The Illusion of Energy Security: A Critique of the UK Government’s Energy Policy

What is the UK government’s energy policy?

The current UK government’s energy policy is built around a rapid transition to a cleaner, more domestically produced energy system. The central part of this proposal is the ambition to deliver clean power by 2030 through a major expansion of renewables, grid infrastructure, and other low-carbon technologies, while also using state intervention more actively through state-backed companies such as Great British Energy. Alongside this, the government supports home insulation and electrification to reduce demand and lower bills, backs nuclear and carbon capture as part of the wider energy mix. The government’s North Sea policy is more restrictive than its rhetoric sometimes suggests: it has ruled out new licenses for oil and gas exploration in the North Sea, while still allowing existing fields to keep producing for the rest of their operating life. Ministers defend this on the grounds that new licenses would do little to lower bills or strengthen energy security, as the UK remains tied to international energy markets and the basin is already mature. Yet this leaves the policy open to criticism from both sides, as it seeks to claim political credit for sounding tough on fossil fuels without fully confronting the economic and strategic tensions of continuing to rely on hydrocarbons during the transition. This policy ultimately depends on how quickly the UK can reduce its exposure to internationally traded oil and gas. As long as hydrocarbons remain a key part of the system, the UK will still be vulnerable to global commodity price shocks, regardless of domestic political targets.

What are the potential benefits of this position?

The potential benefits of this strategy are that, assuming it works, it could leave the UK with a more secure and resilient energy system that is less exposed to the sort of international oil and gas price shocks that have driven bills higher in recent years such as the closure of trade flows through the strait of Hormuz. A larger domestic supply of renewable and nuclear power, combined with improved grid infrastructure and home insulation, could reduce long-term dependence on imported fuels, strengthen energy sovereignty, and lower household energy costs over time. In principle, it could also support new investment, jobs and industrial capacity in sectors such as offshore wind, nuclear, grid construction and clean energy technology, while helping the UK meet its climate targets at the same time.

The attraction of this strategy is that it could gradually reduce the UK’s sensitivity to volatile gas and power markets. A system with more domestic renewables, nuclear and lower demand would in theory leave households and industry less exposed to imported fuel costs and international supply disruptions. That ambition must also be set against the wider structure of the UK energy system, where fossil fuels still accounted for 75.2% of energy consumption in 2025, the low-carbon share was 21.8%, and net import dependency stood at 43.5%

Our view on these policies:

The government’s energy policy is built on the sort of slogan that sounds impressive on a podium and much less convincing once it collides with the physical reality of the British energy system. “Clean power by 2030” is presented as though it were a serious governing plan, when in practice it often feels more like a branding exercise for ministerial speeches. The target is not modest either: the government’s own planning documents envisage clean sources delivering at least 95% of Great Britain’s generation by 2030. In the government’s own figures, clean sources were 60% of Great Britain’s electricity generation in 2023, meaning the system would have to move from 60% to at least 95% in just seven years. That is not a small adjustment to the system. It is a near-total redesign of the electricity mix on an extremely compressed timetable, in a country already notorious for grid bottlenecks, planning delays and chronic infrastructure underdelivery.

Linking this directly to commodity markets, the real question is whether this transition changes the UK’s marginal pricing exposure in practice rather than only on paper. If clean capacity, storage and grid upgrades do not arrive fast enough, gas will continue to play an outsized role in power pricing, leaving the market exposed to the same underlying commodity risks.

What makes the policy weak is the gap between its moral certainty and its operational vagueness. Ministers speak as if announcing a deadline is the same as solving the engineering, financing and permit constraints that have restricted British energy for years. The government itself admits that the clean power mission depends on large-scale grid expansion, flexibility, storage, new generation and a faster planning system. In other words, the success of the programme rests precisely on the set of things Britain has historically been worst at delivering quickly.

