would create about 1,100 direct and indirect jobs... the UK government faces a potential loss of £258m”
SupportedThe UK government‘s proposed £15bn warm homes plan, focused on insulation and heat pumps, would deliver greater economic benefits than developing new North Sea oilfields such as Rosebank and JackdawBusiness | The Guardian: “would do more to cut the cost of living, create jobs and boost the UK’s economy than drilling for new oil”
SupportedThe plan would cut household energy bills by £1bn a year, boost the economy by £1.6bn annually and create around 50,000 jobsBusiness | The Guardian: “would slash £1bn a year from household energy bills... provide a £1.6bn yearly boost to the economy, and about 50,000 new jobs”
SupportedThe Rosebank oilfield would generate about 1,100 direct and indirect jobs, with tax revenues likely limited after accounting for industry reliefs and decommissioning costsBusiness | The Guardian: “The Rosebank oilfield... would create about 1,100 direct and indirect jobs... tax revenues are likely to be limited... potential loss of £258m”
SupportedEnergy secretary Miatta Fahnbulleh said on Wednesday that a decision on the Jackdaw gasfield is 'imminent', with a decision on Rosebank to follow laterBusiness | The Guardian: “A decision on whether to give the green light to the Jackdaw gasfield in the North Sea was 'imminent', the energy secretary, Miatta Fahnbulleh, said on Wednesday. A decision on Rosebank would take a little longer”
SupportedEquinor has previously estimated 3,500 jobs at peak for both Jackdaw and Rosebank combinedBusiness | The Guardian: “Equinor previously estimated 3,500 jobs would be created at peak for Jackdaw and Rosebank combined”
SupportedExperts have repeatedly noted that new North Sea oil and gas would not lower UK fuel prices because oil and gas are sold on international marketsBusiness | The Guardian: “Experts have repeatedly pointed out that new North Sea oil and gas would not bring down fuel prices... because oil and gas are sold on international markets”
SupportedWhile the total profits from Rosebank over its 25-year lifespan could reach £1.5bn for its backers, the UK government could face a net loss of £258m due to tax breaks and incentives, according to research by WWF and UpliftBusiness | The Guardian: “While the total profits from Rosebank for its backers... could be £1.5bn over its 25-year lifespan, the UK government faces a potential loss of £258m through tax breaks and incentives”
SupportedTax revenues from the North Sea were about £4bn in 2025-26, but upstream tax relief and support measures amounted to an estimated £3.26bnBusiness | The Guardian: “Tax revenues from the North Sea were about £4bn in 2025-26, but upstream tax relief and support measures amounted to an estimated £3.26bn”
SupportedAs the basin declines, tax revenues from drilling are projected to fall to about £100m by 2030, with taxpayers likely facing £12bn in decommissioning costs for offshore infrastructureBusiness | The Guardian: “tax revenues from drilling are projected to fall to about £100m by 2030. Decommissioning costs ... taxpayers are likely to be asked for £12bn”