Energy and Natural Resources - Coursework Example

1. Introduction Australia is ranked as one of the best regions to reside in the world by any index ranging from income, healthcare, human development to civil rights. Worldwide, it is the 6th biggest country by land mass, with its moderately small population concentrated in the extremely-urbanized east of the continent. In addition, Australia immensely enjoys the advantage of diverse and abundant energy resources and is actually the ninth biggest producer of energy in the world, together with being one of the only 3 net exporters of energy in the OECD. Australia’s extensive usual energy resource base comprises of natural gas, coal, uranium as well as oil. Australia also enjoys substantial solar, geothermal, wind and vast ocean and biomass energy potential. This paper seeks to explore Australia’s energy policy spanning from historical perspective, energy markets, principal sources of energy, energy security, governance, energy and economic development to sustainability (IEA, 2012). 2. Historical perspective Political history-The political unit that is present-day Australia started forming when the British settlers started coming in the continent in 1788. Australia has always been a democracy which dates back to the 1800s. The country’s system of government developed over the years from single governors who were representatives of the British Parliament to the wholly elected representative democracy which operates currently. Australia has been at the forefront in numerous crucial democratic steps like giving its women voting rights as well as introducing secret ballot (Fenna & Robbins, 2013). Initially Australian politicians looked to the US and Europe for their foreign policy, however, in the last 2 decades or so, they have turned to East Asia as a priority especially China and Indonesia. It is important to note that the system of governance in Australia has not always been wholly democratic especially in the initial years of the Federation. Britain in addition held sway and had an almost authoritarian control over many features of the Federation’s governance. Nevertheless, in several ways Australia has been a key leader as far as democracy development is concerned in the modern world (Economou & Ghazarian, 2010). Economic history- Colonization started a drastic transformation in the pattern of not only human activity but also utilization of resources in Australia, and by 1890s, an extremely thriving settler economy had been created, especially on the basis of a good climate in large south east regions of the country, including Tasmania as well as the southwest region, appropriateness of land for not only European agriculture but also pastoralism ,abundant mineral resources together with the simplicity with which these resources were taken from their original owners (Palmer,2014). The developments that took place around 1810 can be described as the turning point as far as creation of ‘colonial’ economy was concerned. Several Australian historians have chosen to regard more highly those that took place around 1820s as more important. Economic growth from that period was on the basis of an increased production of wool together with other rural produce for such markets such as Britain as well as other northwestern Europe industrializing economies. Nevertheless, this growth was disrupted by two key depressions that occurred in the 1840s and 1890s and stirred in complicated ways by 1851’s Victoria gold discoveries. However, the principal dynamics were unchanged essentially (Economou & Ghazarian, 2010). Local manufacturing, construction industries and agriculture also expanded so as to meet the pressing needs of rising populations, concentrated mainly in urban centers. The establishment of Commonwealth of Australia widened the prospects for intervention of the public in private markets. Liberalization as well as structural change is the era that was witnessed between 1973 to 2005.Due to shakiness in the global economy from the start of 1970s, together with limitations at home put an end the boom experienced during the post-war period. Australia continued suffering from constant inflation in addition to rising unemployment remaining consistently high leading fluctuation of per capita income during the 1970s together with absolute contraction of the economy during the years 1982 to 1983 as well as 1990 to 1991.Since then Australian economy has been recording growth after growth and 2004 saw the country being ranked behind only Sweden and Norway in the UN’s Human Development Index (Economou & Ghazarian, 2010). Energy history-Australia has come a long way as far as the history of its energy is concerned. Coal was first mentioned in the history books of Australia in 1797 in North South Wales, marking the start of a profitable history and emerged as Australia’s second biggest export as well as economic influence as of today. Coal was discovered through the entire 19th century in just about every Australian state with technological developments leading to various techniques of converting coal into power. The post WW2 period witnessed a fast economic boom in Australia which resulted