Blog: What does growing geopolitical uncertainty mean for the UK energy system?

Price exposure is the real risk

Recent market volatility has reinforced a key point: the UK is not at immediate risk of running out of gas, but it remains highly exposed to international price movements.

As David explained during the discussion: “What we're looking at here is primarily a price shock rather than a physical supply crisis.”

While the UK benefits from a relatively diverse supply mix, including domestic production, imports from Norway and LNG from global markets - gas remains globally priced. This means price shocks feed directly into UK energy costs regardless of where the gas physically comes from.

Crucially, gas continues to set the wholesale electricity price much of the time in the UK, meaning global price spikes quickly translate into higher electricity bills.

David noted: “The gas price spike hits households twice, once through electricity bills and then directly through heating costs.”

With around 85% of UK homes still heated by gas boilers, the UK remains structurally exposed to gas market volatility in a way many European countries are not.

Lessons from the Russia–Ukraine crisis

Reflecting on the Russia–Ukraine crisis, David argued that Europe has moved quickly to diversify supply and strengthen resilience, particularly through rapid LNG infrastructure deployment and expanded storage.

However, he suggested the UK has made slower progress on strategic gas infrastructure: “We entered this crisis with around 10 to 16 days of gas. In Europe it’s closer to 90 days.”

Storage alone does not eliminate crises, but it can provide insulation against short-term disruption and reduce the need for reactive intervention during periods of market stress.

The energy trilemma: pace and sequencing matter

The conversation also explored the ongoing challenge of balancing security, affordability and decarbonisation. David argued that, over the medium term, accelerating towards clean energy improves all three areas simultaneously by reducing long-term exposure to volatile gas markets while lowering emissions.

However, he also acknowledged the short-term tensions involved in managing the transition: “The priority for the short to medium term should be to continue with decarbonisation, but also to look at the investments we need to make in gas infrastructure to buffer the residual risk.”

The discussion highlighted that the UK’s exposure to energy shocks is shaped not just by global events, but by decades of energy mix decisions and the pace of structural reform.

Domestic production and the role of low-carbon gases

The podcast also explored the debate around greater domestic oil and gas production.

David’s view was nuanced: domestic production may contribute to security of supply, but it does not materially reduce the UK’s exposure to global gas prices: “The UK is a price taker on international gas markets.”

Instead, the conversation focused on the strategic role low-carbon gases could play in reducing long-term exposure to imported fossil fuels. David described biomethane as one of the most practical near-term options because it is domestically produced, low carbon and compatible with existing infrastructure: “It remains the most underappreciated option in the near-term mix relative to the risk profile in delivery.”

Hydrogen and carbon capture and storage (CCS) were discussed as longer-term solutions, particularly for industrial uses and dispatchable power generation.

Operating at pace in a changing system

A recurring theme throughout the discussion was the importance of agility across the energy sector as geopolitical events, technology and market conditions evolve rapidly.

David stressed that organisations responsible for data, governance and market systems have a critical role to play in supporting resilience and enabling the transition at pace: “These events move very, very quickly. It requires all parties in the energy sector… to respond quickly in agile ways.”

As the gas system evolves to integrate low-carbon gases and new technologies, the ability to adapt systems, processes and governance efficiently will become increasingly important.

The future of the gas network

The discussion concluded by exploring what current geopolitical and market realities could mean for the long-term future of the UK gas network.

David argued that gas demand is unlikely to decline evenly across regions or sectors, creating difficult decisions around how infrastructure is maintained, repurposed and funded during the transition: “We will need a gas network for many, many more years to come.  The question is where, when and carrying what gas.”

He also highlighted the complexity of repurposing parts of the network for low-carbon gases such as hydrogen, particularly where different users connected to the same infrastructure transition at different speeds.

In the nearer term, biomethane and limited hydrogen blending may offer more practical opportunities to utilise existing infrastructure while reducing emissions.

A closing thought

Episode 22 of DecarbDiscussions highlights a clear takeaway: the UK’s energy vulnerability is shaped less by physical supply and more by exposure to global gas price shocks.

Managing that risk will require continued progress on decarbonisation, targeted investment in resilience, and a system capable of adapting quickly to changing geopolitical and market conditions.

To listen to the full podcast, click on the link below.

Geopolitics and gas: The cost of energy exposure podcast

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