The superpower battle over energy – and what it means for your bills

A gas rig in the North Sea. An oil field in Texas. A solar panel factory in China. They can feel a world away, but your energy bill says otherwise.

In January, it could jump by more than a quarter – around £460 extra a year for the typical UK household – according to the latest forecasts from the big suppliers British Gas, EDF and E.ON.

For the second time in four years, a war thousands of miles away is landing in British inboxes.

Since US and Israeli strikes on Iran in February effectively closed the Strait of Hormuz, oil and gas prices have soared.

Winter is expected to push them higher still: demand for gas is rising just as Europe's winter gas stores are at their lowest since records began in 2011.

And there's a bigger threat looming over all of this: the warming climate. Cutting carbon emissions is essential to limit future warming and avoid the most damaging effects of climate change. But keeping bills down while cutting emissions is proving hard – and not just for the UK.

As world leaders gather this week in Antalya, Turkey, for COP31, the UN climate summit, the same tension is playing out around the world. Energy and climate policy has become the front line in a contest between the world's two energy superpowers, leaving everyone else squeezed in between.

America is betting on fossil-fuel molecules: pumping record volumes of oil and gas and pressing its allies to buy them. China is betting on electrons: flooding the world with the solar panels, batteries and electric cars that can replace those fuels.

Whether the bet on fossil fuels or renewables wins will shape not just what the world pays for energy, but how fast it can cut the emissions that are heating the planet.

The UK, which already buys nearly a quarter of its imported gas from America and much of its clean energy kit from China, is being pulled both ways. So which path will it take? Is there a middle way and what will it all mean for your bills?

Two decisions

On the Moray Firth near Inverness, a long spit of sand and dunes curls out into the sea at Whiteness Head. Behind it lies a yard where, for nearly 30 years, thousands of workers built the giant platforms that opened up North Sea oil.

Ming Yang, one of China's biggest wind turbine makers, wanted to bring it back to life with a £1.5bn factory and up to 1,500 jobs initially generated. In March, after US lawmakers had urged the UK to block it, ministers did just that, citing national security.

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Last month, they approved a new North Sea gas field, Jackdaw. No to Chinese wind turbines; yes to North Sea gas.

Few countries are more exposed to the energy shock than the UK. Gas heats most homes and, much of the time, sets the wholesale price of electricity. The last shock, after Russia's invasion of Ukraine, cost households an extra £63bn – around £2,200 each – according to the Energy and Climate Intelligence Unit and E3G, two climate and energy research organisations.

Wind turbines represent homegrown energy, but they come with potential problems

Less than half of the UK's gas now comes from its own North Sea fields, and the energy we import often comes from places that turn out to be unstable or unreliable.

At the same time, Energy Secretary Miatta Fahnbulleh says tackling climate change remains a priority after Britain's hottest summer on record. The heatwaves, droughts and wildfires it brought would have been almost impossible without global warming, the Met Office's chief scientist told BBC Panorama.

But when I pressed Fahnbulleh on which matters most, bills or climate, she was unequivocal: "With the cost of living biting, affordability is my overriding objective, without a doubt."

"We are far too exposed to global markets we have no control over," Fahnbulleh told me. "What's the solution to that? Homegrown clean energy."

There are two ways to make Britain's energy more homegrown: drill for more of it, or build more of it.

The case for drilling

Within hours of Jackdaw's approval, US President Donald Trump - at war with wind turbines since objecting to a wind farm near his Aberdeenshire golf course in 2006 - took to Truth Social. "They should go FULL BLAST!!!" he wrote. "TAKE DOWN THE COSTLY AND RIDICULOUS WINDMILLS!"

Now the UK government faces a tougher choice - whether to approve Rosebank, west of Shetland, the UK's largest undeveloped oil field.

Rosebank is far bigger than Jackdaw - Fahnbulleh has said it would produce about seven times the emissions - and it is mostly oil, not gas. The subject has reportedly split the cabinet. A decision is expected within weeks.

Fahnbulleh, centre, at Jackdaw last month. She says the drilling will have minimal impact on energy prices

The government's opponents are already blaming high bills on its reluctance to drill. Conservative leader Kemi Badenoch has told the prime minister to "stop faffing about" and give permission, calling drilling "the only way we can protect families from rising bills".

"If we use our own gas… that will bring our bills down," says Reform UK's Richard Tice.

Last week's US midterms were a reminder of the political risks. Soaring petrol prices are widely seen as a key reason Trump's Republicans lost control of Congress.

