Argumentative Essay Example on Global Energy Outlook

2021-06-08 02:49:27
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University of California, Santa Barbara
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Since the dawn of civilization, energy in any of its form has been a key success component in making life easy. This fact has been consistently passed down through generations to the medieval periods, where energy was used primarily for transport and facilitating critical activities such as agriculture. The energy situation today as noted by Robichaud (2014) shares similar elements from decades ago. That is, energy production and consumption are primarily attributed to major industrial usage, transport, as well as home use and correlates to correlates to macroeconomics factors. The world economy churns out a massive $75.59 trillion annually all of which is either directly or indirectly dependent on energy resources. In this regard, managing energy resources through an effective strategic plan is the next frontier for attaining competitive advantage between businesses and countries alike.

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The global energy outlook offers a clear guideline of what might happen given specific assumptions (Mitrova, 2014). In other words, the report provides broad industry-wide trends postulated by modern technologies and demographic trends. The global energy outlook report gives insights into alternatives and assumptions simulated from different macroeconomic models, demographic, and world oil price changes. More importantly, it carries some significance in the contemporary business environment and offers a pool of policies detailing various elements of energy sources and sustainability. For instance, the report reveals trends in liquid fuel demand and supply into the future, describing industries and regions that are more likely to make an impact on prices as well as carbon dioxide emission rates (Pradhan, 2008).

The importance of the global energy outlook boils down to the need for growth, sustainability, and maintaining a competitive advantage in the market. Although energy markets are complex, the global models offer simplified forms indicating production and consumption levels, regulations imposed, as well as producer and consumer behavior (Pradhan, 2008). These projections rely heavily on the present and past data analyzed using econometric simulations to arrive at forecasted trends. Equipped with this tool, states and companies could align their production behavior to parallel the global energy outlook recommendations. Moreover, organizations can effectively formulate energy policies like how to save energy and meet green gas emissions targets.

The industrial sector consumes 54% of the world's total delivered energy in processes such as processing, assembly, and manufacturing of products (Iea.org, 2017). Using the global energy outlook, industrial firms stand to benefit by distributing their branches to areas with affordable power and sustainable supply (Challoner, 2012). For instance, according to the 2016 report, energy consumption is forecasted to decline in the non-OECD industrial sectors from 64% to 59% from 2012 to 2040 (Iea.org, 2017). This paradigm shift gives an indication that most non-OECD firms are moving away from energy-intensive manufacturing, despite the rapid growth of energy use in other sectors (Dukert, 2009). For this reason, the intensive energy firms will not be regionally suited for these areas.

At a deeper level, the global energy outlook indicates the world's energy markets by fuel types. This information is useful for organizations aligning machinery used in the production process (Field, 2012). Notably, the liquid fuel petroleum use indicates a rising trend from 90 million barrels per day in 2012 to 121 million in 2040. These figures show that producers and consumers of petrol-driven engines will still be in business by 2040. However, a rising concern for green gas emission is likely to hamper industry returns (Agency, 2012). This observation is particularly true in countries such as the USA, which are committed to lowering emissions via the Kyoto protocol (Kitous et al., 2016). In this regard, liquid fuel demand and supply are likely to experience shocks in developing countries which will, in turn, affect energy organizations trading within these regions. Similar observations are ascertained for other energy sources such as coal. Coal is the primary carbon producer and firms depending on coal energy are highly regulated and should not be expected to produce much revenue.

The global energy outlook's relevance is ubiquitous for energy consumers and producers alike, as well as regulatory bodies like the state. For instance, it aids organizations to determine segments that are energy-intensive and expedite the energy audit process (Matsuo, Yanagisawa, and Yamashita, 2013). The global energy outlook acts as a baseline indicator for individual organizations regarding power consumption strategic planning. In other words, it is a means of achieving a competitive advantage by consuming less energy or employing renewable energy sources.

Surprisingly, significant organizational changes in the industrial sector are postulated to happen in Russia and The Middle East. This change is attributed to mining and oil extraction present in these regions (Pradhan, 2008). In addition, Indian firms that are predominantly agricultural are also anticipated to increase energy consumption attributed to better living standards. Currently, China and Asia are the world's economic powerhouses as they are the highest energy consumers in the region.

