Strategic Challenges to Sustainability in Light of Climate Change - Australian Energy Industry - Case Study Example

Strategic Challenges To Sustainability In Light Of Climate Change: The Case Of Australian Energy Industry Student’s Name Institutional Affiliation Course Name Date of Submission Strategic Challenges to Sustainability In Light Of Climate Change: The Case of Australian Energy Industry Introduction Energy is one of the key drivers of economic growth and development. Fortunately, Australia is amongst the counties that are blessed with abundant natural resources that it harnesses to produce energy. Currently, Australia is the leading exporter of coal. Additionally, the country also ranks among the leading exporters of, uranium, oil and natural gas. The petroleum industry alone contributes an estimated $6.2 billion every year to the Australia’s GDP (IBP Inc. 2013, p. 4). Despite the development and contribution of the energy industry to the economy of Australia, the industry is facing the challenge of sustainability due to the problem of climate change, which remains a big problem due to the country’s overdependence on energy from fossil fuel. In fact, different stakeholders, including the environmentalists, local community and farmers, the government and economists have had divergent opinions about the future prospects of Australians energy industry. The objective of this paper is fivefold. First, the paper will analyze the current state of sustainability in the Australia’s energy industry and proceed to identify the strategic challenges to its sustainability in light of climate change over short, medium and long-term. The paper will also identify the stakeholders involved in the industry, their roles and involvement. Additionally, the document will analyze and discuss the strategic responses to the challenges, as well as the roles and measures to implement the appropriate approaches. The Current State of Sustainability of Australia’s Energy Industry Sustainability is considered critical for economic growth and development today. Sustainability implies utilizing the resources available responsibly to meet the present needs without interfering with the ability of the future generation to meet their needs (IBP Inc 2013, p. 13). Sustainability is particularly of great importance in the energy industry because of the growing problem of climate change. Over the past few decades, the planet’s average temperatures have increased significantly due to global warming problem (Pelling 2011, p. 21). In fact, the problem of climate change is currently being felt all over the world. These include prolonged droughts, rising sea levels, increased typhoons, glacial movements and flooding just to name but a few. Unfortunately, the problem of climate change is directly linked to human activities that release greenhouse gasses into the environment. Despite the growing problem of climate change, the current state of sustainability of Australia’s energy industry is worrying. This is because Australia has not invested adequately in the sustainable energy sources, such as the renewable energy sources that are being championed by the environmentalists and world leaders. According to a survey, it emerged that Australian federal energy policies promotes largely the investment in fossil fuel, such as coal, oil and natural gas instead of promoting the production and use of renewable energy sources. In fact, the Australian government has been promoting the production of fossil fuel in the country by providing subsidies to companies that produce fossil fuel (Riedy and Diesendorf 2003, p. 125). This is because Australian government gains a great deal from the export earnings from the fossil fuel. Currently, Australia ranks among the countries that depend largely on coal, natural gas and oil products as its main source of energy. This is not withstanding the fact that coal industry emits about 38% of the total greenhouse gas produced in Australia (Riedy and Diesendorf 2003, p. 127). The country’s overreliance on fossil fuel has made Australia rank amongst the leading emitters of greenhouse gases. In fact, industry analysts believe that Australia could be affected most by the climate change problem not unless it changes its energy policy. Fortunately, the government and industry players have begun noticing the problems that the country is likely to face if it does not change its energy policy. As such, the government in conjunction with energy exploration and production companies is beginning to undertake sustainable energy initiatives, which involves promoting the production and use of clean energy. The commitment of the federal government and industry players became apparent recently, where the Australian government published the Carbon Pollution Reduction Scheme and Garnaut reports, where it announced its commitment to reduce greenhouse emission (Garnaut, R 2008, p. 32). At the same time, the Australian federal government announced the mandatory renewable energy target of 20% by the year 2020. Despite these promising pronouncements, renewable energy is still harnessed in small amount compared to fossil fuel. Currently, renewable energy only accounts for about 10% of the country’s total energy production. This raises the question as to whether the federal government and Australian energy players are committed to fighting climate change. In fact, Hill (2015) report shows that the production of renewable energy plummeted by about 90% over the last two years. This also confirms that Australia is still far from achieving total sustainability and will continue to emit large amounts of greenhouse gases due to its overdependence on fossil fuel. Accordingly, the country will most likely feel the greatest impact of climate change, unless the government changes its energy policies by investing adequately in clean sources of energy, such as solar, geothermal, hydroelectricity, biomass, wind and nuclear power, which remain underexploited. Strategic Challenges To the Sustainability of Australia’s Energy Industry In Light Of Climate Change Achieving sustainability has proved to be a big challenge for the Australian energy industry. Achieving sustainability has been hampered by climate change, which is exuberated by the increased emission of greenhouse gases into the atmosphere. As earlier noted, Australia still