Energy Industry in Australia - Case Study Example

Name Unit Class Table of Contents Table of Contents 2 Introduction 2 Energy industry in Australia 3 Challenges and strategic responses 4 Preferred approach over time 6 Stakeholders involved 6 Energy industry Strategic responses to climate change 7 Mitigation – reduce GHG emissions 7 Adaptation 8 Transformation 9 Time line, measures and roles to assist in implementing strategies 9 Conclusion 11 References 12 Introduction Australia is ranked as the world 20th largest consumer in the energy sector. The country is endowed with vast energy reserves which enables it to play a major role in supplying world energy needs. Australia is the leader in the export of coal and among the largest exporters of Uranium. The country was ranked sixth in the exports of the Liquefied natural Gas (LNG). Australia is estimated to hold more than 38% of the world reserves in uranium, 9% of the coal deposits as well as almost 2 % of the world natural gas resources (BREE, 2012a). The country has high potential for the renewable energy due to the high number of sunlight hours. There are also other sources of renewable energy such as wind, wave energy and geothermal (Falk & Settle, 2011). However, climate change is a big challenge in the sector due the rising risks brought about by energy being used. The main challenges facing the energy sector in Australia is facing are sustainability, dependence on fossil fuels, increasing climate change and its effects, and increase in global fuel prices. This report will analyse the Australian energy industry by looking at its current state, strategic challenges, sustainability and the major stakeholders in relation to climate change. The report will then analyse the possible strategic responses and the preferred approach. Lastly, the report will analyse the timeline of the measures and strategies used in the energy industry. Energy industry in Australia According to Falk & Settle (2011), Australia has abundance energy which acts as a major contributor to the country economic prosperity. The energy sector in Australia supports a lot of the country industries which acts as source of employment and helps in infrastructure. The energy is also a major source of the country export value. As the country’s economy grows and the population increases, the demand for the energy in the country has increased (Falk & Settle, 2011). The country has been using fossil fuels to meet most of the country energy needs. This is due to the fact that Australia has abundant coal resources which have helped in generating more than three quarters of the country energy needs. The transport sector in Australia depends on oil which the country has to export in some cases. The national policies in the country have enabled the expansion of the Australian energy industry. The energy sector in Australia has been affected by the changes related to climate change. The industry has put in place transformational changes that are aimed at reducing the green gas emissions. At the moment, the energy industry in Australia has high carbon dioxide (CO2) emissions amounting to the half of the total country release. This has led to the stakeholders adopting sustainability strategies in the energy industry (Zahedi, 2010). Challenges and strategic responses As the climate change, the energy sector is supposed to be able to adopt sustainability measures through a strategic approach. Sustainability in the energy sector involves shifting from the heavy dependence on the fossil fuels and moving towards technologies that aimed at reducing the carbon emissions (Solangi et al. 2011). One of such technologies is the use of renewable energy and utilising carbon capture and storage. At the moment, the renewable energy sector in Australia accounts for about 5% of the primary energy consumption and almost 7% of the electricity generation (Syed et al. 2010). The country has also drafted energy policy that is aimed at boosting the renewable energy sector. Despite this, sustainability of the energy industry faces challenges. The main challenges are uncertainty in the future global energy demand, ensuring that there is enough energy in Australia economy as well as for citizens’ daily use, impeding oil shortage in future, high prices and reducing the impacts of the carbon dioxide emissions (Falk & Settle, 2011). The challenges are all intertwined and policies that are designed are supposed to ensure that they take care for all of them. Though Australia is well endowed in the energy reserves, future sustainability is still a challenge (Wood, Carter & Mullerworth, 2013). The country is also endowed with vast amount of uranium making it the richest country in uranium globally. The main strategy used to counter the uncertainty in energy demand is use of global and local policies to ensure there is sustainability. Despite the country being able to get approximately 60 million PJ of solar, it has not been well harnessed (Buckman & Diesendorf, 2010). The solar energy in Australia can be able to sustain the country as it is 20,000 more than the country’s needs. The country is also endowed with wind energy as well as abundant geothermal resources. There is also energy potential from the waves, tides as well as the currents which are found in the shoreline (Wood, Carter & Mullerworth, 2013). Australia has put in place policies and measures that enhance adoption of sustainable energy. This is through carbon price, subsidies and creating awareness. Of late, there has been an increase in adoption of renewable energy with rooftop solar being highly used in households. The next challenge of dealing with reduction in oil dependency is due to fact that oil reserves are dwindling (Falk & Settle, 2011). There is also increase in the fuel prices. These have led to the need of reducing overdependence on the fossil fuels. The green gas emissions from the use of fossil fuel pose a challenge to the energy sector. The step towards generation of energy from renewable sources is one of the best resolutions to deal with this problem. According to Falk & Settle (2011), the issue arises due to fact that despite the efforts towards sustainable energy, most of the energy used in Australia comes from fossil fuels. This adds more greenhouse gas emissions to the atmosphere. The