Essentially, the lead global energy policy framework is cutting greenhouse gas emissions by 40%. Although the consumption of non-fossil fuels is expected to grow at unprecedented levels, fossil fuel consumption still is forecasted to account for 78% of total energy use in 2040 (Lesser, 2014). Equally worrying, abundant natural gases are being exploited at high levels. As Challoner (2012) notes, this includes a large supply of tight gas, shale gas, and methane. At the same time, there is a steady rise in green gas emissions in developing non-OECD nations. Thus, CO2 emissions are expected to increase from 32.2 to 43.3 billion metric tons in 2040, even though such releases associated with burning liquid fuels are estimated to have dropped to a sustainable low of 36% in 2012. Markedly, coal that accounted for 43% of all emissions in 1990 is the most carbon-intensive fuel. Due to its carbon constituents, it remains the leading source of CO2 discharges through 2040, despite the decline in its use. Today, even the natural gases that accounted for a mere 19% of these emissions in 1990 and 20% in 2012 indicate a rising trend towards a high of 26% in 2040 (Iea.org, 2017). These aspects tend to ascertain that with the prevailing trends and factors held constant, the energy policy framework for reducing CO2 emissions by 2030 would be unattainable. However, if fuel prices were to drop which is highly unlikely carbon emission targets could be achieved.

The energy policy framework aimed at improving and transitioning to renewable energy sources is being rapidly deployed. For instance, developed countries like China and the USA have instituted programs such as the carbon trading scheme and the US Clean power plan scheduled to commence in 2017. Furthermore, in 2014, a total of 130 GW of renewable energy mega power plants were installed through supportive policies all over the world. Today, renewable energy sources are second to coal as the largest source of electricity because of these milestones (Mitrova, 2014). Adoption of renewables shows an upward trend from 8% in 1990 to 18% in 2012 and 29% in 2040. These figures indicate energy policy frameworks for attaining up to 30% share for renewable energy are feasible.

Over time, policy frameworks aimed at improving energy efficiency have attained significant strides. For example, the construction sector that is documented as the leading energy consumer is nowadays characterized by consumer electronics that utilize less energy. This action has been affected by the presence of bodies that regulate the manufacturing of equipment to meet specified international standards, such as ISO, and CE compliance. Similar steps have been instituted in the industrial sector to ensure efficient utilization of energy. In the words of Boehmer-Christiansen (2013), the growth in energy demand is only attributed to population growth; effective use of policy frameworks operates in tandem with strategies aiming at reducing prices.

SWOT Analysis of the Global Energy Outlook

Strengths

The strengths of the global energy outlook recommendations are as follows:

It provides forecasts that are essential in planning the future.

It is based on past and present data, thus it has a very minimal margin of error

It gives the analysis of fuel usage per fuel type, industry sector, region, and country.

It also simulates different scenarios offering resiliency

Weaknesses

Conversely, its weaknesses areas outlined below:

It is only based on postulated data and does not factor in new risks that could occur in the market.

It offers regional statistics but does not narrow down to area market specifics. Thus, it only benefits large-scale organizations.

It does not factor in occurrences of a natural disaster or other calamities; hence, catastrophes could render data postulated on a region completely unusable.

Opportunities

The opportunities of the global energy outlook are as shown below:

It gives insights into new markets offering a competitive advantage to firms.

It offers an opportunity to eliminate green gas emissions and reduce global warming.

It provides methodologies of using sustainable energy to sustain a firm's operations.

Threats

Lastly, its threats are as follows:

The report could lead to demand and supply shocks since consumers and producers expect certain changes already. For instance, since companies anticipate liquid petroleum price increase the commodity might be hoarded.

No business continuity plan is offered in the event of a disaster, hence companies using the report might fail to pull themselves out of energy shocks.

SWOT Matrix

Considering the above-mentioned SWOT analysis, the SWOT matrix of the global energy outlook can be designed as shown in the table below.

Strengths

It provides forecasts that are essential in planning the future.

It is based on past and present data, thus it has a very minimal margin of error

It gives the analysis of fuel usage per fuel type, industry sector, region, and country.

It also simulates different scenarios offering resiliency Weaknesses

It is only based on postulated data and does not factor in new risks that could occur in the market.

It offers regional statistics but does not narrow down to area market specifics. Thus, it only benefits large-scale organizations.

It does not factor in occurrences of a natural disaster or other calamities; hence, catastrophes could render data postulated on a region completely unusable.

Opportunities

It gives insights into new markets offering a competitive advantage to firms.

It offers an opportunity to eliminate green gas emissions and reduce global warming.

It provides methodologies of using sustainable energy to sustain a firm's operations. Threats

The report could lead to demand and supply shocks since consumers and producers expect certain changes already. For instance, since companies anticipate liquid petroleum price increase the commodity might be hoarded.

No business continuity plan is offered in the event of a disaster, hence companies using the report might fail to pull themselves out of energy shocks.

Conclusion

In conclusion, the global energy outlook is a comprehensive document that aids organizations to craft strategic energy plans. Its importance boils down to the need for information to institute such policies and business sustainability. At the same time, its significance is...

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