UK households could see bills rise by around £460 as superpowers vie

The typical UK household energy bill could rise by more than a quarter, around £460 extra a year, according to forecasts from British Gas, EDF and E.ON. For the second time in four years, a war thousands of miles away is affecting UK energy bills. The last shock, after Russia's invasion of Ukraine, cost households an extra £63bn, according to the Energy and Climate Intelligence Unit and E3G.

Since US and Israeli strikes on Iran in February effectively closed the Strait of Hormuz, oil and gas prices have soared. Winter demand is expected to push them higher still, with Europe's winter gas stores at their lowest since records began in 2011.

The rise comes as world leaders gather in Antalya, Turkey, for COP31. The UK is caught between the world's two energy superpowers: America pumping record volumes of oil and gas, and China flooding global markets with solar panels, batteries and electric cars.

Energy Secretary Miatta Fahnbulleh said affordability was her overriding objective. “We are far too exposed to global markets we have no control over,” she told the BBC. “What's the solution to that? Homegrown clean energy.”

The government has approved a new North Sea gas field, Jackdaw, while blocking a £1.5bn Chinese wind turbine factory at Whiteness Head, citing national security. A decision on Rosebank, the UK's largest undeveloped oil field, is expected within weeks. Fahnbulleh has said Jackdaw's drilling will have minimal impact on energy prices, adding that oil and gas are sold on global markets.

Conservative leader Kemi Badenoch has told the prime minister to “stop faffing about” and approve Rosebank, calling drilling the only way to protect families from rising bills. Reform UK's Richard Tice said: “If we use our own gas… that will bring our bills down.”

Tessa Khan of campaign group Uplift said Rosebank “doesn't really do anything for energy security” and that it would “send a very dangerous signal about the UK's seriousness about addressing climate change after the summer that we've just had”.

The North Sea is in long-term decline, with output down more than two-thirds since its peak in 1999 and expected by the Office for Budget Responsibility to keep falling by about 10% a year. Jackdaw's reserves amount to only a few months of UK gas demand, and Rosebank contains less than a year's oil consumption.

The government last week introduced a bill to ban new exploration licences, though Rosebank, already licensed, is not covered.

The Climate Change Committee calculates a future price shock like 2022's would push household bills up 59% under a high-carbon path but only 4% if the UK focused on renewables. However, building more renewables does not automatically mean lower bills: higher interest rates and supply chain costs have pushed up initial costs, and new grid infrastructure is needed.

Fahnbulleh acknowledged Britain was swapping dependence on petrostates for dependence on Beijing. “Well, look, we are,” she said, adding that the UK had a diversified global market. She said she wants more clean-tech kit made in Britain.

The US formally left the Paris climate agreement this year and is not expected to send a delegation to COP31. Meanwhile, China now sees pushing the climate agenda as serving its national interest, according to Li Shuo of the Asia Society Policy Institute, who called it a “role reversal.”