A Collaborative Sustainability Solution for EPCs and Asset-Owners

Author photo: Peter Reynolds
By Peter Reynolds

Keywords: EPCs, Asset-Owners, Sustainability, Collaborative Sustainability, Asset Optimization, Performance Engineering, ARC Advisory Group. 


As consumer pressure, government regulation and investor pressure mount, the need to mitigate sustainability project risks, optimize CapEx, and reduce time to market is imperative. Project economics is the top barrier to the execution of sustainability projects. EPCs must deliver a project using sustainable engineering design and construction through the effective use of work packages and construction recourses, balancing supply chain demands for materials and minimizing carbon. At the same time, most sustainability work today is on modifying existing plants to reduce carbon intensity. 

Asset owners and EPC companies are turning to solving energy efficiency challenges while also tackling the more complex energy supply chains such as hydrogen, carbon capture, and renewables.  Project complexity and level of technical expertise needed are top risks when bidding on sustainability projects. Established manufacturers remain the top CapEx project sponsors; however, multi-company consortia, venture capital, private equity firms, and startups are rising, and therefore choosing the right contract strategy is essential along with a clear digital strategy and collaborative solution, including the following key points:

  • Engaging leading EPCs with a green strategy and roadmap to minimize negative impacts on the environment.

  • Utilizing cutting-edge digital technologies to reduce risk required by project sponsors.

  • Executing concurrent engineering with a multidisciplinary solution at each project phase.

Research Demographics

ARC Advisory Group recently conducted research to better understand how Engineering Procurement & Construction (EPC) industry leaders use digital solutions to deliver sustainability projects to improve return on assets. A global web survey of more than 200 experts and in-depth discussions across several industries identified compelling best practices and reasons for EPCs and industrial organizations to consider in their digital strategy and approach to bidding capital projects, addressing project risk, and better managing supply chain execution risks. Forty percent of the survey respondents were from global EPC companies, and the balance worked for leading oil & gas, chemicals, and power and utilities companies.

The EPC Sustainability Perspective

For many projects, this covers the pillars of energy optimization, workforce and resource management, sustainable materials and processes, and digital tools to lower overall carbon intensity. In simple terms, carbon intensity measures how much carbon dioxide (CO2) and other greenhouse gases (GHGs) are emitted per unit of activity or output and is a way to compare the environmental impact of different processes. Leading EPCs have a green strategy and roadmap to minimize their negative impact on the environment, society, and economy while contributing to positive project change and sustainable engineering and construction including:

Energy Optimization

During design and execution, project teams minimize waste and energy consumption, which can lower the negative impact of construction on the site. 

Supply Chain Management

Construction companies and EPC contractors need to optimize both material and supply chain and focus on optimizing material usage through design using modular construction, minimizing waste material handling, and better scheduling of resources.

Sustainable Material Choice

Construction materials, catalysts, type of chemicals used by operations and the selection of cleaner process technology design are primary contributors that significantly impact the environment. 

Near-Term Sustainability Projects

According to the IEA, the forecast for annual spending on energy-related CapEx projects will grow from $3 trillion to $5 trillion by 2030. The energy transition is increasing both the size and variety of CapEx projects. EPCs anticipate bidding on energy efficiency-related projects over the next 3-5 years, more than any other type of sustainability project. Project complexity and the level of technical expertise required are top risks when bidding on these. Energy efficiency projects carry the lowest risk and provide the quickest and most cost-effective CO2 mitigation while lowering costs. Most sustainability work in the near term will be modifications to existing plants. Over the next 3-5 years, hydrogen and CCUS will most closely follow energy efficiency project spending. 

The Profiles of Sustainability CapEx Sponsors

The profile of sustainability-focused capital expenditure (CapEx) sponsors are changing, driven by several key factors such as growing investor demand, technology advancements, the regulatory landscape and societal pressures. Established manufacturers are the largest segment, followed by multi-company consortia, venture capital, private equity and start-ups.

Collaborative Sustainability

Established Manufacturers

The largest segment of sustainability CapEx sponsors is established manufacturers. In the oil & gas and chemical industries, these companies face increasing regulatory and societal pressure to adopt sustainable practices as they are responsible for a significant portion of global greenhouse gas emissions, water and other natural resources consumers. As a result, there is a growing demand for oil and chemical companies to reduce their environmental impact and operate more sustainably. 

Many oil and chemical companies are now setting ambitious sustainability goals and taking steps to implement those goals. For example, ExxonMobil has established a goal of reducing its greenhouse gas emissions by 25 percent by 2030, and Chevron will achieve net-zero emissions by 2050. These companies also invest in renewable energy and sustainable technologies, such as carbon capture and storage. Oil and chemical companies are also working to improve their social and economic performance. For example, many companies are investing in programs to enhance the working conditions of their employees while also working to develop products and services to meet the needs of their customers sustainably.

Transitioning to a more sustainable future will be challenging for oil and chemical companies. Still, it is also an opportunity for these companies to create new value and competitive advantage. Companies that adapt successfully to the changing landscape will be well-positioned for long-term benefits. 

Some specific examples of how oil and chemical companies are working to become more sustainable include investing in renewable energy sources, such as solar and wind power or by creating power purchase agreements. This is helping to reduce the reliance on fossil fuels and their greenhouse gas emissions. Development of new technologies can also help oil and chemical companies diversify their product slate and reduce environmental impact. New technologies include carbon capture and storage, recycling, and new methods for Direct Lithium Extraction (DLE). Improving energy efficiency of operations reduces costs and environmental impact. Typical projects include process design optimization, reducing waste heat, reusing or recycling energy streams, reducing flaring and capturing methane at source, asset electrification, and implementing better energy management systems.

Multi-Company Consortia

The Oil and Gas Climate Initiative (OGCI) is a group of 12 companies committed to reducing their greenhouse gas emissions. To support companies outside the group, OGCI focuses on partnering, capacity building, and innovations to target key technologies and areas that can impact the greatest emission reductions. The OGCI’s current focus areas include carbon capture, utilization and storage (CCUS), methane emissions reduction and transport emissions. The Carbon Capture and Storage Coalition (CCS Coalition) is a group of companies working to develop and deploy carbon capture and storage technologies.


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