Hollowed out: the cost of policy drift on the UK’s energy supply chain

Our members help shape the policy positions and work that we do. They are fundamental in driving our advocacy efforts, and we call on all sectors, sizes of business and positions in the value chain to help them grow and diversify.

Policy vs reality

Our Regional Committees in the UK and our Shadow Board in the US consistently relay members’ insights on the real-world impacts of high-level policy decisions. Too often, these policies aspire to net zero by 2050, and prioritise operators and developers. None consider the realities of those further down the energy system – the thousands of SMEs across the entire energy supply chain, which are advocating and delivering technology at pace to drive decarbonisation and net zero, while being hampered by these very policies at the same time.

The weight of rising costs

In the UK, we have spoken at length at our Regional Committees about the impact of high energy prices on manufacturers and factory companies. We have discussed the increase in the minimum wage, which adds further costs – particularly for those that encourage and promote apprenticeships. While these employers are willing to absorb the additional expense, there must be some balance or support to offset the burden.

Shifting policy, stalled growth

A refusal to act meaningfully on local content – combined with non-binding targets and weak enforcement – has left the UK supply chain unable to compete on cost, despite stronger expertise and sustainability policies. The shift from the Conservative Party’s anti-fossil fuel stance to a ban on new licences and exploration has effectively frozen investment, meaning no new work for the domestic supply chain. Meanwhile, continual changes in government focus  – from carbon capture, utilisation and storage, to hydrogen, to data centres, to solar – have created instability and uncertainty, preventing long-term investment and undermining our ability to build a viable business case.

What we could be left with in the UK is a hollowed-out supply chain – one that wants to be here but is not being given the opportunity to develop and grow

The pull of global stability

As a result, supply chain businesses are turning to markets such as the Middle East, North Africa and India, where significant work and investment are underway. They are also focusing on sectors that offer greater security in payments and project delivery, such as defence.

These markets are pulling on the UK supply chain at pace. We see our members relocating talented staff into these regions, not only to deploy their expertise, but also to retain their talent. For many, the only way to keep their workforce is to provide international opportunities.

Stable policy environments are also allowing these companies to grow. For the past 18 months, we have emphasised that this is a single, interconnected supply chain, with companies using their profits from the oil and gas sector to drive their move into renewables and newer technologies. With the lack of projects in these technologies, and the oil and gas slowdown resulting in reduced work and fewer profits to transition, technology adaptation is stagnating in the UK.

By bidding for and winning work internationally, these companies are regaining momentum. They are beginning to reinvest – on a smaller scale at first – in transition projects, often located in the same regions as their oil and gas operations. In doing so, they are achieving abroad what they had aimed to do at home: establish a sustainable business model, plough profits into new technologies, expand capacity, and ultimately bid for larger projects, creating a renewed cycle of growth.

The cost of inaction

What we could be left with in the UK is a hollowed-out supply chain – one that wants to be here but is not being given the opportunity to develop and grow. This is undermining our capability to deliver our own net-zero targets. A reduced workforce, shrinking margins and a lack of work stability are leaving businesses present on paper, but without the capability to deliver in practice.

It is not difficult. It is made difficult by a cluttered energy system, short-term political cycles, a stream of headlines, and a failure to deliver on the substance. GB Energy, the National Energy System Operator, Sovereign Wealth Fund, Hydrogen Allocation Rounds 1 and 2, Allocation Round 7, Net Zero Teesside, The Acorn Project – all have been flagged as priorities, yet none have delivered tangible results on which the supply chain can act.

A call for meaningful policy

Policy must be stable, actionable and meaningful. The Middle East is proving it can be done — why is the UK not doing the same? 

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