Now in its fifth year, the highly acclaimed EIC Survive and Thrive Insight Report surveyed more than 60 energy supply chain businesses and confirmed that, for the second year running, the most popular growth strategy in challenging markets was to move away from oil and gas and into other areas in order to ‘survive’.
With governments on a global scale pursuing net zero policies, but little being done to help the energy sector to diversify into green energy markets, the report also once again showed three quarters of companies that diversified preferred to move out of energy completely.
EIC CEO Stuart Broadley said: “This move away from oil and gas is both good and bad news. On the positive side, it is sensible for business leaders to spread their risk and diversify into as many sectors as they can, including to non-energy markets like infrastructure and defence, to protect against further market uncertainty and economic shocks.
“On the negative side though, it also reveals that businesses do not see enough opportunity for them to simply switch from oil and gas to renewable and transition technologies like wind, hydrogen and CCUS. The pipeline of green opportunities is too small, inconsistent and with lower CAPEX value and there is still inadequate support available for companies to transition.
“Indeed, supply chain companies will need to stay in oil and gas, now without government support following recent anti-oil policy changes, in order to survive and to meet the widely expected bow-wave of new oil and gas work following the end of the pandemic, both domestically and internationally.
“The future for companies will surely include involvement in exciting new energy transition projects such as Acorn too, which will be helpful, but these are still years away. I would therefore not be surprised that we see companies rebounding back to oil and gas in the next couple of years.”
As the UK government looks to establish its position as a global leader in the Net Zero transition, it is in danger of pursuing strategies which assume that transition and diversification for all is easy, whereas EIC data shows that many supply chain companies need at least five years to transition, and longer to be globally competitive.
The EIC will continue to work with government to ensure that these concerns, and other findings from EIC’s 2021 Survive and Thrive Report, such as how developing new export markets is once again the least used growth strategy for the fifth years running, are represented at all levels and regions in order to appropriately and successfully take action to address the needs, challenges and opportunities of the entire UK supply chain.
Read the full report here.