Aiming Toward a Hydrogen Economy: Icelandic New Energy Limited - Assignment Example

Aiming Toward A Hydrogen Economy: Icelandic New Energy LTD Aiming Toward A Hydrogen Economy: Icelandic New Energy LTD Titus Rock Manickam Order No. 233281 16 July 2008 Aiming Toward A Hydrogen Economy: Icelandic New Energy LTD The SWOT of using Iceland as a base for Hydrogen Fuel Technology, using the PEST Framework The PEST (Political, Economic, Social and Technological) Framework Of late, the SWOT (Strength, Weakness, Opportunities, and Threats) analysis has started moving side by side with the PEST framework. By its very nature, for any business setup, SWOT has always been inseparably influenced and linked to the PEST framework. Only, while the SWOT concept has been around for some time, awareness about the PEST framework dawned much later. The SWOT and PEST concepts prominently figure in the energy sector. In a situation where a new form of energy is being given shape in one particular country, these concepts gain much more importance because of the high stakes involved both for the country of the energy's origin, other countries involved as partners or shareholders in the conglomerate, and countries, corporations and individuals whose interest in the new product has been inspired. Thus, when discussing the strength, weakness, opportunities and threats of the hydrogen fuel technology enthusiastically researched and developed in Iceland, the inevitability of the political, economical, social and technological implications continue to remain unabated at each step and level although their form may differ from country to country and region to region, depending on each country's political, economical, social and technological status, political system and relationship with the world community. (China Energy Industry - PEST Framework Analysis) Strength The main advantages of using Iceland as base for Hydrogen Fuel Technology are her abundant natural resources, her desire to appropriate technology to tap her resources through research and development without upsetting her ecological and environmental balance, and her potential to return to her pristine, original and idyllic landscapes through sustained innovation and tie up with major energy corporations such as Shell, DaimlerChrysler, etc. Iceland is geologically well placed with tremendous reserves of hot ground water, giving her much needed geothermal resource to process hydrogen fuel energy for economical and domestic use. Till the 1970s, Iceland was dependent on whatever energy she could muster from fossil fuel her lackluster economy could afford. The shift to Hydrogen fuel energy brought about a sea change economically, socially and corporately. It not only catapulted Iceland as a case study of immense potential and promise for other nations to emulate but also rejuvenated the nation's economy and social scenario. (Ken Mark and Jordon Mitchell, p12) Iceland's proximity to affluent Western European nations, as also its own skilled and dedicated human resource provides it the potential to harness the latest and the best in terms of human skills and technological resources. With this proven record of pollution-free energy use Iceland's credentials as trend-setter in the important energy sector can only grow from strength to strength in the international arena. Weakness Despite Iceland's success with Hydrogen fuel technology, a universal change over to this form of energy is not viable as of now. Globally, hydrogen fuel technology is in its infancy and the world has a long way to go before its usage could be made safe and cost-effective enough for the end-user to switch over to the same extent as in the case of Iceland. It is difficult and unsafe to store hydrogen in gaseous form. In its independent state, hydrogen burns out. In its liquefied form it is necessary to keep it at -217C. It is not possible to store and distribute hydrogen fuel in the existing infrastructure. A new infrastructure has to be created for its storage and distribution. Geothermal production of hydrogen is not possible universally as it is not available uniformly. Production by use of other means such as methane is not viable as it causes pollution by emission of carbon monoxide ((Ken Mark and Jordon Mitchell, p4) As of now, production of hydrogen by any means other than geothermal application is unviable, expensive and counter-productive. For instance, production of hydrogen fuel by means of methane increases the level of pollution due to the contaminating nature of the manufacturing process, defeating the very purpose of producing hydrogen fuel to reduce and eliminate pollution. Opportunities The involvement of major corporate giants like Shell, DaimlerChrysler, Volvo, Toyota, reinforce the possibility of hydrogen fuel emerging as a viable