Current Sustainability in Australia Energy Industry - Case Study Example

Current Sustainability in Australia energy industry Name Class Unit Introduction This paper is based on the Australian energy industry. In Australia, the main sources of energy are; uranium, coal and gas. The energy industry in Australia plays a major role in the country’s economy. The sector is also a major source of employment in Australia. The country energy mix is made up of black and brown coal which accounts for up to 37% of the total energy supply (ABARE and GeoScience Australia, 2010). The rate of energy consumption in the country has been on rise while the supply has been growing at a slower pace. The government plays a major role in shaping the industry. The government designs policies which determine the type of energy used, demand and the industry growth. Due to climate change, the energy industry faces a major challenge. This is due to Australia reliance on fossil fuels which highly contribute to greenhouse gas emissions (Zahedi, 2010). The essay addresses the current sustainability in Australia energy industry, strategic challenges to sustainability in light of climate change, major stakeholders and their role and possible strategic responses. Lastly, the essay will choose the preferred strategic response in the light of climate change. Current state of sustainability in the industry Australian energy industry has abundant and diverse resources. The country is rated as the world ninth largest energy producer and among the energy exporters in OECD. Australia conventional energy resources include natural gas, oil, and uranium, there is also potential for thorium. The country has a lot of untapped energy from solar, geothermal and wind resources (Zahedi, 2010). There is also potential for tidal energy, wave and biomass. The Australian energy sector contributes highly to the economy and employs over 100, 000 people (ABARE and GeoScience Australia, 2010). The industry has experienced major changes in policy framework. The changes have taken place as Australia became a major player in the Liquefied Natural Gas (LNG) markets and global coal market. To keep the energy prices low, the government have been increasing competition in the market. There have been market reforms to ensure that there is high competition between the suppliers and consumers. Unnecessary regulatory barriers have been eliminated to ensure that the energy market is not distorted (Bureau of Resources and Energy Economics, 2012). Energy is a key component for Australia future. This has led to need for reliable and efficient energy supply in the country. Energy has also been a major source of Australia export revenue hence contributing to the economic growth. The energy exports from Australia accounts for 20% of the exports. The country cost of developing energy resources have been on rise compared to the competitors. This has become one area of a challenge for the country (ABARE and GeoScience Australia, 2010). Australia is rated as world eighteenth largest consumer of energy. The country major source of energy for consumer consumption is non-renewable energy sources. This represents almost 95% of the country total energy consumption. Renewable energy sector in the country produces the remaining 5% of the country’s need. The country electricity generation capacity is rated at 54 Gigawatts. Majority of the country electricity comes from steam plants, coal and gas. Over the past years, Australia energy consumption has reduced. This is due to the decline of the Australian energy intensity economy. The trend can also be attributed to the energy efficiency which has been achieved through use of technology and fuel switching. The government have introduced policies that have led to use of new fuel efficient technologies which have helped in efficiency. Less energy intensive sectors have also been growing at a fast rate than energy intensive sectors such as manufacturing (ABARE and GeoScience Australia, 2010). Strategic challenges to sustainability Australia is ratified to the Kyoto protocol. The protocol was entered into the country domestic laws in March 2008. Through the protocol, Australia promised to reduce the emissions by over 108 % of the 1990 emission levels. Under the Copenhagen accord, Australia is committed to reduce the emission levels by 25% below the 2000 levels by the year 2020. The international agreements are a major source of pressure for Australia to ensure that they reduce their carbon emission levels (Zahedi, A. 2010). In Australia, sustainability is not only about the climate change but also about the future for the country energy sector. The continuous growth for non-renewable energy sector especially coals in Australia poses a great environmental challenge. This is a challenge that is also evidenced in most country that relies on fossil fuels. There is land degradation, reduced water quality and deterioration of the urban air quality. The global dilemmas such as greenhouse gas emissions have been a major challenge for the Australian energy sector. The rising demand for energy has made it hard for Australia to attain its international obligation on environment (WWF, 2014). Australia faces another challenge in ensuring that there is sustainable energy use and production. The efficiency of fuel conversion has been blamed on low efficiency in the sector. At the moment, the country is obliged to ensure that GHG emissions are kept within a given level. This is despite the rising consumption of non-renewable energy in the country (Zahedi, 2010). There is a lot of pressure on the energy sector to invest more on renewable energy sources. This has been contributed by the rising GHG emissions as a result of fossil fuels. There has also been an increase in nuclear waste which is dangerous. When fossil fuels are combusted to produce energy, carbon is released into the atmosphere which forms carbon