depends largely on fossil fuel derived from different sources, such as coal, natural gas and oil products. Currently, Australia is the leading producer of coal, which is a major source of greenhouse gas. Diesendorf and Saddler (2003, p.13) show that the mining and use of coal in Australia emits about 38% of the total greenhouse emitted in Australia. Apart from coal, Australia still largely depend on petroleum, and natural gas as it main source of energy. Because of the country’s dependence on fossil fuel as its main source of energy, it has become extremely challenging for the industry to achieve sustainability targets. In fact, currently, Australia is amongst the leading emitters of greenhouse gases due to its production and use of fossil fuel. The second major challenge to sustainability in light of climate change has to do with political uncertainty regarding Australia’s Renewable Energy Target (RET). Currently, most companies that had invested in renewable energy to ensure environmental sustainability are pulling out from the Australian energy industry citing difficulties working in Australia due to unfavorable political climate. In fact, investment in the country’s renewable energy has declined by more than 90% just over the last three months and is likely to plummet further because of the unfavorable political environment surrounding Renewable Energy Target (RET) (Hill 2015). Some of the renewable energy companies that have pulled out of Australian energy industry for lack of political goodwill in Renewable Energy Target (RET) include Vestas Wind Systems and Acciona Energy. Industry analysts predict that achieving environmental sustainability targets could become a nightmare in Australia in the long run if the rate at which fanciers and firms that invest in renewable energy continue to pull out of Australia ‘energy industry for other markets. Additionally, achieving sustainability in Australia’s energy industry is also facing a huge challenge for lack of government support in terms of financing. Although Australian government has in the recent past announced its commitment to fighting climate change by promoting investment in renewable energy, the reality on the ground shows the opposite. Major Stakeholders Involved, Their Roles and Involvement The Australian energy industry has a number of stakeholders with an interest in the activities of the industry. Among the major stakeholders with an interest in the industry include the local population and farmers, environmentalists, the government, and the management of the firms. These stakeholders have a huge role in influencing the activities in the industry. Local communities and famers are the first major stakeholders that are affected greatly by the energy industry (Pittock 2005, p. 24). Energy industry usually involves exploration, drilling and mining of different energy resources, such as coal, natural gas and oil. The activities conducted by energy firms usually interfere with the natural environment by causing erosion and emissions that destroy the natural environment. To the local community, some of the energy exploration activities, such as coal mining that occur on areas, such as Bowen and Clermont not only been complaining of increased noise and air pollution, but also of soil erosion that destroys (Bradshawet al. 2002, p. 26). Farmers are also concerned that coal mining activities going on in the currently are interfering with underground water that they depend on for agricultural purposes. The government is the other key stakeholder that has been involved in the energy industry. The Australian federal government has particularly been involved in coming up with energy policies for the country. For instance, most of the federal policies on energy have largely been encouraging the continued production and use of fossil fuel as the main source of energy. In fact, the Australian government continued to provide subsidies for firms that are involved in coal mining, as well as exploration and production of natural gas and oil because of the contribution of these fossil fuels to the Australian economy (Bradshawet al. 2002, p. 26). However, recently, the federal government showed its commitment to tackling climate change by introducing green initiatives that encourage the production and use of renewable energy sources. Therefore, to ensure the protection and conservation of the environment, the local community and farmers have been encouraging energy firms to adopt sustainable energy production methods to prevent environmental pollution. Diesendorf and Saddler (2003, p.27) reveal that the local community and farmers have been calling on the federal government to consider using latest technologies that minimizes the amount of pollution to the environment, as well as encouraging a move towards harnessing and use of clean energy in the country to ensure sustainability. Environmentalists are the other major stakeholders that have been greatly involved in the energy industry in Australia. The environtalist groups are particularly concerned that increased production of fossil fuel is having a serious negative impact on the environment. Greenpeace, which is one of the international environmentalist organization operating in Australia recently lead the country in rejecting the federal government’s planned building of the Carmichael Coal Mine citing the negative impacts that the project would have on the environment, such as increasing greenhouse emissions, as well as destroying the natural habitat for certain animal species (Bradshawet al. 2002, p. 29). The environmentalist group has called on the government to abandon the plans terming the project “carbon bomb” that will produce about 130 million tons of carbon dioxide, thereby increasing the problem of climate change. The environmentalist has offered a solution to the federal government by encouraging the exploration and harnessing of clean energy sources. The environmentalist groups argue that, in order for Australia to achieve environmental sustainability, it must move away from the use of fossil fuel and instead invest adequately in renewable energy sources, such as wind, solar, nuclear, geothermal, biomass and hydroelectric power. Lastly, the mining companies are also a key stakeholder in the Australian energy industry. The mining companies have an interest in the industry because