Guest Editorial: Timing and Substance Are Key for Net-Zero Supply Chain

Abstract

The reduction of carbon through the energy value chain is essential to meeting net-zero ambitions but requires long-term visibility—and early commitment—from across traditional and emerging industries as well as from governments. This is particularly true of the experience and expertise found in the oil and gas supply chain, where engineering, design, manufacturing, and service must work in tandem with the ongoing energy transition. Supply-chain investments are, after all, significantly influenced by the speed at which new projects are constructed; how these developments compare with rival opportunities will determine the size and location of critical support elements. And timing is as important as substance for the supply chain, where continued promises of progress tomorrow must finally make way for accelerated, definitive time frames for the development, construction, and operation of a fully decarbonized energy sector. Energy technology company Baker Hughes is among those which have committed to reaching net zero by 2050. But for others to follow suit, and for meaningful transformation across the industry, there remain hurdles to overcome and risks to be removed. Full Speed ... Ahead? Development of the energy transition market has been slow for many manufacturing and service-based oil and gas supply-chain companies. Customers have, for example, and with a few notable exceptions, been only minor participants in offshore renewables, so while parts of the workforce have transitioned into these projects, there remains a highly skilled core focused solely on the traditional energy sector. The same is largely true for hydrogen and carbon capture, usage, and storage (CCUS)—two critical enablers of wider decarbonization. Concept and feasibility work has generated an early market for the engineering sector but left the actual business of realization and operation in limbo. This means there is yet no market for those manufacturing and service companies interested in pursuing the transition to decarbonization, and little evidence when seeking the blessing of boards, shareholders, and banks. While customers are—at least in outlook—shifting toward low-carbon power, CCUS, and hydrogen, there is a need to create opportunities for an existing supply-chain business to develop new capabilities or to redirect existing resources.