alternative. Governments, corporations and local governing councils are watching with interest the phenomenal success of hydrogen fuel technology in Iceland. Currently, there are outlets for selective use of hydrogen fuel in USA, Europe and Japan. The serious issue of global warming and its ominous threats to normal life, climatic conditions and natural habitats due to the greenhouse effect, makes it mandatory for nations everywhere to explore possibilities in their region for safe installation of facilities for generation and distribution of hydrogen fuel. The urgent need to minimize emission of carbon dioxide and other polluting gases is leading governments and industries to weigh suitable options and hydrogen fuel is emerging as one of the frontrunners. Threats Hydrogen is inflammable. It is not safe for storage and transportation in areas with high population density. Its purity can be maintained only if processed by geothermal means. Other forms of production are counter-productive and harmful to the environment and may cause increase in pollution level instead of reducing it. The energy crisis has the world caught in a tight situation between the devil and the deep sea. It cannot cut back on the use of the ubiquitous fossil fuel without harming the economical scenario everywhere. It cannot sit back and wait for a new form of energy to develop from somewhere either. It has to decide one way or the other and time is running out for fence sitters. The situation is bad enough for someone in powerful, important position to lose nerve and make the wrong choice. Currently, its production must be carried out under strict vigilance and tight security measures. Hydrogen production facilities are soft and easy targets for terrorist outfits intent on causing mass scale destruction. Opportunities for INE in the next ten years The involvement of major players like Shell, DaimlerChrysler, Volvo and Toyota augurs well for INE. Having begun from the scratch and garnered relevant information and skills, INE has the expertise and resource to exploit commercially. In the next ten years, INE has much to gain. Its conglomerate will make progress albeit slowly. Its clientele in the USA, Europe and Japan will expand, and other nations will follow. However, progress in other nations is bound to be slow due to several factors like safety concerns, high cost of production, unrelenting trade unions of existing energy corporations, and political prevarications. Nonetheless, within its own country's borders, INE could arrange exhibitions and conferences highlighting its expertise and achievements, and invite governments of the day from other nations and corporation leaders to get first hand information about the viability of hydrogen fuel in diverse locations and environments. Outside its country borders, INE already has presence in the USA, Western Europe, and Japan. Corporations like Shell, DaimlerChrysler, Volvo and Toyota could be relied on to expand operations in these highly industrialized economies. One well established way of expanding in these countries is by increasing use of vehicles run on hydrogen fuel there. With highly motivated team of researchers, INE has the potential to make deeper inroads into the technical aspects of producing hydrogen fuel in the years ahead. Having a good record of successfully utilizing the hydrogen fuel technology domestically, in the fishing industry, and transportation, INE must concentrate their operations on these segments. The factors that INE has to bear in mind while planning and organizing for commercial viabilities are: 1) Does it want to limit its conglomerate and stick to its current partners and shareholders Or would INE like to extend its partnership and shareholding with others outside the present components 2) Does it feel appropriate to be listed in the important world stock markets In other words, is INE ready to become a corporation 3) Is INE confident of reducing the cost of producing hydrogen fuel by means other than the geothermal source Also, is it in a position to foresee production of pure hydrogen fuel by all means without polluting emissions 4) Is INE in a position to enter the USA, European and Japanese stock markets on its own without the support of its partners who form her conglomerate INE has a critically important role to play in the global arena. Therefore, it must frame policies and programs to globalize to reach out and seize fresh opportunities wherever they exist. Source: China Energy Industry - PEST Framework Analysis, RESEARCHANDMARKETS, http://www.researchandmarkets.com/reportinfo.asprfm=rss&report_id=585579. Ken Mark and Jordon Mitchell, Aiming Toward A Hydrogen Economy: Icelandic New Energy Ltd. (ISLENSK NYORKA), Richard Ivey School of Business, The University of Western Ontario, Canada N6A 3K7 Read More