Economics for Business 2: Renewable Energy in Australian Economy
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This report analyzes the economic implications of Australia's transition from non-renewable to renewable energy sources. It examines the context of the international economic climate and the Australian government's targets for reducing carbon emissions, as outlined in the Paris Climate Agreement. The report focuses on an article discussing the Australian Energy Market Operator's proposal for a "fast change" scenario to cut emissions by 52% by 2030, and discusses the economic concepts of externalities, economies of scale, and production costs. It assesses the positive impacts of renewable energy, such as energy price synergies, continuous energy supply, and job creation, while also acknowledging potential negative externalities like increased initial costs and investment skepticism. The report concludes by highlighting the debates surrounding the shift to renewable energy and the need to balance different perspectives and economic trade-offs.

Running head: ECONOMICS FOR BUSINESS
Business Economy
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Business Economy
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Table of Contents
Introduction................................................................................................................................2
Importance of Article.................................................................................................................2
Economic Understanding of Situation.......................................................................................3
Conclusion..................................................................................................................................7
References..................................................................................................................................9
Table of Contents
Introduction................................................................................................................................2
Importance of Article.................................................................................................................2
Economic Understanding of Situation.......................................................................................3
Conclusion..................................................................................................................................7
References..................................................................................................................................9

2ECONOMICS FOR BUSINESS
Introduction
The international economic condition deals with significant fluctuations along with
dynamics with time resulting in changes within economic patterns of distinct nations at
various periods. The economies of the nations deal with considerable variations because of
changes in distinct endogenous and exogeneous factors. While the endogenous aspects
include the internal factors of the economy, the exogeneous aspects indicate the factors that
generally takes place outside the concerned economy (Anderson et al. 2016). This also have
significant implications on the performance of he nation’s economic aspects into
consideration. Taking into account the same, this report focuses investigating the dynamics
within the renewable energy industry is among the predominant economies within the
contemporary international scenario, the Australian economy.
In consideration to this fact, it serves among the major functions of the nation’s
government in order to decrease the carbon emissions. This is based on their target explained
within the Paris Climate Agreement and the nation has been focussing greatly on the
renewable energy plants development in order to attain lower emission targets (Buckley
2016). Moreover, such actions are observed to have positive along with negative implications
on distinct economic aspects of the nation that its experience in the shifting process from the
non-renewable to renewable resources energy. The report also attempts to explain the
economic implications of it in consideration to the article by Eryk Bagshaw with name
“Australia's energy operator proposes 'fast change' scenario to cut emissions by 52 per cent
by 2030”.
Importance of Article
As it can be observed from the assertions of this article, the Australian Energy Market
Operator has developed a plan of decreasing the greenshouse emission of gas by twice of the
Introduction
The international economic condition deals with significant fluctuations along with
dynamics with time resulting in changes within economic patterns of distinct nations at
various periods. The economies of the nations deal with considerable variations because of
changes in distinct endogenous and exogeneous factors. While the endogenous aspects
include the internal factors of the economy, the exogeneous aspects indicate the factors that
generally takes place outside the concerned economy (Anderson et al. 2016). This also have
significant implications on the performance of he nation’s economic aspects into
consideration. Taking into account the same, this report focuses investigating the dynamics
within the renewable energy industry is among the predominant economies within the
contemporary international scenario, the Australian economy.
In consideration to this fact, it serves among the major functions of the nation’s
government in order to decrease the carbon emissions. This is based on their target explained
within the Paris Climate Agreement and the nation has been focussing greatly on the
renewable energy plants development in order to attain lower emission targets (Buckley
2016). Moreover, such actions are observed to have positive along with negative implications
on distinct economic aspects of the nation that its experience in the shifting process from the
non-renewable to renewable resources energy. The report also attempts to explain the
economic implications of it in consideration to the article by Eryk Bagshaw with name
“Australia's energy operator proposes 'fast change' scenario to cut emissions by 52 per cent
by 2030”.
Importance of Article
As it can be observed from the assertions of this article, the Australian Energy Market
Operator has developed a plan of decreasing the greenshouse emission of gas by twice of the
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amount decided by the government through aiming to decrease same by 52% by 2030, for
addressing the promises made by the nation within the Paris Climate Agreement (Dranove et
al. 2016). The operator intends to attain the “Fast Change” by increasing investment within
the development areas of the renewable energy plants. Conversely, such radical plan of the
operator is anticipated to deal with contradictions in consideration to the policy structure of
the present government. This is not deemed to be that complex and that has provisions in
enhancing the baselines of the carbon emissions based on the situational needs along with
need of maintaining business sustainability (Duranton, Henderson and Strange 2015).
The method of operation has been developed in order to attain such target. This is
through setting up numerous new renewable energy areas within the nation for obtaining
exceptional economies of scale along with cost effectiveness within production of it. Based
on this article, the proposal of seven innovative areas for the renewable energy areas that is
anticipated to deal with resistance (Granger 2014). This is particularly from the officials those
are against the renewable energy product activities-based subsidy. Conversely, the operator
also indicates the increasing concerns of a major share within the coal plants through
attaining the end of their operating life at the end of 2040. Moreover, this also indicates
towards the increasing requirements for consolidating investment within renewable energy
industry.
