Economist Warns UK Is Importing More Carbon-Heavy Gas By Turning Away From North Sea Production

Britain is becoming less energy secure by discouraging domestic gas production and turning instead to imports with a higher carbon footprint, a leading economist has argued — as the war in Iran keeps energy policy firmly in the political spotlight.
Sir Dieter Helm, an Oxford economist who specialises in energy, said the UK’s current approach was producing outcomes that ran counter to its own stated goals — importing liquefied natural gas from abroad and piping Norwegian North Sea gas into Britain, while simultaneously discouraging domestic extraction through licensing restrictions and a heavy windfall tax on producers.
“We are not using our own gas and as a result we are less secure than otherwise would be the case,” Sir Dieter said, speaking on his podcast Helm Talks.
The economist outlined what he described as three widely repeated claims that did not hold up to scrutiny: that Britain is moving away from gas dependency; that it uses its own domestically produced gas; and that homegrown gas must always be priced in line with global markets. On each point, he argued the reality was more complicated.
On the question of pricing — a central plank of the Government’s argument against new North Sea licences — Sir Dieter pointed to the era of British Gas, when long-term fixed-price contracts were standard. He suggested a similar model could be revisited, with the government using its control over offshore licences as leverage to negotiate stable supply agreements with producers.
The UK currently relies on gas for around 35 per cent of its total energy needs, a figure Sir Dieter said showed little sign of falling in the near term despite years of investment in wind and solar. He also noted that British industrial energy prices had remained elevated even after the initial spike that followed Russia’s invasion of Ukraine in 2022 — a period ministers had used to make the case for accelerating the transition away from fossil fuels.
The debate has sharpened since conflict broke out in Iran, prompting renewed calls from industry figures and trade unions for increased North Sea output. At Prime Minister’s Questions, Conservative leader Kemi Badenoch challenged Sir Keir Starmer directly, describing the ban on new drilling licences as reckless given current global conditions. The Prime Minister acknowledged that oil and gas would remain part of the energy mix for years ahead, while reaffirming the Government’s commitment to renewables.
The Department for Energy Security and Net Zero has maintained that new licences would neither improve energy security nor reduce consumer bills, given that oil and gas is traded on international markets where Britain is, in the Government’s words, a price taker. A spokesperson reiterated that position, arguing the only lasting protection from price volatility was reducing dependence on fossil fuel markets altogether.
Sir Dieter did not dispute the long-term case for decarbonisation, but called for a more grounded approach to the transition — one that accounted for gas’s continued role rather than, as he put it, approaching the issue like an Orwellian slogan.​​​​​​​​​​​​​​​​