main problem in Australia energy industry does not lie on availability of the energy resources but measures to curb overdependence on the fossil fuels (Buckman & Diesendorf, 2010). This is especially seen in use of brown and black coal for power generation as well as the use of oil for the transport sector. The increase in solar use and adoption of smart technologies are bound to change the energy industry. The Australian government have put more efforts in the renewable energy sector with an aim to increase its adoption. If the renewable energy sector is fully adopted, overdependence in fossil fuel will be reduced. Preferred approach over time Australia has committed itself to combat the challenges facing the energy industry. The main approach used is implementation of the local and international policies. The country has committed itself to Kyoto protocol, Copenhagen Accord and Cancum Agreement. This has given the country a timeline to reduce CHG emissions (Syed et al. 2010). Since 1990, the use of coal has reduced by more than 3% while oil dependence has reduced by more than 2%. The government have been committed to ensure that GHG emissions by the energy sector and other areas is reduced by more than 80% in 2050 compared to 2000 levels (Helm, 2013). Stakeholders involved The main stakeholders in the Australian energy sector are the government, public and the private sector. The government has been tasked with coming up with policies that will ensure there is sustainability in the energy industry. There have been efforts by the federal government collaborating with state government in coming up with solutions to sustainable energy (Effendi & Courvisanos, 2012). The government has been on forefront in supporting renewable energy sector through subsidies and carbon tax. Through the efforts of the government, there have been major efforts in implementation of Kyoto protocol and renewable energy projects. The government has also been committed to geothermal energy development. The public has been urged to ensure they utilise energy conservation and adopt the renewable energy. Home owners have been installing solar power and also building sustainable housing. The public is influenced by the government policies. When the policies favours use of renewable energy, it becomes easier for the public to install and use it. This is through subsidies and awareness which enlightens the public on the need for renewable energy (Zahedi, 2010). The private sector includes the industries and businesses which are the major polluters. The government policies are able to limit the amount of greenhouse gas emissions from the industries. This is through the carbon tax and permits. The government can reward the industries that utilise the renewable energy in their operations. Industries are supposed to minimise energy usage through utilising energy conservation and installing renewable energy. All the stakeholders are required to work together in making sure that sustainable energy is attained (Effendi & Courvisanos, 2012). Energy industry Strategic responses to climate change Mitigation – reduce GHG emissions Australia greenhouse gas (GHG) emissions have been increasingly rapidly since 1990. Between 1990 and 2010, the levels of GHG had increased by 30 percent. The current trend shows that Australia has reduced the portion of coal used and increased in the amount of natural gas used. The use of natural gas and renewable energy has been on increase in the electricity sector since 2010. The use of renewable energy has been associated with the policies set by the federal and state governments. Australia is also committed to international statement on future GHG mitigation (Helm, 2013). Australia international pledges on GHG mitigation are; Copenhagen Accord and Cancum agreement and the Kyoto protocol. Under the Copenhagen Accord, Australia have pledge to reduce the carbon emission by 5-15 or 25 percent as per the levels at 2000 by the year 2020. From the Kyoto protocol, the country is expected to reduce the carbon emissions by 99.5 % of the levels of 1990 by 2020. The pledges are highly supported by Australia political system. The energy sector has been able to take steps due to CO2 emission. The dependence on coal and oil has reduced while use of renewable energy and natural gas has increased (Syed et al. 2010). These are measures aimed to mitigate GHG emissions. Adaptation Energy industry have adapted to climate change in several ways. One of the ways in which the energy sector has used is investment in the climate resilient assets. This involves use of technology and improving on the existing infrastructure to be climate resilient. Companies have put up energy reduction and efficiency plans. This is through use of insulation, CO2 reduction goals and efficient lighting systems. Another adaption in the energy industry is carbon capture. This is through use of several avenues such as oxy-combustion. Some of the company in the energy industry have focused on customer energy efficiency (Zahedi, 2010). The plan is due to fact that there is an increase in demand for renewable energy. There have been introduction of smart meters which enables the consumers to monitor their consumption and plan their energy use. Some of the companies have invested in the renewable energy technologies to enable shift from fossil fuel. The tactics used are solar power canopies, research and development and bio fuels (Neuhoff, 2005). There has also been an increase in customer involvement to ensure that adaptation takes place. Transformation The energy sector has responded to reduction in carbon emissions through carbon pricing, low emission technologies and smart energy technologies (Falk & Settle, 2011). This is aimed at making the consumer to shift from coal to gas to reduce carbon emissions (Helm, 2013). The main aim is to drive development of low emission generation of power. Australia has put effort on low emission technologies. The traditional power generation have been centralised in Australia. This will change with the growth of then small scale power generation. This will enable the power to be generated near the households and business reducing the costs. There are also plans to increase cogeneration and trigenerations. Smart energy technologies are set to transform the