they are directly involved in the building and running of mining companies and oil and gas exploration plants. Possible Strategic Responses and the Preferred Approach Climate change resulting from excessive emission of greenhouse gases is the main challenge facing Australia energy industry sustainability. As elaborated earlier, Australia depends largely on fossil fuel derived from coal, natural gas and oil products. Unfortunately, these energy sources emit large quantities of greenhouse gases that are responsible for climate change. Fortunately, there are a number of strategic responses that can be implemented to fight climate change so as to promote sustainability in Australia energy industry. The first strategic response is the investment in renewable energy sources. In this regard, if the government intends to ensure sustainability in Australia energy industry, it must invest adequately in clean sources of energy as this will help see a reduction in greenhouse emission, thus fighting climate change (Australian Greenhouse Office 2002, p. 54). Although the Australian government has shown some commitment in promoting the production and use of renewable energy, it must do more by creating policies and showing political good will in renewable sources of energy to encourage financiers to invest in renewable energy sources. Secondly, Australian energy industry can respond to climate change by adopting advanced technologies that minimize the amount of pollution from the industries. Schneider et al. (2010, p. 57) noted that careless and irresponsible disposal of industrial discharges is partly to blame for the problem of climate change. Therefore, to promote environmental sustainability, the energy industry should ensure responsible disposal of industrial discharges through the adoption of new technologies. However, of the strategies highlighted, investment in renewable sources of energy is the best solution to the challenge. This is because investing in renewable energy sources will help reduce Australia’s overdependence on fossil fuel, effectively minimizing greenhouse emissions that are responsible for climate change. Accordingly, this would help boost sustainability by tackling air pollution. Strategies to Effectively Implement These Responses Having identified the appropriate strategic response to the challenges, the next thing is to ensure that the responses are implemented effectively. The first strategy to implement the responses is to lobby the politicians to pass laws that discourage the continued production of fossil fuel, such as coal mining, but instead encourages investment in renewable sources of energy (Pittock 2005, p. 33). As things stands, lack of political goodwill is largely to blame for inadequate investment in alternative energy sources. In fact, many renewable energy firms are currently pulling out of Australia because of the existing unfavorable political climate regarding Renewable Energy Target (RET). Therefore, to ensure effective implementation of sustainable clean energy sources to respond to problem of climate change, it will be important to lobby and encourage politicians and the government to encourage investors to invest in renewable sources by providing a favorable political environment. Secondly, it will also be important to ensure that all the other stakeholders in the industry are involved in the implementation of the strategies to minimize resistance Diesendorf and Saddler (2003, p.19). Thirdly, implementing the responses will require conducting public education to create awareness on the problem of climate change and why there is a need to engage in sustainable environmental initiatives as this will encourage the participation of the entire Australian society in adopting better ways of minimizing pollution that causes climate change. Conclusion Energy industry contributes greatly to the Australian economy. Australia is amongst the countries that are blessed with abundant natural resources, such as coal, uranium, natural gas and oil that it produces and exports to the international market, thereby earning the country foreign exchange and revenue. Unfortunately, Australia has largely relied on fossil fuel that emits large amounts of greenhouse gases that cause climate change. Despite the increased push for the adoption of sustainable initiatives, such as renewable energy, Australia still depends largely on fossil fuel. This has put it on wrong course with many stakeholders, such as the local community and farmers, as well as environmentalists. However, to tackle the climate change effectively, there is an increased need for Australia to invest adequately in renewable energy sources, and minimize its production and use of fossil fuel. However, to achieve this, the government and politicians must show the goodwill by enacting policies that encourage investment in renewable energy as well as providing funds for investment in clean energy. References Australian Greenhouse Office 2002, National greenhouse gas inventory 2000. AGO, Canberra, viewed 8 July 2015 www.greenhouse.gov.au/ Bradshaw, J., Bradshaw, B. H., Allinson, W. G., Rigg, A. J., Nguyen, D. N., Spencer, L. 2002. The potential for geological sequestration of CO2 in Australia: preliminary findings and implications for new gas field development, APPEA Journal, vol. 42, no.1, pp. 25-46. Diesendorf, M., & Saddler, H 2003, Australia’s polluting power: Coal-fired electricity and its impact on global warming. WWF Australia, Sidney Garnaut, R 2008, The Garnaut climate change report. Cambridge University Press: Cambridge, UK. Hill, J 2015, Investment in Australian renewable energy industry plummets 90%, viewed 8 July 2015 http://cleantechnica.com/2015/04/15/investment-australian-renewable-energy-industry-plummets-90/ IBP, Inc. 2013, Australia oil, gas resources and exploration handbook volume 3 South Australia - Strategic information and regulations. Lulu.com, Melbourne. Pelling, M 2011, Adaptation to climate change. Routledge: London Pittock, B 2005, Climate change: Turning up the heat. Earthscan / CSIRO: Collingwood, Vic Riedy, C., & Diesendorf, M 2003, Financial subsidies to the Australian fossil fuel industry. Energy Policy vol. 31, pp. 125-137. Schneider, S.H., Rosencranz, A., Mastrandrea, M.D. and Kuntz-Duriseti, K. 2010. Climate change science and policy. Island Press: Washington DC. Read More