Global Energy Supply Chains Shifting from Fuels to Tech

For the past 200 years, energy has been all about supply chains. From whale oil to coal to natural gas, high energy density hydrocarbons powered both the industrial and digital revolutions, providing heat, light, power and raw materials. Hydrocarbon-based energy resources are unequally distributed, so extracting, processing and moving fuels via ship, rail, pipeline and power line has resulted in a massive industry in itself, with its own technical, geopolitical and environmental risks to investors. Post COP26, we have seen increasing national and corporate commitments to decarbonisation and environmental sustainability, especially on energy use for operations and supply chains. This global movement is accelerating investment in renewable energy technologies, energy storage and other assets to enable a decarbonised power system as a core backbone of low carbon energy economies worldwide. Significant investments - $1 trillion per year - in renewable energy and efficiency, along with concomitant investment in advanced operations and forecasting, transmission and consumer solutions, means that global supply chains are also undergoing a massive transformation. In addition to environmental and climate concerns, national governments and multinational companies are also reassessing their geopolitical security, especially related to energy supplies. The creation and maintenance of robust, resilient and economically productive supply chains is poised to offer heretofore unprecedented opportunities for new investment. The energy supply chains that have been developed and operate for oil, gas and coal depend on the continuous provision of fuels from a relatively limited number of countries with rich resources. While the energy density of these fuels make them ideal for shipping and piping, their non-renewable consumption results in the potential for geopolitical and economic demand disruptions (booms and busts), exemplified by the oil embargo of the 1970s and the more recent pandemic demand erosion and subsequent rebound. In contrast, the main players and risks for many clean energy supply chains will be fundamentally different, requiring new approaches to investment and policy by industry and government decision makers.