2020 hasn’t been gentle with the energy sector: between environmental concerns, increasing public scrutiny, new government mandates disrupting traditional business models, and a pandemic to round it up, it’s fair to say that the industry is in turmoil.
The findings from ‘A sustainable future for business post-COVID’, our new survey into the sustainability of the energy industry, found the need to become sustainable is effectively posing an existential crisis for the sector.
The cost of doing nothing Many energy businesses have struggled to make significant progress on their sustainability and resiliency journeys due to the pandemic. 74% of energy companies have had difficulty predicting and planning for government decisions, and 68% have struggled to attract and retain environmentally focused talent. These problems have led to 70% of businesses having to postpone implementation of their sustainability goals.
This is creating an existential threat for energy companies that are failing to meet regulatory and consumer expectations, increasing their long-term risk. 66% of those surveyed admit that they will need to change their business model to comply with the government’s sustainability goals. Carbon is one specific area that the sector is struggling with, 66% state that the industry is unable to comply with the government regulations. On top of government regulation, energy companies are also dealing with more eco-conscious clients demanding sustainable alternatives to traditional energy products. This pressure can be felt down to the bottom line: four companies out of ten are concerned that failure to become sustainable will turn customers to their competitors.
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The post-COVID energy mix The COVID pandemic was a challenge for the energy sector, but it acted as a catalyst for organisations to become more sustainable moving forward. According to the survey, 62% of companies see COVID as a chance to reshape their business in a more sustainable way.
Despite this, many energy companies are taking a lukewarm approach to their energy mix: by 2030, British energy companies expect to reduce their reliance on fossil fuels and clean fuel (4% and 1.5% respectively), and increase their investment into new energy sources (15%). This is despite a strong government mandate and heavy investment towards renewable energy sources to enable the country to reach its net zero objectives by 2050.
By contrast, Dutch companies are accelerating their shift towards renewables to meet drastic emission cuts required by the government by 2030: renewables are slated to represent 29% of the energy mix (+2% compared to current levels), replacing both fossil (20%, -8% compared to current levels) and clean fuel (24%, -7% compared to current levels) as the primary energy source for the country.
The case for virtual twins Virtual technology is seen by many energy businesses as key to helping the sector transition to a sustainable future. 67% are currently using virtual twins to reduce waste and carbon emissions; while two in three (65%) are using them to collaborate more effectively in a digital world.
We’re proud that our solutions are already used to harness the power of renewables, such as wind turbines, along with solutions to turn water into energy, mobile electrical chargers and solar panels. Highly versatile, the virtual twin approach is also used to improve the safety of operations in extraction sites, from drilling into caves to extracting fossil fuel, routing nuclear power and managing waste; and even mapping out models of physical sites before construction.
Beyond the immediate benefits when it comes to improved collaboration to upskill staff and speed up innovation, the sector sees virtual twins as a fundamental technology to support their business in its transition to a greener economy. Two in three energy leaders even consider that virtual twins will play a critical role in achieving a carbon neutral world by 2050. Now is the time for the energy sector to invest in them if it is to become a net zero industry.
‘A sustainable future for business post-COVID’ survey is based on the views of 503 energy business leaders in the energy sector in the Netherlands and the UK. The research was conducted by Censuswide on our behalf in February – March 2021.
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