But when I asked Fahnbulleh whether producing more British oil and gas would bring bills down, she was clear. "No, it doesn't," she said. "In the end, the oil and gas is sold on global markets."

Critics go further. Rosebank "doesn't really do anything for energy security", argues Tessa Khan of the campaign group Uplift, which has fought the field in the courts. "What it does do is send a very dangerous signal about the UK's seriousness about addressing climate change after the summer that we've just had."

Zoom out, though, and the row looks rather different. The North Sea is in long-term decline. Output has fallen by more than two-thirds since its peak in 1999, and the Office for Budget Responsibility expects it to keep falling by around 10% a year – even with Rosebank, which its forecast assumes goes ahead.

Whatever ministers decide, the basin's most productive days are behind it. Jackdaw's reserves amount to only a few months of UK gas demand, while Rosebank contains less than a year's worth of our oil consumption.

The debate around Rosebank and Jackdaw has sparked vehement opposition from climate protesters

And last week the government introduced a bill to write its ban on new exploration licences into law. Rosebank, which is already licensed, is not covered. That could let ministers have it both ways: approve the last big field, while promising there will never be another.

With bills set to rise again in January, that may prove a tempting combination.

The case for electrons

The alternative is to build.

Gas is bought, burned and bought again. A wind turbine or solar panel costs money to put up but can then generate electricity for decades without needing shipments of fuel.

The government's climate advisers, the Climate Change Committee, calculate that a future price shock like 2022's would push household energy bills up 59% if Britain stayed on a high-carbon path - but only 4% if it focused on renewables.

The cost of power from new solar farms fell by 90% between 2010 and 2024, and from onshore wind by 70%, according to the International Renewable Energy Agency. But the recent bout of global inflation has been pushing initial costs back up. Last year the Danish developer Ørsted scrapped plans for Hornsea 4, a giant wind farm off the Yorkshire coast, blaming soaring supply chain costs.

Higher interest rates have made things worse. Most of the cost of a wind or solar farm comes up front, so developers must borrow heavily before they generate any power.

And there is another problem. Britain needs expensive new electricity networks to bring that renewable power to the towns and cities where it is needed. Meanwhile, gas-fired stations still frequently set wholesale power prices - meaning any cost savings are not always reflected in customer bills.

All of which means building more renewables does not automatically mean lower household bills.

The China question

And there is another issue - China's dominance of clean tech. It makes the vast majority of the world's solar panels and batteries, and around two-thirds of its electric cars.

And China's lead is growing. In March, its exports of solar panels, batteries and electric cars hit a record, up 70% on a year earlier, according to the think tank Ember.

The UK wants to escape the fossil fuels that leave households exposed to price shocks and keep adding to global warming. Much of the technology needed to replace those fuels comes from China - a country it is increasingly reluctant to depend on.

I asked Fahnbulleh whether Britain was swapping dependence on petrostates for dependence on Beijing. "Well, look, we are," she said, adding: "we've got a diversified global market".

Britain will keep buying from China where it needs to, says Fahnbulleh, but she wants more of the kit made here. "I want to see turbines," she said.

Yet UK-built turbines were exactly what Ming Yang was offering.

"There was a security risk, and national security comes first and foremost," says Fahnbulleh. The government has never publicly explained what that risk was.

Two days before Jackdaw was approved, Japan's Sumitomo Electric opened Britain's first HVDC subsea cable factory at Nigg, a short way up the coast from Whiteness Head, creating up to 250 jobs.

Foreign investment, then - just not from China.

Role reversal

Earlier this year the US formally left the Paris climate agreement and is not expected to send a delegation to this year's COP. Without American pressure, others have less reason to make bold promises: national pledges now add up to a cut in global emissions of just 6% by 2035, the UN says – a tenth of what scientists say is needed to limit warming to 1.5C.

Donald Trump is a big exponent of fossil fuels

China is beginning to fill the space. Li Shuo, of the Asia Society Policy Institute, calls it a "role reversal". Once "a very conservative player" at climate talks, China now sees pushing the global climate agenda as serving its national interest – and, he says, "we're only at the beginning of this". It aims to hit one of COP31's flagship goals, getting 35% of its energy from electricity, five years early.

And increasingly it is Chinese companies, rather than governments' promises, that are driving the transition. "It's really just a China story," says Li Shuo.

If that is right, it leaves the UK in an uncomfortable place. Hard choices – and they come when household budgets are already stretched thin.

Lead image: Getty/Reuters

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