Despite growing demand and ambitions 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, according to a new report.
According to the Energy Industries Council’s (EIC) 7th Survive and Thrive report, the world’s oil and gas markets are experiencing a period of significant growth and a return to boom times.
This finding is backed up by EIC’s Financial Investment Decision (FID) data, which suggests that oil and gas projects are more valuable and more likely to proceed with full funding compared to renewable and transition technologies such as wind and hydrogen.
The report shows that oil and gas segments, including upstream, midstream, and downstream, have the highest FID rates, averaging around 20 per cent for projects with startup dates between this year and 2028.
In contrast, renewable energy and energy transition technologies have much lower FID rates. Offshore wind stands at only 8 per cent, hydrogen at 3 per cent, carbon capture at 2 per cent, and floating offshore wind at just 1 per cent.
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.
EIC Chief Executive Officer Stuart Broadley said the much lower level of funding for green projects, compared to hydrocarbons, highlighted in this report, is having a 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.
“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.”