dioxide. At the moment, energy generation accounts for 26% of the GHG emissions. This makes the energy sector the single largest contributor of GHG emissions hence climate change (Diesendorf, 2014). Major stakeholders involved To attain sustainable and reliable energy for Australia in the light of climate change, stakeholders in the sector have been involved. The main stakeholders involved are; industries, environmental groups, consumers, and all levels of governments (Bureau of Resources and Energy Economics, 2012). The consumers have been engaged in energy conservation in Australia through several means. This is through introducing feed in tariffs, education on energy conservation and advocating for efficient energy equipment. Consumers who utilise renewable energy are provided with feed in tariff as an incentive. There are also seminars and workshops on efficient energy use which have helped in spreading awareness (Zahedi, 2010). Environmental groups which have been lobbying in Australia for clean and sustainable energy. These groups have been supporting Australia move to have 20% of their energy generated from renewable sources by 2020. The groups have also been very active in advocating reduction in GHG emissions as well as ensuring that energy production does not harm the environment. The environmental groups have also been working with industries to advocate adoption of clean energy. Through creating awareness, environmental groups have helped the community to engage in energy conservation. Industries are a major player towards energy efficiency and sustainability. Most of the industries have been utilising energy saving mechanism and adopting modern technology than consumes less energy. Through adopting a low carbon emission initiative, industries are a major player in ensuring environmental health (Yusaf, Goh & Borserio, 2011). In Australia, all levels of government have been working together towards energy industry efficiency. All levels of governments have been committed to the energy sector of Australia. The country has come up with several reforms which have been aimed at reducing emissions. For example, the carbon pricing mechanism which has been aimed at reducing emission is one of the most effective government strategies. This policy covers emissions from power generation, industrial processes and stationary gas combustion among others (Haque & Deegan, 2010). Possible strategic responses Australia can tackle the energy problem through use of awareness to industries and other consumers. Lack of adequate information makes it hard to use energy efficiently or adopt efficient technologies. The industry has been slow in adopting clean energy due to lack of adequate information. To address this challenge, the government can provide training and demonstrations. Awareness can be provided to the communities by the government at all levels. Rules and regulations is another strategy to address energy use and climate change. Industries that emit carbon levels above set limits should be prosecuted. Self-regulations can ensure that industries are able to regulate themselves and hence play a major role in combating climate change (Haque & Deegan, 2010). Overreliance on non-renewable energy sources is a major challenge in Australia as well as globally. There are several strategies that Australia can adopt to ensure energy sustainability, and reduction of GHG emissions. Australia can increase its investment on clean energy. This is through financial support to clean energy technologies. This is a strategic response that has already been implemented with support for research and development. There has also been support for commercialisation for the renewable energy as well as demonstration (Zahedi, 2010). The government in collaboration with stakeholders in private sector and research bodies have worked together to establish the carbon capture and storage (CCS). The strategy has involved support for both small and large scale projects through selected national programmes. Carbon capture and storage can help Australia to transit into a low carbon economy. This is both in power generation as well as in the industries. Australia has invested in this technology and has the required legal and regulatory framework. The country focuses on using fossil energy plants with carbon capture and storage. This can help the country to have about 26-32% of the total electricity generated as low carbon by 2050. This strategy faces several challenges which make it hard to attain within the timeline. This is due to fact that it is hard to enhance efficiency and reduce the costs of a large scale carbon capture technology. It is also hard to come up with suitable and commercially viable carbon dioxide storage (Zahedi, 2010). Another strategy is introduction of carbon price. Carbon price is a vital tool in addressing climate change in Australia. This is due to fact that carbon price can help a lot in eliminating the uncertainty that exist in energy sector. This is a tool that is supplemented by other polices such catering for energy efficiency as well as technologies. The current Australia policy approach is expensive and ambitious despite the country being resource rich. This is due to fact that a lot of investment is required to enable Australia to make transition towards clean energy. There will be need for construction of infrastructure which will help in expanding the existing energy resource base (WWF, 2014). Preferred approach The most preferable approach for sustainable energy in Australia is investing in clean renewable energy (Diesendorf, 2014). Australia has vast clean energy resources which are untapped. The tapped clean energy in Australia is mostly done in small scale. This has been due to fact that clean energy technology has higher costs compared to other sources. Clean energy is also located in areas far from transmission and distribution infrastructure. There