Britain’s energy record gives plenty of reason for scepticism. Hinkley Point C has become a case study in delay and cost escalation rather than fast strategic delivery. Grid connections were allowed to become so clogged that the backlog ran to more than 700 GW before the system was overhauled. Even the 2023 Contracts for Difference auction failed to secure a single offshore wind project. The pattern is clear: British governments are good at announcing targets, but far worse at delivering the grid, generation and planning capacity needed to meet them on time.

That execution risk is highly relevant to commodity markets because delays in grids, storage and generation do not just slow decarbonisation, but prolong dependence on gas-fired power and imported fuels. The weak delivery increases the chance that the UK remains tied to volatile wholesale gas and electricity prices for longer than policymakers suggest.

Great British Energy is another example of political theatre masquerading as industrial strategy. It is sold as proof that the state is finally “taking control” of the energy future, but the grandiose name disguises how thin the substance still is. Too much of the rhetoric around it suggests the government thinks that rebranding capital allocation as national renewal is itself an achievement. A state backed company can be useful, but it is not a substitute for a coherent energy market design, nor is it proof that ministers know how to build things at pace. Great British Energy is backed by £8.3 billion of new money through Parliament, which underlines the seriousness of the state’s intended financial role even if funding alone does not resolve the underlying delivery constraints. Institutional rebranding does little by itself to change the underlying energy supply stack. What matters is whether the policy actually changes physical energy balance, it can lower marginal reliance on gas, and improve resilience against external commodity shocks.

The same pattern appears in the Warm Homes Plan, where a worthy objective is wrapped in triumphalist language. Upgrading homes and reducing fuel poverty is sensible policy. But the fact that Britain still needs a major state-backed retrofit programme shows the failure of energy policy over many years, and there is little reason to trust that a government which struggles to deliver infrastructure at scale will suddenly manage to upgrade millions of homes efficiently, cheaply and on schedule. Announcing £15 billion and aspirations for up to 5 million homes sounds impressive. Delivering it house by house across the country is the part governments routinely fail at. This also has a direct commodities dimension because lower household demand would reduce the volume of gas and power the system needs to procure during tight periods. If delivered properly, efficiency acts as a form of demand-side insulation against commodity price spikes, especially in winter.

The UK Government’s biggest mistake in this policy

The policy on oil and gas in the North Sea is incoherent and counter-productive to Britain’s energy security. The government says it will issue no new licences for new North Sea exploration, while also insisting that existing production will continue, that the transition will be orderly, and that Britain still needs resilience as domestic gas output declines. At the heart of the policy is an attempt to reconcile political signalling on fossil fuels with the practical realities of energy security. The result is a muddled compromise that satisfies neither side. If new licences truly make no meaningful difference to prices or security, then ministers are tacitly admitting how little control Britain has over its own energy costs. If domestic supply still matters for resilience and transition management, then the government is conceding that hydrocarbons remain strategically relevant long after the rhetoric suggests otherwise.

There are four key issues with this policy: it risks making Britain more reliant on imported oil and gas, deters investment, confuses climate accounting with real-world transition management, and threatens job losses alongside skills shortages in roles that cannot easily be filled. The issue here is the future balance between domestic hydrocarbon supply and imported barrels or molecules. If the UK reduces its own production faster than demand falls, it becomes more exposed to international supply chains and external pricing pressure.

The strongest case against it is that it risks making Britain more dependent on imported oil and gas while pretending to be morally serious about securing energy sovereignty. The government’s defence is that new North Sea licences do not materially change prices because the UK buys and sells into global markets, which is true as far as it goes.

Domestic production does not set the price, but it still affects where supply comes from, how exposed the country is to foreign disruptions, how much economic value stays in the UK, and whether industrial capacity and jobs survive the transition. The government itself says gas system resilience must be maintained as domestic production falls, which weakens the claim that further decline does not matter strategically. In commodity markets, the source of supply still matters even when the headline price is set internationally. Greater import dependence can raise exposure to shipping disruptions, geopolitical bottlenecks and tighter regional gas balances, all of which can amplify volatility for UK consumers and industry. The import issue is not theoretical: the government’s own security of supply report says the UK’s net primary oil imports increased by 11.7% in 2024 to 19.7 million tonnes, the highest level since 2014.