in the construction of numerous coal-fuelled power stations and what was initially operated by the local authorities was now run centrally and extended to rural Australia. There was expansion of electrical railways across the whole country and exportation of coal became a booming business with electricity cost going downwards .Electricity started being used countrywide marking the beginning of electricity utilization boom (Economou & Ghazarian, 2010). Between the 1960s and 1980s, environmentally conscious individuals gathered and started experimenting with renewable sources of energy. Australian diggers after the war and experienced in engineering utilized their experience and knowledge in modernizing the solar power sector making Australia a leader in solar power with over half a million PV solar systems installed in various households across Australia. Hydroelectric power generation in Australia goes back to the late 1800s and Tasmania witnessed the making of the pioneer hydroelectric scheme in 1901.Nevertheless, the 1990s saw a gradual shift from hydroelectricity. Thus ,the very last key hydroelectric dam was constructed in 1992 in Tasmania .Thus even though the numerous opportunities for production of hydroelectric power exists, there has been a halt in production of hydroelectricity due to the investment in alternative renewable source which soon will surpass hydroelectricity as the leading renewable energy source (Palmer,2014). The 2000s have seen a rise in wind farms. Whereas the initial commercial wind farm was constructed in Western Australia in 1987 ,by 2009 concrete plans had been put in place to build 3 new big scale wind farm projects aimed at offsetting the energy needs of Australia after the approval of power-dependent desalination plants (IBP,2015). 3. Markets-Energy markets can be described as commodity markets dealing specifically with not only the trade but also energy supply. Energy market does not only refer to a market of electricity but also may refer to other energy sources. The energy markets worlds over till the 1970s underwent drastic transformations and were typified by monopolistic organizational frameworks. Majority of the petroleum reserves in the world were under the control of seven sisters. Nevertheless, circumstances in 1973 changed significantly due to the growth of OPEC’s influence in addition to the 1973 repercussions of oil crisis that were felt world over by various energy markets, Australia included. Australia has liberalized its energy markets and is under the regulation of both national as well as international authorities comprising of liberalized markets aimed at protection of consumer rights and prevent oligopolies. The Australian Energy Market Commission seeks to prevent price volatility, reform market whenever necessary in addition to searching for evidence for such practices as anti-competitive behavior and prevent monopoly formation (Palmer, 2014). 4. International Oil (Energy) Companies and National Oil (Energy) Companies Some of the international oil/energy companies that have played a crucial role in Australia in the development of the oil/energy sector comprise of Chevron which is the biggest foreign owned oil producer, and supplies 96,000 barrels daily. Other significant international oil corporations comprise of ConocoPhillips, ExxonMobil, Shell, Inpex from Japan, Apache Energy, BHP Billiton and Total .These companies play a critical role in the exploration and development of numerous offshore blocks. This provides the much needed foreign direct investment funds. Additionally, there are some domestic Australian companies that comprise of Woodside Petroleum which is the biggest and Santos that both concentrate on upstream gas and oil developments .The other smaller local players in both downstream and upstream market comprise of Beach Energy and Origin Energy (Markus,2014). 5. Energy Mix: Major Sources of Energy That the Country Uses-Australia is rich in minerals, comprising uranium and fossil fuel reserves. It belongs to the Organization Cooperation and Development (OECD) and is a considerable net exporter of energy, and sends almost 70 percent of its energy production overseas. With the exception of crude oil as well as other liquids, the country retains energy surplus of the rest of energy commodities according to information from Australia’s Bureau of Resource and Energy Economic (BREE).In 2012, Australia was the 2nd biggest exporter of coal on the basis of weight and the 3rd biggest liquefied gas (LNG) exporter in 2013 (EIA,2015).Moreover ,Australia holds the largest recoverable uranium reserves according to 2012 data in addition to being the 3rd biggest producer as well as uranium exporter for powering electricity according to data from World Nuclear Association. Nevertheless, the country is a net importer of refined petroleum products and crude oil, even though it exports a broad range of petroleum liquids. The country heavily depends on fossil fuels as its primary source of energy consumption. Petroleum together with other liquids in 2012 represented an approximated 36 percent of Australia’s total energy consumption. The oil consumption share has