The global energy crisis fuels political debate on North Sea expansion
As the ceasefire between the US and Iran provides limited hope for a resolution, the impact of the war continues to grow. The brent crude price remains firmly above USD100 per barrel as governments move to curb energy consumption, reduce taxes and offer relief to industries and consumers faced with rising costs.
In the UK, debate has turned to how to respond to this crisis. The Labour government has come under scrutiny to maintain its ban of new licenses for drilling oil and gas in the North Sea. While the current crisis poses elevated energy security risks to the UK and countries globally, it is pertinent that expanding North Sea drilling is not the solution.
The argument for clean energy only grows stronger
As the war continues in the Middle East with the Hormuz Strait still effectively closed as of the 13th of May 2026, we expect the mandate for home grown renewables only gets stronger.
Despite the pressure from opposition parties to explore North Sea fields to mitigate energy security risks in the UK, we highlight that drilling more oil and gas is counterproductive. Squeezing limited oil and gas production out of UK fields would only strengthen the link between global energy shocks and UK prices because UK prices for oil and gas are linked to international markets, leaving the UK more vulnerable to shocks.
Another key factor driving the case for renewables is because they will lower costs. The Climate Change Committee (CCC), an independent statutory body that advises UK governments on climate targets, has previously outlined that the cost of a single fossil fuel price spike on the scale of 2022 is likely to cost as much if not more than the entire net additional cost of reaching net zero by 2050. As the current crisis is shaping up to potentially be the most disruptive we’ve ever seen, this demonstrates the case for decoupling our energy systems from fossil fuels and investing in renewables.
Below highlights climate damage & energy crisis costs against transition costs:
Over the last decade, climate-related extreme weather events have already caused roughly $2 trillion (£1.4 – 1.6trn) in economic losses globally, according to research for the International Chamber of Commerce and related analyses.
The 2022 energy crisis cost an estimated £183bn in economic costs in the four years following Russia’s invasion of Ukraine, according to E3G.
Given climate damages continue to grow and the current energy crisis impacts could be larger than that of 2022, these costs are expected to continue increasing.
Balancing and grid upgrade costs make up some of the major investments to shifting to a renewable system. We highlight some estimates below:
Moving to a renewables-based system requires spending on new technologies as well as electricity networks and flexibility (such as storage, demand response and fast-ramping plants) to manage variable wind and solar output. The National Energy System Operator projects balancing costs could peak at around £8 billion in 2030 but also sees up to £4 billion in potential annual savings if key grid and flexibility projects are delivered.
Ofgem have also proposed an initial plan to spend £28bn on energy infrastructure networks by 2030, with estimates up to £60bn by 2030. This is over half the estimated £183bn in economic costs in the four years following Russia’s invasion of Ukraine.
The above is by no means a comprehensive cost comparison. However, it does highlight that the energy crisis supports as well as climate costs far outweigh that of the often-cited high system changes needed to move to renewables. It is estimated that grid upgrades will add around £3 per month to household bills by 2031, which has a limited impact compared to the unexpected rise of 54% rise in the Ofgem price cap in April 2022 and further rise in October of the same year.
This shows that not investing in net zero is the truly expensive path. The combination of crisis support, macroeconomic disruption and climate damage costs far exceeds the incremental cost of building a clean, flexible energy system.
Looking ahead
This latest crisis is already accelerating demand for clean technologies. In particular, high oil prices make electric mobility (electric vehicles and associated charging infrastructure) more completive as we see demand surging globally for electric vehicles.
In response, the UK and other governments are moving to reduce barriers to domestic clean energy: bringing the next Contracts for Difference (CfD) auction forward to unlock new renewables capacity, deepening links with the EU electricity system, to share and raising windfall taxes to raise capital for supporting consumers.
We expect this crisis will accelerate near-term growth in renewables and related infrastructure. In this blog, we highlight that clean domestic technology should be the focus in the longer term and that the costs of transitioning to a decarbonised grid are far outweighed by those remaining reliant on fossil fuels. This shift will also continue to create significant talent support opportunities across clean energy, grid infrastructure, storage and electrification as organisations scale projects and strengthen long term energy resilience. If you want to discuss further, reach out at hello@mintselection.com