Energy bills squeezed as US-China superpower battle plays out

Energy bills for a typical household in Britain could jump by more than a quarter in January, costing around £460 extra a year, according to the latest forecasts from 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, with demand for gas rising just as Europe's winter gas stores sit at their lowest since records began in 2011.

This week world leaders are gathering in Antalya, Turkey, for COP31, the UN climate summit, where the same tension is playing out. 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. Britain is already being pulled both ways. It buys nearly a quarter of its imported gas from America and much of its clean energy kit from China.

Near the Moray Firth by Inverness, at Whiteness Head, thousands of workers built the giant platforms that opened up North Sea oil for nearly 30 years. Ming Yang, one of China's biggest wind turbine makers, wanted to bring the yard back to life with a £1.5bn factory and up to 1,500 jobs initially.

In March, after US lawmakers had urged the UK to block it, ministers did just that, citing national security. Last month, they approved a new North Sea gas field, Jackdaw. No to Chinese wind turbines; yes to North Sea gas.

Energy Secretary Miatta Fahnbulleh says tackling climate change remains a priority, but with the cost of living biting, affordability is her overriding objective. She says Britain is far too exposed to global markets it has no control over, and argues the solution is homegrown clean energy.

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. Less than half of the UK's gas now comes from its own North Sea fields.

The government now faces a tougher choice. Rosebank, west of Shetland, is the UK's largest undeveloped oil field. Fahnbulleh has said it would produce about seven times the emissions of Jackdaw, and a decision is expected within weeks.

Opponents say Rosebank does little for energy security. Tessa Khan of the campaign group Uplift, which has fought the field in the courts, argues it sends a very dangerous signal about the UK's seriousness about addressing climate change. North Sea output has fallen by more than two-thirds since its peak in 1999.

Jackdaw's reserves amount to only a few months of UK gas demand, while Rosebank contains less than a year's worth of the country's oil consumption. 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.

The case for clean energy is that 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.

Dependence on China is growing, though. It makes the vast majority of the world's solar panels and batteries, and around two-thirds of its electric cars. 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.

Asked whether Britain was swapping dependence on petrostates for dependence on Beijing, Fahnbulleh said: "Well, look, we are," adding that there is a diversified global market. Britain will keep buying from China where it needs to, she said, but wants more of the kit made at home.