grown over the past few decades since it aids growth of Australia’s commodity production, mining, petrochemical industry and transportation sector (EIA, 2015). Consequently, petroleum consumption and that of other liquids has for several years surpassed domestic production. Thus consumption of petroleum has been modestly rising at around 2 percent annually from 2002 peaking at over 1.1 million barrels in 2013. Natural gas and coal represented 21 percent and 36 percent of the country’s energy demand mix respectively and even though production of coal was severely affected by flooding in Queensland State in 2010 to 2011.Lately the Australian government has come up with incentives aimed at promoting policies to minimize consumption of coal, especially within the power sector .The government also has been increasingly promoting use of cleaner sources of energy such as solar biomass and hydroelectricity (EIA, 2015). 6. Energy Security: Energy Security Challenges -Energy security may be described narrowly to comprise of physical supply. Nevertheless, taking into account the challenges that nations like Australia are encountering in the 21st century, a more detailed description could be quite helpful. Energy security can therefore be regarded to envelop physical supply alternatives or reliability, while at the same time comprising of the important issues of sustainability and affordability (Markus, 2014). While exploring these features, it is helpful to identify that, when policy and political issues are being taken into account and when hard choices need be arrived at, reliability will constantly outrank affordability with affordability on the other hand outranking sustainability. Several nations in the world encounter supply challenges with either one or other kind of principal sources of energy. Such challenges can arise due to a country’s physical resource base or can be a creation of policy choices. Australia happens to be in a very unique position globally as regards sources of energy and hence physical reliability. Having vast reserves of gas, coal, wind, uranium sun as well as hydro, there are in fact few if any at all absolute challenges. Thus, the only physical limitations are the absence of elevated mountains for generating hydropower and oil reserves low levels. In deed Australia has opted to forego production of nuclear power. Australia harbors her own distinctive energy security challenges. Consequently when it comes to reliability front, no principal physical challenges exist to general supply of energy, even though regional problems can be considerable. Even though Australia has extremely inadequate transport fuels, the country has varied sources of imports and can therefore opt for some mixture of LPG, LNG or electric vehicles makes real economic or physical constraints to become quite significant. The country has already a high LPG usage in taxi and commercial vehicles, with buses using CNG and planned trials for LNG are in the offing. Australia lacks a long-term, sustainable energy path and climate change strategy remains extremely uncertain with the much praised low-emission technologies still much undeveloped. Abnormally in Australia and globally, a mixture of circumstances implies that energy-linked greenhouse emissions are declining without shifting to gas (Diesendorf, 2014).The government has come up with a lot of plans to ensure energy sustainability. In future, for instance, the government plan such as the Renewable Energy Target as well as enhanced battery technology may make reliable and sustainable renewable energy on a big scale quite affordable and assist in supporting the utilization of natural gas as a more clean burning fuel. Till then, the country’s electricity system should be not only backed up but also be supported by fossil fuels (Diesendorf, 2014).Due to the above challenges, it means that elected government should quickly come to terms with pressing policy challenges while the ones having a longer-term impact may need much extensive and detailed consideration (EIA, 2015). 7. Energy & Economic Development Australia ‘s energy resources have catapulted the nation to become an influential global player and was ranked as the 12th biggest national economy in 2012 using nominal GDP in addition to being the 19th biggest exporter. Australia is an Organisation for Economic Cooperation and Development (OECD) group member-and thus promotes policies aimed at enhancement of the social and economic well-being of the people globally. Due to its vast energy resources, Australia is amongst the only 3 net exporters of hydrocarbon within the OECD in addition to being the biggest net coal exporter. Natural gas is the other major export from Australia. Australia’s coal industry plays an important role in the country’s economy, community as well as the energy security. Coal is the biggest export earner in Australia with a value of over $55 billion and employing about 140,000 australians-100,000 indirectly and 40,000 directly. With more than 54 percent of Australia’s electricity produced from black coal, this resource also underpins the reliability, security as well as the relative low-cost of the country’s