‘Not a single person in supply chain’ thinks UK will hit net zero targets

Not a single person in the supply chain believes UK net zero targets will be achieved.

That is the damning conclusion of the Energy Industries Council’s (EIC) annual Survive & Thrive report into global energy supply chains.

Based on the views of 96 supply chain bosses, the EIC report concludes that “widespread delays in project funding strongly signposts that the UK is not going to meet its legally binding 2050 net zero target, and neither will Scotland meet its 2045 target”.

It adds: “The reality calls for immediate action and a candid discussion about the challenges hindering our progress. It is time for policymakers to acknowledge the jeopardy facing net zero targets.”

The report adds that the UK is not alone, with a lack of decisiveness from politicians hindering net zero in “many other countries too”.

As a result of indecision on global net zero policies, companies are no longer betting so heavily on energy transition growth for future work. The report states: “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.”

It adds there are “rapidly widening disparities between green ambitions and the reality of what businesses actually see in their order books” driven by lack of funding for green projects and “a return to boom times” for oil and gas markets.

The report shows that oil and gas segments, including upstream, midstream, and downstream, have the highest Financial Investment Decision (FID) rates, averaging around 20% 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%, hydrogen at 3%, carbon capture at 2%, and floating offshore wind at just 1%.

On the UK market, in particular, the report flags a “worrying and growing gap between policy ambition and industry reality”.

In particular, it says grid limitations, financing challenges, planning complications and licensing issues all threaten the UK’s energy transition ambitions.

It adds: “Panel discussion and dozen of interviews conducted this year reveal that not a single person in the supply chain believes the UK net zero targets will be achieved.

“Those interviewed may caveat this statement of peril by then saying it would need some magical intervention to address this issue, some form of massive and currently unfunded capacity scale up in the entire value chain.

“But no one believes these rescue plans are going to happen either.”

The report also calls for the government to find a better way to record its net zero progress, claiming “if you measure something, it’s more likely to get done”.

Stuart Broadley, EIC chief executive, said: “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.”