London, 26 July 2023 — Despite growing demand and ambitious country pledges for net zero, the energy supply chain is shifting into oil and gas, triggered by a lack of consistent and profitable work in green projects, raising concerns that net zero 2050 commitments will also be delayed. This is according to the Energy Industries Council's (EIC) 7th Survive and Thrive, released today.
The world’s oil and gas markets are experiencing a period of significant growth and a return to boom times, according to the EIC Report, backed up by EIC’s Financial Investment Decision data, which paints a sobering picture that oil and projects are more valuable and are more likely to proceed with full funding, compared to renewable and transition technologies such as wind and hydrogen.
This new data raises the prospect of rapidly widening disparities between green ambitions and the reality of what businesses actually see in their order books, the report concludes.
The report paints a striking picture of a fast-changing global energy landscape, providing investors and business owners with once-in-a-generation levels of growth and profitability after ten lean years for the energy sector. Drawing insights from 96 interviews with energy supply chain leaders worldwide, the new report sheds light on the preferred growth strategies employed by businesses over the last year.
A decade of underinvestment in global energy infrastructure, coupled with energy security concerns and a return to normal activity levels after COVID-19, has led to high energy prices, rising costs, delayed renewable energy projects, and worries about skill shortages.
The EIC Survive & Thrive annual report provides early warning signals of policy challenges that are starting to rear their heads, with its unique approach to research, centred on detailed interviews with nearly 100 top leaders of many of the world’s leading energy supply chain companies, representing a diverse range of sizes, countries, technologies, strategies and approaches to growth.
Net zero jeopardy is a key revelation from the research. Never before have we heard such vocal concern from our members about the growing gap between net zero dreams and industry reality. The report calls on policy makers to table urgent new approaches to either get back to net zero commitments or accept the reality that targets will be missed and must look to minimise the damage done.
“The much lower levels of funding for green projects, compared to hydrocarbons, highlighted in this report, is having direct impact on energy supply chain businesses. They are not seeing enough renewable and transition related work cascading down into their order books. They can’t wait for policy pledges anymore, so they look to more active markets like oil and gas to support their growth plans,” said Stuart Broadley, Chief Executive Officer of the EIC. "This is such a lost opportunity. The supply chain wants to be part of, and to drive, net zero solutions, but opportunities just aren’t there, in anything like enough volume or profitability.”
“It’s high time for a reality check. We ask governments and energy policy makers to act now, to bring stakeholders together to address this energy policy crisis, to re-ignite funded demand for clean energy products and services, and to provide the right policy environment that encourages investment, innovation and the seeding and rooting of future, worldclass, green-technology exporting businesses.”
Oil and gas features heavily in the report, both in terms of its high levels of activity and the resilience it potentially provides to businesses. As the world teeters on the edge of a recession, leaders believe they are safe from the worst ravages of such a downturn when active with oil and gas, compared to more vulnerable sectors like nuclear, hydrogen and floating offshore wind.
Frustratingly for export and trade policy makers, the report confirms for the 7th straight year, that the least used and hardest growth strategy remains the development of new export and international markets. Nothing the government has done to stimulate global growth seems to have worked, and indeed the results are the worst ever in 2023.
The report also seeks clarity of the talk of a skills crisis, instead suggesting businesses are today largely still able to meet their growth commitments with the resources at their disposal, worried more about a future growth spurt of the green revolution finally happens.
The EIC's Survive and Thrive report serves as a call to action, urging stakeholders work with the EIC to listen to the needs of the global energy supply chain and work collectively to address the challenges faced by businesses in expanding into new markets, achieving net zero targets, and driving the energy transition.
For more information or to access the complete Survive and Thrive report, please visit the EIC website at EIC Survive and Thrive Insight Report (the-eic.com)
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Notes to editors:
The EIC is an award-winning global trade association for the energy supply chain with a worldwide membership of over 900 companies covering all energy sectors. Established in 1943, EIC advocates for its members by working closely with governments and key stakeholders. Members and clients have access to an array of products and services through our London HQ and offices in Dubai, Houston, Kuala Lumpur, and Rio de Janeiro, including EICDataStream, a worldwide database of energy projects in development, and EICAssetMap, a comprehensive operating assets information service. We also offer event solutions, and our expert analysts and consultants produce insightful reports and bespoke market intelligence. In recognition of our commitment to excellence, the EIC was honoured to receive the prestigious King's Award for Enterprise in 2023.