is also challenge when the technology being used is yet to mature. Despite the existing challenges, clean energy stands out as the best strategy to meet Australia low emission future and increasing energy demand (Zahedi, 2010). At the moment, renewable energy accounts for 5% of the country energy consumption (Bahadori & Nwaoha, 2013). This implies that renewable energy represents a small share if the country’s electricity generation. Wind and solar energy are the only source of renewable energy that has been showing strong growth. The major sources of clean energy in Australia are; wind, hydro, biomass, solar and biogas. Clean energy in Australia is distributed based on the regions climatic conditions. The government have been putting up measures to ensure that there is an increase in uptake of the clean energy technologies (Diesendorf, 2007). This is a great move that makes the strategy more viable. The renewable energy target (RET) is one of the government initiatives to ensure uptake of clean energy in Australia. The aim of RET is to ensure that 45,000 Gigawatts of the Australia electricity will be generated from renewable energy sources by 2020. There is introduction of the Clean Energy Future plan in 2011. This is a plan that target to reduce Australia carbon emissions to be 5% below the 2000 levels by 2020. The country is supposed to increase their renewable energy projects. There have been efforts to ensure that there is more renewable energy projects that will enable Australia attain its carbon emission goals (Yusaf et al., 2011). Australia has world highest solar radiation than any other continent globally (Solangi, Islam, Saidur, Rahim & Fayaz, 2011). Large scale solar projects are thus feasible in the country. The government have already started investing in large scale solar projects around Australia. The country has also high potential for Hot Rock geothermal as well as lower temperature geothermal. The country thus has the potential to expand its geothermal power production. At the moment, there are several geothermal power plants while others are in the approval stage. Thus, investment in clean energy is an option that Australia has to capitalise on. This will enable the country to ensure that there is sustainable, reliable and clean energy (Diesendorf, 2007). Australia has the capability to make a great transition towards renewable energy. The plausible deadline for attaining a major shift towards renewable energy will be based on the drafted polices and the allocated investment. The government should carry out reviews in the Renewable Energy Targets on a timely basis (Bureau of Resources and Energy Economics, 2012). This will boost the investors’ confidence. According to research, it is possible for Australia to attain 100% transition towards renewable energy by 2037. This can only be attained through a stable industry growth rate which is estimated at 20% annually (WWF, 2014). Based on the our clean energy future report, Australia can attain 100% transition to renewable energy through transforming the transport sector to use electricity and using bio hydrocarbons in aviation and shipping (Diesendorf, 2007). Conclusion To sum up, Australian energy industry is required to be sustainable in the light of climate change. The industry has been mostly relying on fossil fuels which have a negative impact on the environment leading to climate change. Thus, it is clear that reliability on fossil fuels is a critical challenge to sustainability and climate change. Current energy production in Australia will not be able to meet the future need unless strategies are implemented to address the issue. The stakeholders that are expected to play a role in addressing the challenge are; governments, community, industries and environmental groups. The country have several possible strategies that can implemented which are investment in clean energy, creating awareness, use of rules and regulations, Carbon Capture and Storage (CCS) and enhancing carbon price. The most viable strategy is investing in clean energy. This is due to Australia vast amount of untapped clean energy. Australian continent have the highest solar radiation worldwide. With an increase in investment on clean energy, Australia will be able to overcome the challenge of sustainable and adequate energy for Australia future in light of climate change. References ABARE and GeoScience Australia, 2010, Australian Energy Resources Assessment, Chapter 10. Retrieved 13th July 2015 from, www.ga.gov.au Bahadori, A., & Nwaoha, C. 2013, “A review on solar energy utilisation in Australia,” Renewable and Sustainable Energy Reviews, Vol.18, p.1-5. Bureau of Resources and Energy Economics, 2012, Energy in Australia 2012, BREE: Canberra. Retrieved 13th July 2015 from, www.bree.gov.au Diesendorf, M. 2014, Sustainable Energy solutions for climate change, NewSouth Publishing: Sydney, NSW Diesendorf, M. 2007, Greenhouse solutions with sustainable energy (p. 252). University of New South Wales Press. Haque, S., & Deegan, C. 2010, “Corporate climate change‐related governance practices and related disclosures: evidence from Australia,” Australian Accounting Review, Vol.20, no.4, p. 317-333. Solangi, K. H., Islam, M. R., Saidur, R., Rahim, N. A., & Fayaz, H. 2011, “A review on global solar energy policy,” Renewable and sustainable energy reviews, Vol.15, no.4, p.2149-2163. WWF, 2014, 'Expert Panel Review of the Renewable Energy Target'. Submission 2014. Retrieved 13th July 2015 from, https://retreview.dpmc.gov.au/sites/default/files/webform/submissions/WWF%20RET %2 0Review%20Submission%20May%202014.pdf. Yusaf, T., Goh, S., & Borserio, J. A. 2011, “Potential of renewable energy alternatives in Australia,” Renewable and sustainable energy reviews, Vol.15, no.5, p.2214-2221. Zahedi, A. 2010, “Australian renewable energy progress,” Renewable and Sustainable Energy Reviews, Vol.14, no.8, p.2208-2213. Read More