A second problem is that the policy sends a terrible investment signal. Energy systems are built on long lead times, large sunk costs and expectations about future policy stability. By ruling out new licences while still admitting the UK will rely on oil and gas for years, the government is effectively saying: we still need hydrocarbons, but we are less willing to back domestic supply of them. That encourages capital to leave, weakens supply chains, and makes the UK more reliant on imported molecules produced under other countries’ rules rather than its own. Industry groups have argued that unstable licensing and fiscal policy deter investment across the wider offshore ecosystem, not just in new drilling. That weakens the domestic upstream investment case at exactly the point when the UK still relies on hydrocarbons, creating a more fragile medium-term supply outlook. Discouraging domestic capital while demand remains sticky, risks increasing dependence on imported oil and gas rather than genuinely reducing hydrocarbon exposure.

It confuses climate accounting with real-world transition management. If UK output falls faster than UK demand falls, the gap is filled by imports. That may flatter the domestic political narrative, but it does not mean hydrocarbons have vanished from the system. It often just means the UK has outsourced production while keeping consumption. The Climate Change Committee is clear that North Sea resources are declining and that, without a clean-energy transition, the UK would become increasingly import-dependent; but that does not automatically mean cutting off new licences is the most economically intelligent way to manage the decline. The real policy question is whether demand can fall fast enough to justify a sharper drop in domestic supply. Cutting production is not the same as cutting demand. If demand stays high while output falls, the UK is not moving away from hydrocarbons, but becoming more reliant on imports and global prices.

There is also a jobs and capability argument. North Sea production is tied to a broader offshore industrial base: engineering, subsea services, project management, ports, fabrication and technical labour. The government says these capabilities can be redeployed into offshore wind, carbon capture and hydrogen, but transitions of that sort do not happen cleanly just because ministers say they will. The skills are also not directly transferable on an engineering and stem basis. If investment in the legacy sector falls faster than new sectors scale, you do not get a smooth transfer. You get erosion: workers leave, expertise disappears, and the domestic supply chain weakens before replacement industries are ready. Even the government frames this as a need for a “fair, managed and prosperous transition”, which is an implicit admission that mishandling the decline has real economic risks. This matters for commodities beyond employment alone, because a weakened offshore industrial base can also reduce the UK’s long-run flexibility in both conventional and transitional energy markets. Lost capability today can make future supply responses slower, more expensive, and more dependent on foreign contractors and equipment.

The deeper criticism is that the policy is performative. It lets ministers sound tough on fossil fuels without actually solving the core problem, which is that Britain still depends on hydrocarbons and still lacks enough clean power, storage, grid capacity and electrified demand to replace them quickly. So instead of a genuinely hard-headed transition strategy, the government ends up with the worst of both worlds: less confidence in domestic oil and gas investment today, continued dependence on hydrocarbons tomorrow, and a growing reliance on imports in between. That is why critics call it not a serious energy strategy, but an exercise in political signalling dressed up as policy. In market terms, that leaves the UK exposed to the same underlying gas and power price volatility, but with less confidence in domestic supply and fewer obvious buffers against external shocks.

Concluding Statement:

Perhaps the deepest flaw is that the government talks about energy policy as though it were primarily a test of political will. It is not. It is a test of administrative competence, market design, infrastructure delivery and physical system management. Britain’s problem has rarely been a shortage of targets. There has been a shortage of credible execution. This government has taken that bad national habit and given it greener language. What it offers is not a hard-headed energy strategy but a mixture of aspiration, symbolism, and deadline politics. It wants applause for ambition before it has earned confidence in delivery. The government’s energy policy is what happens when political marketing takes control of national infrastructure: loud on targets, vague on trade-offs, and utterly detached from the grim, practical business of keeping a modern country powered. Ultimately, commodities markets do not respond to slogans but to physical balances, infrastructure constraints and marginal supply. That is why the success or failure of this policy should be judged not by the ambition of its targets, but by whether it genuinely reduces the UK’s exposure to volatile global energy commodities over time.