£37 Billion Abroad: Where Britain's Energy Money Actually Goes

In 2024, Britain spent £24.3 billion more on oil imports than it earned from oil exports. Add another £13 billion deficit for gas, coal, and electricity, and Britain’s total energy trade deficit reaches approximately £37 billion annually.

That’s £37 billion flowing out of the British economy every year to pay for energy that, in many cases, we could produce domestically.

This article follows up on our analysis of why Britain imports 40% of its energy. Here, we examine exactly where that money goes, who benefits, and why the situation is set to deteriorate significantly before any alternative strategy can improve it.

Where Does the Money Go?

Britain’s energy import bill isn’t distributed evenly. It flows to a small number of countries through specific fuel types.

Natural Gas: Norway’s Windfall

Norway dominates Britain’s gas supply:

76% of UK gas imports came from Norway in 2024
31 billion cubic metres of Norwegian gas flowed to Britain, nearly half of UK national consumption
99.2% arrived via pipeline, the remainder as LNG

The Langeled Pipeline, the world’s longest undersea gas pipeline at 1,116 kilometres, connects Norwegian gas fields directly to the British mainland. It was built specifically to serve UK demand as North Sea production declined.

Norway’s total gas exports reached a record high in 2024, with 117.6 billion cubic metres transported through the pipeline system, accounting for approximately 30% of Europe’s natural gas imports. The export value of Norwegian crude, condensate, and natural gas reached approximately NOK 1,100 billion (roughly £80 billion at current exchange rates).

British consumers fund a significant portion of this.

LNG: The United States and Beyond

Where Norway doesn’t supply via pipeline, liquefied natural gas (LNG) fills the gap:

United States: 16.6% of UK gas imports in 2024, up from negligible levels a decade ago
Qatar: Just 1.9% of UK imports in 2024, down from 39.2% in 2011

The shift away from Qatar reflects both increased US shale gas exports and the global competition for LNG supplies following the 2022 energy crisis. Qatar now directs more supply to Asian markets where prices are often higher.

LNG is inherently more expensive than pipeline gas. It requires liquefaction, shipping, and regasification, each step adding cost. Britain’s increasing reliance on LNG as North Sea production declines will increase the average cost of imported gas.

Crude Oil: Norway and America Again

For crude oil, two countries dominate:

Norway and the United States together accounted for two-thirds of UK crude oil imports in 2024
2024 marked a record year for US crude oil imports to the UK, reaching 16 million tonnes
The UK imported crude from 22 countries in 2024, up from 18 in 2023

The diversification of oil sources is actually a positive trend for energy security, reducing dependence on any single supplier. But diversification doesn’t reduce the total cost; it just spreads the payments across more recipients.

The Trade Deficit in Context

To understand what £37 billion means, consider what else that money could purchase:

NHS spending: The entire NHS budget for England is approximately £165 billion. Our energy trade deficit equals roughly 22% of NHS spending.
Defence: The UK defence budget is approximately £55 billion. Our energy imports cost roughly 67% of what we spend defending the country.
Education: The schools budget in England is approximately £60 billion. Our energy trade deficit equals 62% of education spending.

Alternatively, consider it per household. With approximately 28 million UK households, the £37 billion energy trade deficit works out to roughly £1,320 per household per year flowing abroad to pay for energy.

This is money that leaves the UK economy entirely. When we buy domestically produced energy, the money circulates, paying British workers, funding British pensions, and generating British tax revenue. When we buy imported energy, the economic benefit accrues abroad.

North Sea Decline: The Underlying Problem

Britain wasn’t always an energy importer. The North Sea made the UK a net energy exporter from 1981 until 2004. Understanding what changed reveals why import dependency will continue rising.

Production collapse:

Peak output: 4.4 million barrels of oil equivalent per day at the start of the millennium
2024 output: Approximately 1 million barrels of oil equivalent per day
Decline: 77% reduction from peak

Recent acceleration:

Oil output declined 11% in both 2023 and 2024
Gas production fell 13% through August 2024 year-on-year
Government revenues from UK oil and gas fell to £4.5 billion in 2024-25, down £1.6 billion from the previous year

Future projections:

The North Sea Transition Authority forecasts output falling to around 660,000 barrels of oil equivalent per day by 2029
By 2050, oil and gas production is projected to fall 89% from current levels
In 2024, less than half of UK gas came from North Sea reserves; by 2027, more than two-thirds will need to be imported

This is geology, not policy. The North Sea is a mature basin that has been producing for over 50 years. Fields deplete. New discoveries are smaller and more expensive to develop. No amount of licensing or tax incentives can reverse the fundamental decline of a finite resource.

The 80% Import Future

Industry projections paint a stark picture:

“Norway is now UK’s primary gas supplier and declining North Sea output means UK faces importing 80% of its gas and oil within a decade.”

This Offshore Energies UK warning suggests that without major intervention, Britain’s energy import dependency will nearly double within a decade.

