International Energy Policies - Term Paper Example

International Energy Policies Table of Contents Introduction 2 A Brief Discussion of the Harmonisation of the 3 “E” 3 A Brief Overview of the Factors of Energy Supply and Demand 5 Effect of Energy Supply and Demand Factors upon the Global Energy Policies 6 Critical Analysis of Energy Policy Issues 7 Conclusion 8 References 10 Introduction The aspect of energy is considered to be a chief input which contributes significantly towards the production of various products. The different valuable energy policies formed worldwide addresses the crucial issues which are learnt to be associated with the supply as well as demand factors in relation to energy and even its implementation which further deals with the managers, researchers, decision-makers, politicians, planners and consultants. It has been apparent from the fact that the scope of the energy policies depends upon several factors which include planning, investment, economics, forecasting, politics, environment and pricing. The energy policies formulated by various nations throughout the globe chiefly focuses upon various important areas. The vital areas entail the mitigation of greenhouse gases, valuing the advantages which are obtained from various energy sources and most importantly investing particularly in the energy sectors of the developing nations (France, 2012). Structuring of energy policies is considered to be quite important as energy is known to serve as a vital factor in the financial as well as social activities in different industrialised nations. Moreover, the energy policies extensively pose an influence on the aspect of economic development and defending the safety of the citizen’s at large (Flavin & Aeck, n.d). In this discussion, the harmonisation of the 3 “E” which includes economic growth, energy supply security and environmental settings along with different factors relating to energy supply and demand will be taken into deliberation. Moreover, analysing the affect of the mentioned factors on the global energy policies, a balanced view of whether these procedures can be regarded as sustainable in the long-term will also to be depicted in the discussion. A Brief Discussion of the Harmonisation of the 3 “E” According to various realistic theories, it has been noted that the chief challenge of every energy policy decision remains to be the harmonisation of the 3 “E” which consists economic growth, energy security and environmental settings. A clean, affordable, resourceful and a reliable source of energy are supposed to be quite crucial for promoting worldwide prosperity. The developing nations requires to expand their access towards identifying modern as well as reliable energy sources in order to enhance public health, trim down the poverty level by a certain extent, augment productivity, improve competitiveness and most importantly to promote and boost financial growth. The existing modern energy systems are observed to be insufficient in terms of complying with the requirements of the world’s various development projects. Therefore, it is quite apparent that neither schools nor health clinics can properly perform their major functions without the execution of reliable as well as efficient energy services (United Nations, 2010). In relation to the perception of “3” E, the facet of economic growth is observed to run parallel with the factor of enlarged access towards modern as well as dependable energy services. According to the study of World Bank, the nations which are known to engage underperforming energy services are estimated to fail from attaining a substantial level of financial growth. This failure is believed to be the outcome of high energy losses and subsidies, huge investments on generators and inefficient execution of valuable energy resources. Energy is considered to be the living support of worldwide economy because a steady and a reasonable price of energy supplies trigger immense improvement in the living standards of the people. It contributes greatly towards achieving huge fiscal growth with regard to a nation by generating a large number of employment prospects and distributing extensive energy associated goods as well as services throughout the economy (United Nations, 2010). The factor of environmental settings relating to the sustainable advancement of energy has turned out to be a crucial subject matter owing to the augmenting level of global awareness. This is due to the reason that the existing patterns of energy consumption as well as production are considered to be unsustainable which largely threatens the environment on the basis of both global and local scales. It has been apparent from the fact that energy systems on a global basis which includes transformation, supply, utilisation and delivery is regarded as the chief contributor towards climatic alterations and most significantly releases a substantial level of greenhouse gases. It is anticipated that the worldwide economy will expand considerably in future which indicates that the consumption of energy on a global basis will also increase undoubtedly causing adverse effects upon the environmental settings (United Nations, 2010). Along with the issues of economic growth and environmental settings, another imperative aspect i.e. energy supply