Economic Understanding of Situation
The conditions concerned with the Australian economy stand in account to the
renewable energy resources along with the debate taking place in such aspect within the
nation. Moreover, this can also be elaborated with the support of economic concepts of the
externalities, economies of scale along with the production cost. In account for the situation
of high concern for global emissions of greenhouse gasses it has been of increased
importance for economies of distinct nations for decreasing the emissions share within the
amount decided by the government through aiming to decrease same by 52% by 2030, for
addressing the promises made by the nation within the Paris Climate Agreement (Dranove et
al. 2016). The operator intends to attain the “Fast Change” by increasing investment within
the development areas of the renewable energy plants. Conversely, such radical plan of the
operator is anticipated to deal with contradictions in consideration to the policy structure of
the present government. This is not deemed to be that complex and that has provisions in
enhancing the baselines of the carbon emissions based on the situational needs along with
need of maintaining business sustainability (Duranton, Henderson and Strange 2015).
The method of operation has been developed in order to attain such target. This is
through setting up numerous new renewable energy areas within the nation for obtaining
exceptional economies of scale along with cost effectiveness within production of it. Based
on this article, the proposal of seven innovative areas for the renewable energy areas that is
anticipated to deal with resistance (Granger 2014). This is particularly from the officials those
are against the renewable energy product activities-based subsidy. Conversely, the operator
also indicates the increasing concerns of a major share within the coal plants through
attaining the end of their operating life at the end of 2040. Moreover, this also indicates
towards the increasing requirements for consolidating investment within renewable energy
industry.
Economic Understanding of Situation
The conditions concerned with the Australian economy stand in account to the
renewable energy resources along with the debate taking place in such aspect within the
nation. Moreover, this can also be elaborated with the support of economic concepts of the
externalities, economies of scale along with the production cost. In account for the situation
of high concern for global emissions of greenhouse gasses it has been of increased
importance for economies of distinct nations for decreasing the emissions share within the
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4ECONOMICS FOR BUSINESS
international context. In account of the same, Australia has developed its target of renewable
energy for making sure that by the year 2020 minimum 33,000 Gigawatt-hour of the nation’s
electricity that is derived from renewable sources (Turvey 2017).
Figure 1: Greenhouse gas emission route of Australia
(Source: Ward and Begg 2016)
The target of enhancing the renewable energy resources is anticipated to have
numerous positive implications that is explained under:
a) Energy synergy in price- This advantage of usage regarding renewable energy can be
elaborated through the economic concept help regarding economies of scale. This
indicates that by means of initial production cost of such energy and this is because of
the reason that it is high because of increased set-up costs and fixed expenses (Ward
and Begg 2016). Conversely, this also changes with time along with increase in the
production of same, the production expense is anticipated to decrease that results in
increase of the returns to scale. This is indicated in the figure below:
international context. In account of the same, Australia has developed its target of renewable
energy for making sure that by the year 2020 minimum 33,000 Gigawatt-hour of the nation’s
electricity that is derived from renewable sources (Turvey 2017).
Figure 1: Greenhouse gas emission route of Australia
(Source: Ward and Begg 2016)
The target of enhancing the renewable energy resources is anticipated to have
numerous positive implications that is explained under:
a) Energy synergy in price- This advantage of usage regarding renewable energy can be
elaborated through the economic concept help regarding economies of scale. This
indicates that by means of initial production cost of such energy and this is because of
the reason that it is high because of increased set-up costs and fixed expenses (Ward
and Begg 2016). Conversely, this also changes with time along with increase in the
production of same, the production expense is anticipated to decrease that results in
increase of the returns to scale. This is indicated in the figure below:

5ECONOMICS FOR BUSINESS
Figure 2: Economies of scale because of the production cost decrease
(Source: Author’s Creation)
b) Continuous along with reliable energy source- Such energy resources have decreased
depletion source and are anticipated to be highly dependable.
c) Generation of Job- The increase within the renewable energies within the production is
anticipated to generate greater economic activities that finally increase the employment
opportunity within the country’s economy. This is further anticipated to enhance the
economic welfare that in addition increases the aggregate demand within the economy
(Anderson et al. 2016). This is further anticipated to result in increased economic prosperity
and productivity.
Figure 2: Economies of scale because of the production cost decrease
(Source: Author’s Creation)
b) Continuous along with reliable energy source- Such energy resources have decreased
depletion source and are anticipated to be highly dependable.
c) Generation of Job- The increase within the renewable energies within the production is
anticipated to generate greater economic activities that finally increase the employment
opportunity within the country’s economy. This is further anticipated to enhance the
economic welfare that in addition increases the aggregate demand within the economy
(Anderson et al. 2016). This is further anticipated to result in increased economic prosperity
and productivity.
