Energy industry confidence in net zero goals sinks – report

Energy industry confidence in reaching global net zero targets is fading as policy instability, financial uncertainty and slow project approvals continue to hinder progress, according to Net Zero Jeopardy Report II, issued by the Energy Industries Council.

Only 16% of senior energy executives who were interviewed believe the world can achieve net zero by 2050, down from 45% last year.

EIC is one of the world’s largest trade associations of companies that supply goods and services to the energy industries worldwide. It is a not-for-profit organization with a membership of over 950 companies.

For the purpose of the report, EIC spoke to 38 energy leaders and executives from 35 member companies operating across a wide range of sectors. The interviewed companies are mostly based in the United Kingdom, it added.

Broadley: The energy industry is facing real challenges in turning pledges into projects

There are growing concerns over the lack of clear regulatory frameworks, underinvestment in clean technologies and delays in bringing projects to the final investment decision (FID) stage, the report reads.

EIC CEO Stuart Broadley pointed out that the energy industry is facing real challenges in turning pledges into projects. “Business leaders are not seeing the level of policy certainty or investment required to deliver net zero ambitions,” he said.

Confidence in interim net zero targets is even lower. Only 14% of respondents believe their country will meet 2030 climate goals, down from 16% in last year’s report.

Executives raised concerns about supply chain vulnerabilities

The document notes that rates for clean energy projects remain very low. Despite ambitious targets, only 10% of offshore wind and 9% of hydrogen projects have reached FIDs, compared to 21% for upstream oil and gas.

Executives also raised concerns about supply chain vulnerabilities, particularly in clean technology manufacturing and logistics. Many components for renewable energy projects, including wind turbines and battery storage systems, are sourced from China, which increases reliance on a single market, the survey’s findings show.

While China’s dominance has lowered costs, it raises concerns about energy security, trade policy, and supply chain resilience. Interviewees expressed concerns about manufacturing capacity and skills availability, especially when more planned cleantech projects enter the construction phase.

Habboush: These barriers, if left without tackling, will no doubt derail the energy transition

“Industry leaders are not merely expressing frustration, they are passionately warning about fundamental barriers, including unstable policy, weak investment appetite, and slow project approvals. And these barriers, if left without tackling, will no doubt derail the energy transition,” said the report’s author Mahmoud Habboush.

He underscored that one clear path toward net zero is ensuring that energy projects are commercially viable. For that to happen, work needs to be done on the demand side, including facilitating a regulatory environment conducive to creating demand. This will make banks less apprehensive, and more capital will flow, Habboush added.

Financing is a key issue

The offshore wind sector highlights the challenges in scaling up clean energy. Current installations in the UK and Europe are largely a result of investment decisions made a decade ago, which raises serious concerns over whether future targets will be met.

According to EIC, financing is a key issue. Investors remain cautious about backing new clean technologies, particularly in sectors such as hydrogen, carbon capture and storage, and grid infrastructure, the report reads.