Analysis of Australian Energy Industry - Case Study Example

Australian Energy Industry Name Class Unit TITLE: Australian energy industry Introduction This essay looks at the Australian energy industry. The energy sector in Australia is a major contributor to the country economy. This has led to the need for a secure, affordable and sustainable energy source in Australia. Sustainable energy is vital for Australia future growth. Future energy supply in Australia is expected to have lower emissions that will help address the challenges that are posed by climate change and global warming. According to the International Energy Agency, the world energy demands will rise by 40 % in 2030. Demand for energy in Australia is also expected to rise by the same period. This has led to the need to invest in new sources of energy as well as lowering of the carbon dioxide emissions. At the moment, most of energy in Australia comes from fossil fuels (Bartlett, 2006). Due to fact that the energy sector is a major contributor of carbon dioxide emissions, it has a greater role in reducing greenhouse gases (Narayan, Narayan & Popp, 2010). This essay will look at the current state of energy sustainability in Australia and discuss the strategic challenges that the industry face in light of climate change. The essay will identify all stakeholders involved and their roles. Lastly, the essay will discuss the possible strategic responses, preferred approach and measures used to implement the approach. Current state of energy sustainability in Australia Australia has abundance and diversified energy resources. The country have over a third of the world Uranium resources, large coal and gas deposits and wide range of renewable energy sources. The main problem is the fact that fossil fuel resources do not have the capability to meet the country needs. The impact of energy use on the climate in Australia is unsustainable (Kinrade, 2007). Most of the country electricity is produced from black and brown coal. Australia has also been highly dependent on foreign oil. Australian oil reserves have continued being depleted and their production falling. The country estimates that the petroleum trade deficit by 2020 will be over $40 billion annually (Bartlett, 2006). The country power distribution have been having high transmission loses which are unsustainable together with the centralised power generation (Narayan, Narayan & Popp, 2010). Australia is a fossil fuel dependent economy. This has been a major challenge as the country tries to address the problem of greenhouse gas emissions. The fact that the energy sector is the major single contributor to greenhouse gas emissions makes it a major player in combating Australia carbon footprint. Over the last 50 years, there has been an improvement in Australians energy use. The country energy production has been able to outstrip the demand despite the growing population. The use of improved technology and methods such as fuel switching has helped a lot. Australia has been poorly ranked on energy effectiveness taking the 20th largest world energy consumer position (Huva, Dargaville & Caine, 2012). Low cost energy has been a vital need for the Australian energy needs. Energy security is of strategic importance to the country. At the moment, transport and industry energy consumption accounts for 75% of the energy used in the country. This has made Australia energy security principles to be aligned with these sectors. The strategies aims at cost security and reliability are being sustained in these sectors. The high dependence on the oil products has been the most serious security challenge that Australia faces (Bartlett, 2006). This is due to fact that domestic oil production is decreasing while dependence on imported oil is increasing. Australian energy challenges can be summed up to three main issues. The first major problem is ensuring that the energy sources available can be able to supply the economy needs as well as the citizens’ use. The second problem is ensuring that the Australian economy is cushioned against future oil supply shortages and price hikes. Lastly, Australia has a major problem in ensuring that it comes with ways to reduce their carbon footprint. Being a major energy consumer, Australia has been contributing highly to green gas emissions. The challenges facing the Australian energy sector are interconnected. This is due to fact that polies that can be designed to deal with one problem can also help in finding the solutions for the others (Narayan, Narayan & Popp, 2010). Australia is a member and signatory of the United Nations Framework Convention on Climate Change (FCCC). FCCC main aim is to ensure that there is stabilisation of greenhouse gas emissions on the atmosphere to ensure that they are below level that can affect the climate. Based on FCCC, Australia had a target to reduce their greenhouse gas emissions to 8 % based on the 1990 level by 2008-2012. Australia National Greenhouse Strategy (NGS) is a mechanism which ensures that the country commitments are met. Australia is also a member of the Montreal Protocol on Substances that Deplete the Ozone layer. The protocol ensures that precautionary measures are taken to ensure that emissions which deplete ozone layer are eliminated. The government have also been engaged in other protocols and treaties that ensure the country is obliged to ensuring clean energy and reduction in greenhouse gas emissions (Narayan, Narayan & Popp, 2010). Stakeholders and their role in involvement The energy sector in Australia has a wide diversity of stakeholders. The stakeholders in the sector include the commonwealth, state, local governments and territory, industries, public and the environment groups. The stakeholders have been working in collaboration or in groups depending on the task and measures required. Despite the fact that a lot of stakeholders in Australia have