A Fair Deal for Energy – Why the North Sea Needs CfDs

See the full report on the Green Britain Foundation website

The Problem We’ve Created

Britain’s energy system is broken. We’ve let the so-called “free market” dictate prices for something as basic as heat and light — and the result has been chaos. Families saw bills triple while fossil fuel companies pocketed billions. The government scrambled with windfall taxes that were too little, too late, and impossible for businesses to plan around. It’s a shambles.

We all know renewables already run on Contracts for Difference (CfDs), simple long-term deals that guarantee a fair price. It works. Wind and solar get certainty, we get cheaper bills. But here’s the thing… why aren’t we applying the same logic to North Sea gas as it declines?

A Just Transition, Not a Cliff Edge

The North Sea is ageing. Jobs are at risk, and communities fear being left behind. Without a managed phase-out, we’ll see companies walk away when market prices dip, leaving workers and taxpayers holding the bag.

A CfD for North Sea gas changes the game. It sets a fair strike price; the real cost of production plus a reasonable profit. No more obscene windfalls when international prices spike, no more chaos when they crash. Just stability.

That means workers keep jobs while we transition, households get lower and predictable bills, and we avoid the political firefighting that’s plagued the last decade.

The Billions We Could Have Saved

If we’d had North Sea CfDs in place for the last five years, Britain would be £50 billion better off. £20 billion saved in 2022 alone, right in the middle of the energy crisis. That money should have stayed in people’s pockets, not handed over to Shell and BP.

Think about that for a second. £50 billion could’ve funded insulation for every leaky home in Britain, built offshore wind farms to power millions more homes, or even just kept bills down during the hardest winter in living memory. Instead, we paid a ransom to the fossil fuel industry.

No More Excuses

The Tories love to bang on about the free market, but when that "market" delivers volatility, extortionate prices, and energy insecurity, it’s not free at all - it’s hostage-taking. Labour already backs CfDs for renewables. Extending them to the North Sea is common sense. It gives industry certainty, cuts bills, and makes the windfall tax redundant.

This isn’t about propping up fossil fuels forever, far from it. It’s about managing their decline responsibly. Think of it like hospice care for the oil and gas industry… easing it out while we build the green economy of the future.

The Way Forward

A CfD for the North Sea is win-win. Lower bills, secure jobs, and a stable transition away from fossil fuels. It’s not rocket science and we already do it for renewables. We just need the political will to apply the same principle across the board.

The choice is simple: keep lurching from crisis to crisis, or fix the system with one proven tool. The answer’s obvious, let’s get on with it…:)