electricity supply (Markus, 2014).Australia in 2009 was the only country amongst the world’s 33 most advanced economies to record growth during the worst global meltdown since Great Depression era. A key cause for this was Australia’s sustained coal exports. The significance of coal in the Australian economy is also seen in its rising portion of GDP, which has doubled, from a meager 1.7 percent in 2006-07 to about 3.5 % in the 2008-09 periods easily making it the biggest contributor as far as mining sector was concerned (Markus,2014). Each year, the coal industry compensates billions of money yearly to State and Commonwealth governments in the form of royalties, freight charges and corporate taxes. Thus such royalties are worth billions of dollars and they return back to community in form of state financing for schools, roads and hospitals. Overall the energy sector also contributes millions of dollars yearly to finance community social infrastructural projects. This is also inclusive of advantages that flow from its daily operations comprising of business and jobs opportunities, public infrastructure contributions in addition to support for apprenticeships, training and education. Australia is a major supplier of energy resources both domestically and internationally due to its vast coal, natural gas and uranium resources (Markus, 2014). 8. Governance Various energy regulations and policies have been put in place so as to manage and deal with various energy issues that may arise from time to time. Australia’s energy policy is subject to the fiscal and regulatory influence of all 3 levels of Australian government, even though it’s only the Federal and State levels that approve policy for key industries like coal. Thus, Federal energy regulations go on supporting the gas and coal mining industries via various subsidies aimed at fossil usage and production since exports from those industries significantly contribute to foreign exchange earnings together with government revenues. In fact, Australia happens to be one of the most coal-reliant nations globally. Natural gas and coal, alongside other oil-based goods are presently the principal energy sources for consumption in Australia, with the coal industry producing about 38 percent of the country’s entire greenhouse gases. Nevertheless, federal policy has started changing with the publishing of the Carbon Pollution Reduction Scheme White Paper and Garnaut report. Other state energy regulations like targets in Mandatory Renewable Energy make sure that renewable energy leads to a better percentage of Australia’s energy supply. Because of its dependence on gas and coal for energy, Australia was in 2000 named as the largest per capita emitter of greenhouses gases within the advanced economies, irrespective of emissions source. Stern report suggests that Australia is amongst nations most at danger of global warming and climate change (Fenna & Robbins, 2013). 9. Conclusion The energy requirements of Australia have been majorly fulfilled by fossil fuels up to now. Australia’s low-cost energy resources such as coal are accountable for powering about 75 percent of the nation’s local electricity consumption in addition to supporting one of the least expensive electricity globally. This has resulted to Australia’s organized and complex electrical infrastructure, and were it not for the boom in coal industry, the country might not be boasting of the complicated electrical infrastructure it so heavily depends on in their railways, homes as well as cities. Australia’s economic stability can be said to have been reinforced by coal exports, without which the country could have witnessed some specific struggle in its cultural, social as well as community growth (Palmer, 2014).In spite of the restricted lifespan of Australia’s coal resources, it has provided the country with a very strong foundation to transit into renewable energy production. Equipped with functional infrastructure together with a record of renewable energy exploration, there will be a gradual transition from fossil fuels to clean and renewable sources may have some headway. At present, renewable energy represents approximately 7 percent of Australia’s electricity and energy consumption, even though its use is increasing gradually and as the looming end of coal produced electricity nears, Australia may look forward at some somewhat safe future. List of references 1. Diesendorf, M. 2014 Sustainable Energy Solutions for Climate Change. New York: Routledge. 2.Economou,N.& Ghazarian,D. 2010. Australian Politics For Dummies. New York: John Wiley & Sons Ltd. 3.Fenna,A. & Robbins,J.2013 Government Politics in Australia. New York: Pearson. 4. EIA, 2015 Annual Energy Outlook 2015.New York: US Department of Energy 5.IBP, Inc. 2015 Australia Energy Policy, Laws and Regulations Handbook Volume 1 Strategic information and Basic Laws. Washington DC: Lulu.com. 6. IEA, 2012 Energy Policies of IEA Countries: New York 7.Markus, U.2014 Oil and Gas: The Business and Politics of Energy. New York: Palgrave Macmillan. 8.Palmer, G.2014 Energy in Australia: Peak Oil, Solar Power, and Asia’s Economic Growth. New York: Springer Shop. Read More