Australian energy sector (CSIRO, 2009). The main focus of the smart technology is energy efficiency and altering the consumption patterns. The country has been able to focus on introduction of smart meters which commenced in Victoria. Using smart grids, efficiency and ease of fault detection is possible. Shale gas has the capability to transform the energy sector. Australia has a large reserve of shale gas which does not require fracking. Time line, measures and roles to assist in implementing strategies Australia has come up with timelines measures and roles that will help in implementing their strategies in sustainability of energy (Zahedi, 2010). One of the strategies that will benefit from areas well looked at is the renewable energy sector. The implementation of the Renewable Energy Target (RET) has worked in ensuring that implementation of sustainable energy. The country has embarked in establishing export of the gas to reduce dependence on gas for electricity market. Using RET, the energy industry in Australia will benefit from investment in clean energy. RET is designed to deliver reduced green gas emissions in the shortest time possible. This is due to fact that the policy is a cost effective way. To enable RET to succeed, the system has embarked on training which created employment. RET have been able to deliver renewable energy to the consumers at low costs. The competitions that have ensued in the renewable energy sector have led to high innovations in the sector which have reduced the prices. For example, some of the rotors being developed are using sophiscated design to maximise wind power output (Falk & Settle, 2011). Another measure that is being used in Australia is implementing the Kyoto protocol. One of the timelines under the Kyoto protocol is to reduce the carbon pollution to 108% based on 1990 levels (Solangi et al. 2011). This was based on a compliance period which is now ending. The clean energy future is another initiative by the government to reduce carbon emission, fix a carbon price and promoting innovation in the renewable energy sector. Under the clean energy future, the government is supposed to create two bodies that will deploy clean technologies and ensure there is research and development in the sector (Falk & Settle, 2011). The government have set the renewable energy target by 2020. This is by setting a target that will ensure that 20% of the Australian power will come from renewable sources by 2020 (Syed et al. 2010). Public and private partnership has been encouraged with a main aim of encouraging renewable energy. The partnership is through Low Carbon Australia Program that support business in elimination of carbon dioxide. The federal government have partnered with the state governmental in coming up with a timeline for saving 32,000gigawatts hours in every year by 2020 (Helm, 2013). Australia has embarked in looking for support for the wind energy in the country. More than 68% of the population support wind energy development. The country has been able to show their commitment in ensuring sustainable energy. There are also ongoing projects and research on the renewable energy. Cities have also adopted the zero carbon cities initiatives by ensuring they reduce their dependence on the fossil fuels and using appropriate renewable energy technologies (CSIRO, 2009). This is aimed at making Australia a place where sustainability is achieved. Conclusion Australia energy industry is well endowed with natural resources. The country has vast deposits of both black and brown coal and uranium. The vast deposit of energy resources makes the country to have high economic prosperity. The country demand for energy has been on rise due to economic growth and increasing population. For Australia to maintain the growth and prosperity there is a need for having clean, reliable energy which is affordable by the community. The country energy need is mostly dependent on the fossil fuels. The country deposits are able to meet almost three quarters of its energy needs. The need to reduce the green house gas emissions have led to the country energy sector to transform. The energy sector is the main contributor to the C02 emissions. The country has come up with energy conservation strategies aimed at utilising renewable energy. There are policies which have been able to promote use of renewable energy. The main stakeholders in these strategies are the public, government and the private sector. Through implementation of the strategies and following the set timelines, the Australian government have the capability of reducing dependence on fossil fuels. The country has vast renewable energy resources which can cover most of its energy needs hence reducing global warming and the effects of climate change as a result of energy industry. References BREE. (2012a). Australian energy statistics data, Bureau of Resources and Energy Economics. Buckman, G. & Diesendorf, M. (2010). Design limitations in Australian renewable electricity policies, Energy Policy, 38(1), 3365-3376. CSIRO. (2009). Intelligent Grid: A value proposition for wide scale distributed energy solutions in Australia, Australia: CSIRO. Effendi, P. & Courvisanos, J. (2012). Political aspects of innovation: Examining renewable energy in Australia, Renewable Energy, 38(1), 245-252. Falk, J. & Settle, D. (2011). Australia: Approaching an energy crossroads, Energy Policy, 39(1), 6804-6813. Helm, D. (2013). The Carbon Crunch How We're Getting Climate Change Wrong- and How to Fix It, Yale University Press. Neuhoff, K. (2005). Large-Scale Deployment of Renewables for Electricity Generation, Oxford Review of Economic Policy, 21(1), 45. Solangi, M.R.I. K. H., Saidur, R., Rahim, N.A, & Fayaz, H. (2011). A review on global solar energy policy, Renewable and Sustainable Energy Reviews, 15(2), 2149-2163. Syed, A., Melanie, J., Thorpe, S. & Penney, K. (2010). Australian energy projections to 2029- 30, ABARE research report 10.02 prepared for the Department of Resources, Energy and Tourism, Australian Bureau of Agricultural and Resource Economics. Wood, T., Carter, L. & Mullerworth, D. (2013). Getting gas right: Australia’s energy challenge, Grattan Institute. Zahedi, A. (2010). Australian renewable energy progress, Renewable and Sustainable Energy Reviews, 14(2), 2208-2213. Read More