One supply chain. Many technologies. One reality!

I’m beginning to sound like a broken record, but it is worth repeating: there is one single supply chain – and it spans many technologies. 

Our members operate in nuclear, gas, wind, solar and, more recently, hydrogen and carbon capture. They are active across the whole value chain, from top to bottom, and we also represent companies working in legacy sectors such as oil and gas, petrochemical, transmission and distribution, marine and more.

The numbers behind the narrative

Because our members are active in more than one technology – and usually more than one country – EIC is uniquely positioned to highlight global trends while also focusing on the often-overlooked micro-level of the supply chain.

There is not a ‘good’ renewables supply chain and a ‘bad’ oil and gas supply chain, despite what some energy policies imply. There is only one, increasingly integrated, energy supply chain.

And the data tells a compelling story. According to EICSupplyMap – our energy supply chain database, mapping the capabilities of all the sectors, regions and industries that make up the UK supply chain – 82.9% of the UK’s energy supply chain is reliant on oil and gas. Critically, 72.3% of that oil and gas supply chain has diversified into renewable and net-zero technologies. Only 2% of the UK renewables and net-zero supply chain grew from non-oil and gas capabilities1.

We led the way, but we are now the guinea pig nation for a ‘just transition’

Leadership without delivery?

The UK has long prided itself on being a global leader in energy innovation. But today we lack the pace needed to deliver the ambitions of our policies — and the projects on which our supply chain needs to work.

Instead, having led the way, we are the guinea pig nation for a ‘just transition’. We are seeing our supply chain companies explore global opportunities where the divide between oil and gas and renewables is less pronounced – and where projects do get off the ground, reach a financial investment decision and start work.

We see our members increasing their capability in new technologies – but not here in the UK.  They are growing elsewhere, and that means making hard decisions about where to invest for the future: the UK or the Middle East, for example.

Long-term implications

And how does this play out? If the current trend continues and our members keep seeing greater opportunities abroad, as they already are, we face a long-term loss of capacity here at home.

We currently have an integrated supply chain with a great capacity to deliver work (Table 1 and Table 2). But we are at risk  of diminishing our ability to entice investment and deliver projects in the UK.

Take Scottish companies, for example. This does them a huge disservice – framing this as oil and gas versus new technologies misses the point entirely. Our supply chain companies are already engaged in net-zero technologies, and are ready to get to work. But the projects they need to move forward in the UK are still not coming online, and time is running out.

Missing transition 

Opportunity slipping away

As with everything, time matters. Supply chain companies typically need three to five years to move into a new sector, and five to 10 years to become profitable. That’s assuming the work is there to sustain a steady flow of development. Without new licences and clear pipelines, there will soon be no projects — and, at a much faster rate, no jobs. And without projects, there is nothing to transition into.

For many companies, leaving the UK will be the only viable option. And when that happens, we’ll be left hoping they return when the work does finally materialise, rather than ensuring they never had to leave in the first place.

Image credit | iStock