Economics for Business: Implications of Renewable Energy in Australia

Running head: ECONOMICS FOR BUSINESS
Economics for Business
Name of the Student
Name of the University
Author Note

1ECONOMICS FOR BUSINESS
Table of Contents
Introduction................................................................................................................................2
Essence of the Article.................................................................................................................2
Economic Interpretation of the situation....................................................................................3
Conclusion..................................................................................................................................7
References..................................................................................................................................9

2ECONOMICS FOR BUSINESS
Introduction
The global economic scenario experiences considerable fluctuations and dynamics
with time owing to the changes in the economic patterns of different countries at different
periods. The economies of the countries experience considerable fluctuations due to changes
in the various endogenous as well as exogenous factors. While the endogenous factors
comprise of the internal attributes of an economy, the exogenous factors refer to the factors
which usually occur outside the concerned economy but have considerable implications on
the performance of the economic attributes of the country into consideration (Holland 2018).
Keeping this into consideration, the concerned report tries to study the dynamics in
the renewable energy sector in one of the predominant economies in the contemporary global
scenario, the economy of Australia (Clémençon 2016). Given the fact that it is one of the
primary concerns of the government of the country, to reduce the level of carbon emissions,
as per their target, set in the Paris Climate Agreement (2016), the country has been
increasingly focussing on the development of renewable energy plants to achieve lower
emission targets.
However, theses actions are seen to have both positive as well as negative
implications on the different aspects of the economy of the country, thereby giving rise to
substantial debate regarding the trade off which the country is experiencing in its process of
shifting from non-renewable energy resources to renewable energy. The report tries to
discuss the economic implications of the same, with reference to the article by Eryk
Bagshaw, named “Australia's energy operator proposes 'fast change' scenario to cut
emissions by 52 per cent by 2030” (Source: Bagshaw 2018).

3ECONOMICS FOR BUSINESS
Essence of the Article
As can be seen from the assertions of the concerned article, the Australian Energy
Market Operator has proposed a plan of reducing the greenhouse gas emissions by twice the
amount proposed by the government, by aiming to cut the same by 52% by 2030, in order to
meet the promises made by the country in the Paris Climate Agreement. The Operator aims to
achieve this “Fast Change” by accelerating investment in the arenas of development of
renewable energy plants (Shafiullah et al. 2012). However, this radical plan of the Operator is
expected to face contradictions in terms of the policy framework of the existent government,
which is not that rigid and which has provisions to increase the baselines of the emissions as
per the need of the situations and requirement for the sustenance of the businesses.
The main modus operandi which has been proposed to achieve this target, is by
setting up several new renewable energy zones in the country in order to attain economies of
scale and cost effectiveness in the production of the same. According to the article, the
proposal of seven new zones for renewable energy zones is expected to meet resistance,
especially from those officials who are against provision of subsidies to renewable energy
production activities (Martin and Rice 2012). However, the operator also highlights the
increasing threats of a major share of the coal plants reaching the end of their operating life
by 2040, thereby indicating towards the increasing needs for consolidating investment in the
renewable energy sector.
Economic Interpretation of the situation
The situation regarding the stand of the Australian economy regarding the renewable
energy resources and the debate arising in this aspect in the country can be explained with the
help of the economic concepts of externalities, cost of production and economies of scale.
Given the situation of increasing concern of global emission of greenhouse gases, it has been
of utmost importance for all the economies to reduce their share of emission in the global