an interest, the industry has a crucial role to play (Falk & Settle, 2011). Environmental groups The environmental groups in Australia have been lobbying for a clean energy and efficiency in use. This is through advocating for optimising the use of the raw materials, reducing waste and ensuring that harm to environment is reduced. Environmental groups and NGOs have been advocating and encouraging the industries to have clean energy production process. The environmental groups have been able to reach diverse range of people in the Australian community. NGOs have been providing the community with education and required information on energy conservation. The pressures from the communities which have been expressed by NGOS have been able to make influence on government and industry to ensure there is improvement in environmental practices (Falk & Settle, 2011). Industries Industries have been working towards efficiency in production and reduction in greenhouse gases (Kinrade, 2007). Through these activities, industries have been able to reduce their expenditure on energy and increased production efficiency. Australian industries have been working to attain low carbon emissions and a reduction in waste generation. Commonwealth government, local governments and state territories The commonwealth, states and territories have been working together to ensure clean energy production. There have been establishment of demonstration programmes through collaboration of the three governments. The demonstration projects have detailed information to help in ensuring that there is clean production. The governments have found that use of detailed information is a great motivator for the energy industry to come up with clean production. For example, the Victorian government have been able to establish a clean energy production program in partnership with the Australian chamber of manufacturers. The commonwealth, state, local and territory governments have also been coming up with publications to target the public, local governments and regulators. The governments have also been offering training, workshops and funds to ensure that there is sustainable and clean energy for Australia future (Falk & Settle, 2011). Possible strategic responses A reliable energy strategy in Australia is expected to come up with reliable source of energy in the country. The strategy is expected to address main challenges such as reduction of CO2 emissions (Effendi & Courvisanos, 2012). The strategy is also supposed to ensure that energy is availed at reduced costs. Australia has a range of possible strategic responses to issues faced in the energy sector. There are several mechanisms that can be adopted to ensure adoption of safe and clean energy in the country. The mechanisms can be divided into four main themes. The themes are; information and awareness, clean energy tools, self-regulations and regulation and lastly strengthening the market (Bulkeley, 2000). Information/ awareness Lack of awareness and adequate information to industries is a major barrier to clean energy adoption and reduction in greenhouse gas. The energy industry may be unsure in some instances where to gain technical assistance and may be reluctant to invest in cleaner energy due to low level of awareness. This is a barrier that can only be addressed through education and training. The industry and community requires information and increased awareness. Awareness and information can be provided by the government at all levels to communities and the energy industry (Falk & Settle, 2011). To ensure that the energy industry in Australia is able to receive the appropriate energy information, there is need for the country to have adequate information on clean energy production methods and technologies (Bulkeley, 2000). Energy companies such as shell, BP and Boral have been in the forefront to come up with clean energy production techniques. The community and industries can work together to ensure that they improve the environment impact and ensure they improve the public image. The community concern for the environment can help the energy industry a lot in their collaboration. The community can successfully engage the industry through a partnership to address energy effects on environment (Falk & Settle, 2011). Tools for clean energy One of the most vital tools in managing organisation impacts to the environment is Environmental Management Systems (EMS). The tool gives the deadlines that are required to ensure there is a structured approach in protecting the environment. This is among the first step that energy industry should take to protect the environment (Bulkeley, 2000). To use EMS, the industry is expected to access the environmental impacts it make and come up with ways to reduce these impacts. There are also national environmental standards that are important for Australia to ensure that the country plays a role in addressing climate change. Industries may also wish to have international certification on environmental standards (Falk & Settle, 2011). Regulations and self-regulations Good regulation measures are a great way in which Australian government can ensure that there is strong environmental perfoamcne by the energy industry. Through regulation, the government have a legal recourse that can help in ensuring that industries polluting environment are prosecuted. Self-regulations help a lot in ensuring that the industries play a role in ensuring that they combat climate change. Cleaner energy can thus be provided through means of self-regulation and regulations (Bulkeley, 2000). Strengthening the market The government should use economic tools to enhance environment protection. This includes use of incentives for adoption of clean energy. Subsidies can act as a tool to enhance clean energy adoption in Australia. Such an intervention in Australia can encourage investments in clean energy. The