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Figure 3: Aggregate Demand Increase Results in Real GDP Increase
(Source: Authors Creation)
Despite of having numerous positive implications regarding renewable resources
there still remains significant debate concerning the same because of the concerns mentioned
under:
a) Increase in initial cost- The transformation within the renewable resources is increasing
initially the electricity expenses as well as other factors related with daily consumption thaat
is faced by the population of the nation (Anderson et al. 2016).
Figure 3: Aggregate Demand Increase Results in Real GDP Increase
(Source: Authors Creation)
Despite of having numerous positive implications regarding renewable resources
there still remains significant debate concerning the same because of the concerns mentioned
under:
a) Increase in initial cost- The transformation within the renewable resources is increasing
initially the electricity expenses as well as other factors related with daily consumption thaat
is faced by the population of the nation (Anderson et al. 2016).
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Figure 4: Electricity prices increase within Australia over past few years
(Source: Dranove et al. 2016)
This is in turn anticipated to enhance the overall consumption expense along with the
electricity production is needed in all the type of market sectors. It is also anticipated to
enhance the total living expenses that is in the short term. This serves as an instance of
negative externality of shift in the direction of renewable energy sources (Dranove et al.
2016).
b) Investment scepticism- There are considerable amount of considerable scepticism
present among the investors concerned with thee prospects as well as renewable
energy plants sustainability. This further makes it difficult for the nation to make a
radical shift.
Conclusion
Based on the discussion conducted above it can be indicated that in the current
scenario, Australia is enthusiastically and increasingly shifting in the direction of shift from
Figure 4: Electricity prices increase within Australia over past few years
(Source: Dranove et al. 2016)
This is in turn anticipated to enhance the overall consumption expense along with the
electricity production is needed in all the type of market sectors. It is also anticipated to
enhance the total living expenses that is in the short term. This serves as an instance of
negative externality of shift in the direction of renewable energy sources (Dranove et al.
2016).
b) Investment scepticism- There are considerable amount of considerable scepticism
present among the investors concerned with thee prospects as well as renewable
energy plants sustainability. This further makes it difficult for the nation to make a
radical shift.
Conclusion
Based on the discussion conducted above it can be indicated that in the current
scenario, Australia is enthusiastically and increasingly shifting in the direction of shift from

8ECONOMICS FOR BUSINESS
the non-renewable fuel to the renewable energy sources resulting in the commitment of the
nations. Conversely, though almost everyone agrees unanimously to the stand of the nation
for shifting towards renewable sources. Among them some are against the radical manner of
change as proposed by others along with that both of them have perceptions supported by
economic conceptual theories and frameworks. Maintaining a balance among the perceptions
along with dealing with the trade off taking place in the economy is because of the same
issue.
the non-renewable fuel to the renewable energy sources resulting in the commitment of the
nations. Conversely, though almost everyone agrees unanimously to the stand of the nation
for shifting towards renewable sources. Among them some are against the radical manner of
change as proposed by others along with that both of them have perceptions supported by
economic conceptual theories and frameworks. Maintaining a balance among the perceptions
along with dealing with the trade off taking place in the economy is because of the same
issue.
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References
Anderson, D.R., Sweeney, D.J., Williams, T.A., Camm, J.D. and Cochran, J.J.,
2016. Statistics for business & economics. Nelson Education.
Buckley, P.J., 2016. International business: economics and anthropology, theory and
method. Springer.
Dranove, D.S., Besanko, D.A., Shanley, M. and Schaefer, M., 2016. Economics of Strategy.
Drummond, H. and Hodgson, J., 2016. Escalation in decision-making: Behavioural
economics in business. Routledge.
Duranton, G., Henderson, V. and Strange, W. eds., 2015. Handbook of regional and urban
economics. Elsevier.
Granger, C.W.J., 2014. Forecasting in business and economics. Academic Press.
Turvey, R., 2017. Optimal Pricing and Investment in Electricity Supply: An Esay in Applied
Welfare Economics. Routledge.
Ward, D. and Begg, D., 2016. Economics for business. McGraw-Hill.
References
Anderson, D.R., Sweeney, D.J., Williams, T.A., Camm, J.D. and Cochran, J.J.,
2016. Statistics for business & economics. Nelson Education.
Buckley, P.J., 2016. International business: economics and anthropology, theory and
method. Springer.
Dranove, D.S., Besanko, D.A., Shanley, M. and Schaefer, M., 2016. Economics of Strategy.
Drummond, H. and Hodgson, J., 2016. Escalation in decision-making: Behavioural
economics in business. Routledge.
Duranton, G., Henderson, V. and Strange, W. eds., 2015. Handbook of regional and urban
economics. Elsevier.
Granger, C.W.J., 2014. Forecasting in business and economics. Academic Press.
Turvey, R., 2017. Optimal Pricing and Investment in Electricity Supply: An Esay in Applied
Welfare Economics. Routledge.
Ward, D. and Begg, D., 2016. Economics for business. McGraw-Hill.
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