SHOCKED: New research reveals unprecedented crisis impacting energy sector

• 94% of global energy leaders say current multi-faceted crisis is most severe they have witnessed; almost half say shock has set-back net-zero plans
• Underscored by USD203 billion hit to global investment according to CFOs
• Visit the SHOCKED microsite to read more about the challenges confronting the energy industry and routes to build resilience – https://shocked.ghd.com/

New research launched today by global professional services company GHD reveals the energy crisis that has rocked the world over the past three years has created a perfect, multidimensional storm of sector-wide shocks including a capital crunch that has severely depleted investment levels.

SHOCKED – one of the largest global opinion research studies ever undertaken among energy sector leaders – reveals that 94 percent of energy leaders believe the current energy crisis is the most severe their market has ever experienced. And according to energy sector CFOs, investment levels between 2020 and 2022 were an estimated USD203 billion lower than they otherwise would have been.

Extreme market volatility and geopolitical tensions have put energy security high on the global agenda, with three-quarters of energy leaders reporting that this is the number one concern for their organisation. On average, leaders estimate their business could continue to supply energy in line with normal demand for just 70 days if cut off from energy imports.

This disruption has had a significant impact on economies and communities around the world and societal pressure on the energy sector to provide reliable, affordable, low-carbon energy has never been greater. Three-quarters of energy leaders (74 percent) believe energy prices are currently the biggest contributor to inflation, and 76percent say the energy crisis is reducing the standard of living across the globe.

The climate shock continues to force an acceleration of the energy transition, but progress towards net zero is being impacted by the complex dynamics at play. While 42 percent say the current energy crisis has accelerated their organisation’s net-zero plans – by an average of five years – almost half of energy leaders (47 percent) state that the crisis has decelerated their net-zero plans – by an average of six years.

While the crisis may have put the brakes on net-zero strategies for many companies, the resulting volatility in natural gas prices has driven the diversification of energy assets. Seven in 10 energy sector leaders report that the volatility in natural gas prices over the past 12 months has accelerated their business’s adoption of renewable energy generation assets, while 44 percent say this volatility has decelerated their adoption of coal assets.

As GHD and global energy leaders look to the future of the industry, SHOCKED identifies five key priorities that will help de-risk the energy transition:

Priority 1: Unlocking money and markets:
De-risking and unlocking capital flows into energy projects will require smart planning, permitting, policy and regulatory frameworks.

Priority 2: Supercharging engineered solutions
The integration of well-thought-out design principles into new energy infrastructure and retrofitting of existing infrastructure will be critical to help build system resilience.

Priority 3: Carefully balancing supply chains and resources
A successful transition will require access to new streams of raw materials, re-tooled supply chains and a (re)skilled workforce.

Priority 4: Securing community understanding and social acceptance
Earning social acceptance for crucial projects will require engagement and education at both a macro and a community level.

Priority 5: Ensuring a just transition
A de-risked transition is one that is fair, balanced and just. The cost of transition must be spread fairly between countries and across communities to ensure no one is left behind.

About GHD

GHD is a leading professional services company operating in the global markets of water, energy and resources, environment, property and buildings, and transportation. Committed to a vision to make water, energy, and communities sustainable for generations to come, GHD delivers advisory, digital, engineering, architecture, environmental and construction solutions to public and private sector clients. Established in 1928 and privately owned by its people, GHD’s network of 11,000+ professionals are connected across more than 160 offices located on five continents.