security is also considered to one of the vital constituents while arriving at major energy policy decisions. It is evident that a safe, secure, reasonable as well as a sustainable energy supply is identified to be quite crucial for a nation in order to preserve its economic as well as strategic interests as a chief global player. The present global energy systems are found to be struggling in order to secure an adequate energy level to comply with the fundamental human requirements (World Economic Forum, 2012). A Brief Overview of the Factors of Energy Supply and Demand According to the report published by The National Petroleum Council (NPC), the overall global energy demand is likely to augment at a faster rate of 50% to 60% by the year 2030 owing to the amplification in total world population and the expected increase in the average living standard of people of the developing nations. Moreover, along with the demand, there also lies a considerable supply of energy sources. The world can avail energy from various sources according to the significant demand in future which includes production of energy from oil, nuclear energy, natural gas, coal and renewable sources. Renewable energy can be attained from definite sources such as wind, bio-fuels, sun and hydroelectric power among others. In order to fulfil the extensive energy demand globally, the energy industry would need to focus upon continuously raising the supply especially of hydrocarbon fuels (Holditch & Chianelli, 2008). After acquiring a brief idea about the situation of supply as well as demand of energy, it can be stated that numerous major factors have been indentified which are known to significantly influence the energy demand and supply. One of the imperative factors expected to noticeably influence the supply as well as the demand of energy is the environment. This is because the operational procedures which are associated with energy production drastically depend upon the prevalent environmental conditions which play a decisive role in developing various kinds of resources. Moreover, apart from the major aspect of environmental settings, technological breakthroughs in the field of nuclear power, solar energy, bio-fuels and hydrocarbon fuels such as natural gas, oil and coal is identified to be the other factor which contributes towards the supply and demand of energy. In addition, factors such as government regulations, financial structure and infrastructure are also perceived to be the important factors of energy supply as well as demand. It needs to be stated in this context that the explosion in terms of population and financial development of a nation have been identified to be the major reasons which would increase the demand for energy in the upcoming years. In relation to the supply of energy sources, it has been indentified that a vast portion of energy throughout the globe is created from different non-renewable sources which entail gas, coal and oil. Moreover, a minimum portion of energy is also generated from other non-renewable sources which include wind power, solar power, hydro-electric power and fossil fuels (Exxon Mobil Corporation, n.d). Thus, collectively, it can be stated that there exists every possible chance of an augmentation in the demand as well as supply of energy in future. Factors such as environmental concerns, government regulations, infrastructure, population growth and economic advancement are believed to play a decisive part in the aspect of energy supply and demand by a considerable extent. Effect of Energy Supply and Demand Factors upon the Global Energy Policies A considerable effect is known to be posed upon the global energy policies in relation to the various energy supply and demand factors such as environmental concerns and economic development. The aspect of global energy policies is quite essential for nations contributing towards enhancing the effectiveness of an energy system and encouraging financial advancement and growth. In relation to the factor of environmental concerns, the rising pollution linked with blazing of fossil fuels is learnt to ultimately affect the global energy policies. Moreover, the one of the most imperative factor which is supposed to largely influence the global energy policies is the increased rate of atmospheric absorption of various greenhouse gases that eventually leads towards dramatic alterations in the climatic patterns. Additionally, apart from the environmental concerns, the factor of economic development also affects the global energy policies by a large level (World Energy Council, 2005). Critical Analysis of Energy Policy Issues The equilibrium price which is also acknowledged as market-clearing price is defined as the price where the quantity demanded equals quantity supplied. It is also described as a price where the target of both the buyers as well as the suppliers matches each other (The McGraw-Hill Companies, 2009). It can broadly be stated that the factor of energy supply as well as demand equilibrium can be accomplished in a better form through competition and open markets. For instance, in order to attain the equilibrium position, the government of Margaret Thatcher, the Prime Minister of United Kingdom (UK) in the year 1980 reduced the level of taxes, privatised many state-owned enterprises, lessened