Can Energy Supply Chains Keep Pace with Decarbonisation?

Decarbonisation is no longer a distant goal—it is actively driving investment strategies across the energy sector.

Companies are under pressure to reduce carbon emissions while ensuring financial viability, but sourcing and procurement challenges remain a significant hurdle.

According to L.E.K. Consulting’s Global Energy Study 2025, businesses are adapting their approaches to navigate these obstacles, but limitations in infrastructure and commercial uncertainty are slowing progress.

Despite record investment in clean energy, traditional oil and gas remain essential, highlighting an ongoing transition rather than an outright shift.

Global investment in clean energy reached US$1.8tn in 2023, according to the International Energy Agency (IEA), yet fossil fuels continue to receive substantial funding. This reflects the industry's need to balance energy security with decarbonisation goals.

Rebecca Scottorn, Partner, and Amar Gujral, Managing Director and Partner at L.E.K. Consulting, explain: “The global energy transition is undergoing a significant recalibration, balancing ambition with economic and infrastructure realities.

“L.E.K.’s latest Global Energy Study highlights a shift from aspirational targets to commercially viable solutions, with investments prioritising proven technologies like solar, storage and energy efficiency.”

Modernising supply chains to meet growing demand

Three key investment areas are shaping the energy supply chain:

• Grid modernisation – Expanding renewable energy capacity requires upgraded transmission and distribution networks. Smart monitoring tools and energy management technologies are becoming essential for balancing supply and demand. Without these improvements, large-scale renewable integration remains a challenge.
• Energy storage – With renewable energy sources like wind and solar producing variable output, storage solutions are critical. L.E.K.’s study finds that 77% of utilities surveyed plan to expand their storage capacity within five years, with a focus on large-scale battery projects and long-duration storage.
• Emissions control – Companies are adopting advanced methane detection and reduction technologies to improve efficiency and cut emissions. The electrification of industrial processes is also increasing, replacing gas-powered systems with electric alternatives.

Rebecca and Amar note: “While decarbonisation remains a central focus, traditional energy sources such as natural gas and nuclear continue to play a critical role in ensuring energy security.

“Regional strategies vary—Europe and Australia emphasise grid modernisation, the US focuses on resilience and emerging markets advance energy access.”

Procurement challenges in clean energy investment

As businesses prioritise sustainability, procurement strategies must evolve. Electrification is a key area of focus, with industries moving towards electric power for operations onshore and offshore.

However, supply chain bottlenecks and regulatory delays continue to impact investment decisions.

Carbon capture and storage (CCS) illustrates these challenges. While large-scale CCS projects are technically feasible, many fail to secure final investment due to uncertain financial models and contractual risks. Without clear agreements, scaling CCS remains difficult.

Energy storage infrastructure is expanding to meet rising electricity demand, particularly from data centres and industrial facilities. However, shortages of critical minerals such as lithium and cobalt are affecting the rollout of battery storage, with cost fluctuations influencing procurement strategies.

Rebecca and Amar explain: “Investment in grid infrastructure and energy storage is accelerating to address the intermittency of renewables and rising power demand from electrification and data centres.

“Companies are now adopting a pragmatic approach, integrating sustainability with economic returns. By aligning investments with scalable solutions and fostering collaboration, the energy sector is charting a balanced path toward a more resilient, low-carbon future.”

Barriers to scaling new energy technologies

Despite strong investment, several emerging technologies are struggling to scale due to supply chain and regulatory uncertainties.

Clean hydrogen is widely seen as a long-term solution for industrial decarbonisation, but a lack of distribution infrastructure and unclear policy frameworks deter large-scale investment. Without regulatory clarity, investors remain cautious.

Nature-based carbon offsetting is also under scrutiny. While companies explore these solutions to meet emissions targets, concerns about measurement reliability and long-term effectiveness raise doubts about their viability.

The expansion of electric vehicle (EV) charging infrastructure, especially for heavy-duty transport, faces hurdles. Grid capacity limitations and high commercial costs are preventing rapid deployment, slowing widespread adoption in the logistics sector.

The energy industry is at a turning point. Businesses are shifting procurement strategies, modernising grids and expanding storage to support a cleaner, more stable energy system. The transition is happening, but supply chain constraints and infrastructure challenges continue to dictate its pace.

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