At current prices, 80% import dependency would mean an energy trade deficit approaching £60-70 billion annually. That’s assuming prices don’t spike during the transition as they did in 2022.

The 2022 energy crisis demonstrated what happens when supply is constrained. UK household energy bills doubled. Businesses closed. The government spent £40 billion on energy support schemes. A repeat is not hypothetical; it’s a matter of when, not if, unless domestic production is replaced.

What Would Domestic Alternatives Cost?

The government estimates that achieving energy security through domestic clean power requires substantial investment:

Total system investment: £280-400 billion over 15 years
Offshore wind: £230 billion
Nuclear: £245 billion
Onshore wind: £40 billion
Solar: £37 billion

These numbers are large. But they need to be compared against the alternative: continuing to send £37 billion (and rising) abroad every year indefinitely.

The investment case:

£300 billion invested over 15 years = £20 billion per year
Current energy trade deficit = £37 billion per year
Potential annual saving = £17 billion+

This is before accounting for:

Jobs created in the UK rather than Norway
Tax revenue retained domestically
Reduced exposure to price volatility
Supply chain economic multipliers

The arithmetic is straightforward. Investing in domestic energy capacity costs less per year than paying for imports, while building long-term economic assets that generate returns for decades.

Why Gas Still Sets Our Prices

Even as renewable deployment accelerates, imported gas continues to dominate electricity prices:

Gas provided approximately 30% of UK electricity in 2024
But gas sets electricity prices 97% of the time, the highest proportion in Europe

This is the marginal pricing problem. Electricity markets price all generation at the cost of the most expensive unit needed to meet demand. When gas is required to balance the grid (which is almost always), gas prices set the market price for all electricity, including cheap wind and solar.

The result: even when wind generates electricity at £50/MWh, consumers pay prices set by gas at £100/MWh or more. The difference flows to renewable generators as windfall profits, rather than reducing consumer bills.

Solving this requires either:

Enough storage and flexible demand to eliminate the need for gas backup entirely
Market reform to decouple renewable prices from gas prices
Sufficient nuclear capacity to provide baseload power that doesn’t require gas backup

None of these solutions is quick. All require sustained investment.

The Security Dimension

Energy import dependency isn’t just an economic issue. It’s a security vulnerability.

Single points of failure:

76% of gas from one country (Norway) through one primary route (pipelines)
The Langeled Pipeline carries a substantial portion of UK gas supply through 1,116km of undersea infrastructure
Pipeline sabotage in the Baltic Sea in 2022 demonstrated this vulnerability is not theoretical

Geopolitical leverage:

Norway is a friendly ally. But alliances can shift. Energy leverage is real political power.
Europe’s dependence on Russian gas before 2022 provided Russia with significant political leverage, and some argue, contributed to strategic miscalculation.

Price volatility exposure:

When 40% of your energy is imported, you’re a price taker on global markets
The 2022 price spike was triggered by events thousands of miles from Britain
Future crises, whether in the Middle East, the Arctic, or elsewhere, will have similar effects

Energy independence isn’t about isolationism. It’s about having options. A country that can meet its own energy needs can negotiate from strength. A country that cannot is vulnerable.

What Improvement Looks Like

There is good news. Import dependency has actually improved slightly over the past decade:

2014: Approximately 65% of electricity generation fuel was imported
2024: Just under 50% of electricity supply relies on imports

This improvement is entirely due to renewable deployment. Wind and solar use no fuel, so they contribute nothing to import dependency. Every megawatt-hour generated by British wind farms is a megawatt-hour not generated by imported gas.

The Clean Power 2030 target, if achieved, would further reduce electricity import dependency. But electricity is only part of the picture. Transport, heating, and industrial processes still rely heavily on oil and gas.

True energy independence requires:

Electrification of transport and heating
Massive expansion of wind, solar, and nuclear generation
Storage and flexibility to manage intermittent renewables
Grid upgrades to connect new generation to demand centres

The investment required is substantial. But the cost of not investing is measured in perpetual payments abroad, periodic price crises, and strategic vulnerability.

Conclusion: The £37 Billion Question

Every year, £37 billion flows out of Britain to pay for energy we could largely produce ourselves.

That money builds Norwegian sovereign wealth funds, not British infrastructure. It pays American shale workers, not British nuclear engineers. It generates tax revenue in Doha, not in the UK Treasury.

This isn’t inevitable. Britain has the renewable resources, the nuclear expertise, and the engineering capability to be energy independent. What we’ve lacked is the political will to sustain the investment required.

The SMR programme is one step. Offshore wind expansion is another. But at current pace, we’re falling behind. North Sea production is declining faster than domestic alternatives are being built.

The question isn’t whether we can afford to invest in domestic energy. It’s whether we can afford not to, as the import bill grows to £50 billion, then £60 billion, while our economy remains hostage to events we cannot control.

£37 billion per year. Every year. Going abroad.

That’s the cost of the energy policy we have. The alternative costs less, creates more jobs, and leaves us less vulnerable.

The numbers are clear. The question is whether we’ll act on them.