government have been providing assistance that is aimed at encouraging adoption of clean energy. Tax deductions and depreciation allowances are some of other economic tools that can be used in the industry as well as consumers. This makes the industry and consumers to use items which are more energy efficient which helps in conservation. Australia has been using economic tools for a long time for various purposes (Bulkeley, 2000). Preferred strategic approach in energy sector (renewable energy) Solar energy Australia has the highest average solar radiation globally. This is a vast and largely untapped energy. At the moment, solar energy consumption in Australia averages for 0.1% of the primary energy consumption. The country has projected that solar energy use will increase by 5.9% annually to reach 24 PJ in 2029-30 (Beath, 2012). Australia solar energy radiation is at 58 million PJ. This is 10,000 times the total annual energy consumption in Australia. In the period of 2007-08, Australia solar use represented 0.1 % of total energy consumption. The most use of solar energy has been water heating (Effendi & Courvisanos, 2012). At the moment, electricity generation have been increasing using solar through use of photovoltaic and solar thermal technologies. Most of the Australian states have feed in tariffs in place while others are in the process of introducing them. There have been high investments in research and development of solar energy in Australia. The government have been supporting the construction and demonstration of mega solar projects in Australia. Australia is also a leader in the development of solar technologies worldwide (Kinrade, 2007). Investment in infrastructure to tap solar energy in Australia has been a major challenge which the country is tackling. Hydro-electricity Hydro electricity is the most common form of renewable energy. This is a mature technology which Australia has already invested in and has lesser impacts on the environment. The main issue with hydropower generation have been limited sites for hydropower. There are also high capital costs and possibility of environmental impacts on large sites. Despite this, increase in hydroelectricity development is a great strategy (Huva, Dargaville & Caine, 2012). Wind Wind energy exploitation presents a great opportunity for Australia. Wind power generation have been used in Australia as an alternative energy source. The current technology trends are larger turbines, reliability and high level of control. The costs of wind power have been decreasing at a steady rate (Trainer, 2012). Australia has extensive knowledge on wind energy resources. The main problem faced by this strategy is intermittent production and low proportion of wind energy that is available during the peak demand. Geothermal power Australia has high potential of geothermal power which can be tapped. Australia has been giving attention to geothermal energy obtained from deep hot rocks and sedimentary aquifers. There are also cases of using low grade heat which cools and heats the buildings. The country has witnessed decreasing costs for production of geothermal power (Trainer, 2012). The technology has the capability to meet demands and have low exposure to changes in energy prices. The main disadvantages are huge water demands during operations and long times for construction (Kelly, 2007). Biofuels Biofuels are produced from biomass materials which are renewable. The biomass materials are burnt in the power stations to come up with heat or electricity. There is also production of bio liquids including bio diesel and bio ethanol which are used as fuels to supplement fossil fuels. The CO2 produced during the consumption is balanced in CO2 absorbed in production. Australia has invested in biofuels as a strategy towards sustainable energy (Kelly, 2007). Fuel cells Fuel cells come in different types based on the electrolyte being used. Fuel cells efficiency ranges between 40-60%. Fuel cells produce heat as well as electricity. The efficiency of fuel cells rises up to 85% when the waste heat is reused. This is a technology that Australia have invested in to attain sustainable energy. The country has also invested in smart grids and hybrid technologies. The development of technology has made the country to invest in energy research which will enhance sustainability and efficiency. Conclusion This essay has been able to analyse and discuss the Australian energy industry. Sustainability is a major issue that affects the energy industry in Australia. Australia is a country with diversified and vast energy sources. Despite this, Australia is a fossil fuel dependent economy. The high dependency on fossil fuels poses a major challenge to sustainability and climate change. The problem of greenhouse gas emission from energy use has been a major challenge. Fossil fuels lack the capability to cater for Australia future energy needs hence unsustainable. To ensure sustainability of the energy industry in the light of climate change, Australia has been drafting strategies. The main stakeholders involved are; commonwealth, state, local governments and territory, industries, public and the environment groups. At the moment, information and awareness, clean energy tools, self-regulations and regulation and lastly strengthening the market are among the possible strategies that can be used. The most preferred strategic response is increased investment on renewable energy. This includes solar energy, hydroelectricity, wind, geothermal power, bio fuels and fuel cells. With an increase in investment in renewable energy, Australia will be able to combat climate change and ensure sustainability. References Bartlett, A. A. 2006, “A depletion protocol for non-renewable natural resources: Australia as an example.” Natural Resources Research, Vol.15, no.3, p.151-164. Beath, A. 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