Lack of clarity on project timelines causing uncertainty for supply chain businesses across the energy industries, says world's leading energy trade association.
London, 30 March 2023 — The Energy Industries Council described the UK government's Powering Up Britain plan as underwhelming, saying the much-awaited announcement is not likely to encourage supply chain businesses to remain in the UK. The EIC, the world’s leading energy trade association, called for more comprehensive measures to be implemented in support of support the UK's energy industry.
The EIC noted that there is currently no timeline in place for the projects detailed in the government policy documents, released today, including carbon capture projects.
The EIC stressed that the scale of these announcement falls short of countering major green energy initiatives by the United States and Europe and does little to encourage businesses to stay in the UK.
“Our impression is that this underwhelming in terms of scale and clarity and does not appear to add anything new. The lack of clarity is causing uncertainty for supply chain businesses across the energy industries,” said Neil Golding, the EIC’s Head of Market Intelligence. “There appears to be very little new in the announcements made today, more a rebadging of previous announcements. The supply chain is continually waiting for the new pipelines of projects to develop, but while we have headlines, we always seem to fall short on setting timescales and clear objectives. This means that we are failing to seed and root our supply chain in the UK.”
“We urge the government to provide more detailed guidance on when carbon capture and other projects will be implemented which will provide greater certainty for the supply chain and encourage investment in the industry,” said Mr Golding.
He added: “The announcement fails to acknowledge the significant contribution of the oil and gas supply chain to the UK's energy security and economy, as well as its role in the transition to cleaner energy sources. The EIC welcomes an open dialogue with the UK Government to discuss how we can work together to develop more robust and sustainable policies for the energy sector.”
With today’s statements, the government aims to deliver almost half a million new green jobs by 2030, supporting a shift towards cleaner energy sources to power more of Britain from within the country. The plan includes reaffirming of a previous commitment to Carbon Capture Usage and Storage, the launch of a £160m fund to support port infrastructure projects for floating offshore wind, the backing of green hydrogen production projects and £380m investment in EV charging points.
Many had hoped that this would be the UK’s response to the Biden administration’s Inflation Reduction Act, which has already prompted some of ousr members to explore the American market as a more viable option, according to the EIC.
Vysus Group’s SVP Commercial, Malcolm Cameron, said: “We are acutely aware of the challenges associated with achieving our net-zero ambitions in the UK. We need to ensure investors have confidence in the UK energy sector if we are to have any chance of speeding up the energy transition and closing the gaps to meet our global targets.”
He added: “While we would have to say these measures do not go far enough, anything that the government can implement to accelerate a cost-effective, balanced transition to a lower carbon economy through clean and sustainable technologies whilst acknowledging the role hydrocarbons still have to play in our energy mix, is to be welcomed.”
The government made no reference to an anticipated reduction of the Energy Profits Levy, which have already reduced investments in the North Sea.
“Various projects and commitments that would have otherwise been awarded to the supply chain were postponed or withdrawn entirely as operators revised their plans and reduced spending in response to the windfall tax, which left them with less available cash,” said John Petchey, EIC Membership Manager for Scotland and Northern Ireland. “This also caused delays in maintenance and safety updates. While each company has a unique situation, the bottom line is that all of them are affected.”
Finbar Kelly, Global Commercial Manager at Norco Group Limited, an EIC member, said, “Although we acknowledge the importance for a net zero and greener future for generations to come, we do realise the importance and significance the oil and gas sector to these goals are and its imperative the government realises this too. The money ploughed into renewable projects and technologies by offshore operators is simply enormous with companies and individuals maybe not aware of this operating out with the North East of Scotland. If we do not support the oil and gas industry, we will lose it, the renewable projects will be delayed, and we will be buying fuels from abroad, which isn’t good for anyone.”
For more information about EIC, please visit: https://www.the-eic.com
** ENDS **
Notes to editors:
The EIC is the world’s leading energy industry trade association and voice for the global energy supply chain with a worldwide membership of over 800 companies covering all energy sectors. Established in 1943, EIC advocates for its members by working closely with governments and key stakeholders. Members and clients have access to an array of products and services through our London HQ and offices in Dubai, Houston, Kuala Lumpur, and Rio de Janeiro, including EICDataStream, a worldwide database of energy projects in development, and EICAssetMap, a comprehensive operating assets information service. We also offer event solutions, and our expert analysts and consultants produce insightful reports and bespoke market intelligence.