ECON101: Australia's Renewable Energy and Economic Impact Report

This report provides an economic analysis of Australia's renewable energy sector, focusing on the government's interest in improving renewable energy sources. It examines the role of policies like the Renewable Energy Target (RET) and feed-in tariffs (FiT) in driving investment and increasing renewable energy uptake. The study uses economic concepts and theories to analyze the impact on GDP, employment, and welfare, illustrating the dynamics of supply and demand in the renewable energy market. The report also offers recommendations to key stakeholders, including policymakers, for enhancing the efficiency and affordability of renewable energy production, and ensuring policies address market inefficiencies and regional variations. The conclusion highlights the potential for growth in the renewable energy sector, emphasizing its contribution to job creation and economic opportunities.

Running head: ECONOMICS FOR BUSINESS
ECONOMICS FOR BUSINESS
Name of the Student
Name of the University
Author’s Note

1ECONOMICS FOR BUSINESS
Table of contents
Introduction......................................................................................................................................2
Reasons behind Australian government taking interest in improvement in renewable energy.......2
Analyzing the study in terms of economic concepts and theories...................................................3
Actions recommended to the key players for improving the current condition of renewable
energy..............................................................................................................................................5
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

2ECONOMICS FOR BUSINESS
Introduction
The present study provides an overview on the Australia’s stand on the renewable energy.
Renewable energy in this nation mainly deals with efforts for quantifying as well as expanding
the utilization of renewable energy in electricity generation as fuel in thermal energy and
transport. Renewable energy is mainly created through generation of electricity using certain
renewable sources, for example- hydro, geothermal, solar thermal, landfill gas and wind.
(Twidell and Weir 2015) The consumption of renewable energy was 5.9% of the total energy
consumption of this nation in the year 2015. Over the last few years, there has been extensive
growth in generation of the renewable electricity in this nation. This study is further analyzed
with the help of economic theories and concepts. In the last section, recommendation is also
provided to the keyholders of this country for improvement of the present condition.
Reasons behind Australian government taking interest in improvement in renewable
energy
Recent evidences reflect that the renewable energy in Australia has been slightly
declining over the last few decades. The policymakers of this nation thereby adopted new
renewable energy policies for reducing greenhouse gas emission and increasing renewable
energy. The two major policy instruments that presently drives increase in the renewable energy
involves- the Australian Government’s RET (Renewable Energy Target ) scheme and FiT(state-
based feed-in tariff ) schemes (Azad et al. 2012). The review of all these schemes reflects that
the policymakers of this country have increased total investment in the infrastructure of the
renewable energy and also enhanced uptake of the renewable energy systems. The main aim of
the policymakers behind adoption of these schemes is to boost electricity from the renewable

3ECONOMICS FOR BUSINESS
sources. Although these two schemes adopted by the Australian government have led to growth
in renewable energy, it led to increase in total cost of the projects. The policymakers of this
country also invested in the technologies of the renewable energy in order to reduce emission of
carbon. The Australian government is also utilizing intergovernmental forums for addressing
overlap between different policies in order to enhance renewable energy.
Analyzing the study in terms of economic concepts and theories
Advancement in technologies of renewable energy as well as increasing cost
effectiveness has provided new opportunities for the Australian economy to transform their
several energy systems. Huge investment in renewable energy by the Australian government has
led to increase in this nations’ GDP (Gross Domestic Product) by near about 1.7%. In addition to
this, accelerating deployment of the renewable energy also improved human welfare and created
new opportunities of employment (Rios, McConnell and Brue 2013) Recent evidences reflects
that rise in growth of renewable energy industry over the last few decades has created several
jobs in Australia (Arena 2016). This creation of several employment opportunities also led to
sustainable GDP growth as well as welfare of this nation. Moreover, utilization of the renewable
energy sources also increased rapidly in this nation due to decline in relative prices along with
advancement of new technologies and support of Australian government policies in meeting
emission targets (Mankiw, 2014). As a result, the demand for energy has increased in this nation
over the years. Moreover, abundance of the renewable energy sources also helped to meet the
rising demand of renewable energy (Sloman, Norris and Garrett 2013). This is illustrated in the
diagram below:

4ECONOMICS FOR BUSINESS
Quantity
Price
D1
D
S1
S
P*
Q0 Q1
Figure 1: Increase in demand and supply of renewable energy in Australia
Source: (Author’s creation)
This figure reflects that the equilibrium price occurs at the point P* in which initial
demand DD and initial supply SS intersects each other. As the demand for renewable energy
increases , the demand curve shifts towards rightward direction to DD1 (Mankiw 2014).
Likewise, abundance of renewable energy in this nation also increases supply , thereby shifting
the supply curve towards right as reflected by SS1. As a result, the quantity will increase but the
price might remain unchanged.

5ECONOMICS FOR BUSINESS
Figure 2: Investment in renewable energy in Australia
Source: (Twidell and Weir 2015)
Actions recommended to the key players for improving the current condition of renewable
energy
 The policymakers of this nation must review their renewable energy policies in order
meet with the changing demand of this nation
 The key holders must make more investments in development of technologies in order to
increase efficient production of these renewable sources of energy and making it highly
competitive as well as affordable.
 The policymakers of this country should ensure that the decisions relating to tax
incentives for the renewable energy resources are designed in such a way that it addresses
inefficiencies in market
 They should also consider regional variation in availability of renewable energy sources
while developing policies and regulation.

6ECONOMICS FOR BUSINESS
Conclusion
The analysis presented in the above study displays that Australian stand on increasing the
share of this renewable energy leads to increase in employment, international trade, human
welfare and economic growth. Moreover, progress in new technologies as well as regulatory
changes also enhanced efficiency in renewable energy. It has been predicted by economists that
growth in renewable energy sector will support near about 24 million jobs and create new
markets as well as opportunities for export of this nation in future.

7ECONOMICS FOR BUSINESS
References
Arena, R., 2016. The economics of Alfred Marshall: revisiting Marshall's legacy. Springer.
Azad, A.K., Khan, M.M.K., Ahasan, T. and Ahmed, S.F., 2014. Energy scenario: production,
consumption and prospect of renewable energy in Australia. Journal of Power and Energy
Engineering, 2(04), p.19.
Mankiw, N.G., 2014. Essentials of economics. Cengage learning.
Mankiw, N.G., 2014. Principles of macroeconomics. Cengage Learning.
Rios, M.C., McConnell, C.R. and Brue, S.L., 2013. Economics: Principles, problems, and
policies. McGraw-Hill.
Sloman, J., Norris, K. and Garrett, D., 2013. Principles of economics. Pearson Higher Education
AU.
Taussig, F.W., 2013. Principles of economics (Vol. 2). Cosimo, Inc..
Twidell, J. and Weir, T., 2015. Renewable energy resources. Routledge.