the number of deregulated industries and most importantly curbed down the power of the unions (The Globalist, 2012). The existence of competition and the formation of open markets broadly matters in order to accomplish supply and demand equilibrium as the outcomes of trade openness can be substantially measured in terms of various major factors which include financial growth, advanced living standard, productivity and future innovation. Moreover, it has been observed that the open economies grow at a faster rate in comparison to closed economies. Thus, these aforementioned facts can ultimately contribute to achieve supply and demand equilibrium in relation to energy services (OECD, n.d.). The energy policies which have been focussed on oil and gas are not considered to be sustainable in the long-term by a certain degree. This is due to the reason that the current patterns relating to energy production as well as consumption especially from oil and gas are perceived to be unsustainable which ultimately threatens the environment both locally as well as globally. Moreover, the current financial, technological, demographic and social trends also contribute towards imposing major challenges regarding the long-term sustainability of the energy policies. There are numerous factors which are possibly known to affect the long-term sustainability of the energy policies related to oil and gas. The stated factors include the increased rate of energy consumption which is produced through oil and gas, extensive growth of oil and gas energy related emissions and most importantly the rise in the population in future. In order to attain long-term sustainability, the energy policies associated with oil and gas needs to provide utmost attention towards recognising, developing as well as deploying relevant technologies by a large level (OECD, 2007). Conclusion The important factors which include economic growth, environmental settings and energy supply security are recognised to be the major challenges which are witnessed while making energy policy related decisions. It has been predicted that the demand of global energy will substantially increase at a faster rate in future. In order to fulfil the energy demand, a broad assortment of energy sources have been identified which include nuclear energy, renewable as well as non-renewable sources. The factors for instance government regulation, environmental concerns and population growth are likely to affect the energy supply and demand along with the global energy policies. In order to achieve energy supply and demand equilibrium, it is necessary to focus upon the aspects of promoting open markets and competition rather than emphasising upon the facet of economic growth or environmental concern. After acquiring a concise idea about the recent patterns of energy production as well as consumption, it can be stated that the energy policies which have been focussed upon oil and gas are not sustainable in future. In order to attain long-term sustainability, the energy policies need to concentrate on technologies associated with oil and gas by a considerable level. References Exxon Mobil Corporation, No Date. 2012 The Outlook for Energy: A View to 2040. Corporate. [Online] Available at: http://www.exxonmobil.com/Corporate/files/news_pub_eo.pdf [Accessed August 09, 2012]. Flavin, C., & Aeck, M. H., No Date. Energy For Development. Files. [Online] Available at: http://www.worldwatch.org/system/files/ren21-1.pdf [Accessed August 09, 2012]. France, N., 2012. Energy Policy. The International Journal of the Political, Economic, Planning, Environmental and Social Aspects of Energy. Holditch, S. A. & Chianelli, R. R., 2008. Introduction. Factors That Will Influence Oil and Gas Supply and Demand in the 21st Century. [Online] Available at: http://www.solargess.org/Literatures%20share-EndNote/%E7%94%B5%E5%AD%90%E4%B9%A6/%E5%85%B6%E5%AE%83/2008%20MRS%20Energy%20Materials%20Focus/206720.PDF [Accessed August 09, 2012]. OECD, No Date. Why Trade Matters. Topics. [Online] Available at: http://www.oecd.org/trade/whyopenmarketsmatter.htm [Accessed August 11, 2012]. OECD, 2007. Introduction: A Broad Look at Energy Issues. Energy For Sustainable Development. [Online] Available at: http://www.oecd.org/greengrowth/38509686.pdf [Accessed August 11, 2012]. The Globalist, 2012. Phase Three: The Return Of The Market. Markets and Governments: A Historical Perspective. [Online] Available at: http://www.theglobalist.com/storyid.aspx?storyid=9656 [Accessed August 11, 2012]. The Mc-Graw Hill Companies, 2009. Market Equilibrium. Introduction to Economics and the Economy. [Online] Available at: http://www.ag.unr.edu/englin/reco100/demand_supply_market_equilibrium.pdf [Accessed August 11, 2012]. United Nations, 2010. Report and Recommendations. Energy For a Sustainable Future. [Online] Available at: http://www.un.org/millenniumgoals/pdf/AGECCsummaryreport%5B1%5D.pdf [Accessed August 09, 2012]. World Economic Forum, 2012. Energy for Economic Growth. Industry Agenda. [Online] Available at: http://www3.weforum.org/docs/WEF_EN_IndustryVision.pdf [Accessed August 09, 2012]. World Energy Council, 2005. Regional Energy Integration In Africa. Documents. [Online] Available at: http://www.worldenergy.org/documents/integrationii.pdf [Accessed August 10, 2012]. Read More