The energy industry is the totality of all of the industries involved in the production and sale of energy, including fuel extraction, manufacturing, refining and distribution. Modern society consumes large amounts of fuel, and the energy industry is a crucial part of the infrastructure and maintenance of society in almost all countries.
In particular, the energy industry comprises:
The increased dependence during the 20th century on carbon-emitting sources of energy such as fossil fuels, and carbon-emitting renewables such as biomass, means that the energy industry has frequently been an important contributor to pollution and environmental impacts of the economy. Until recently, fossil fuels were the main source of energy generation in most parts of the world, and are a major contributor to global warming and pollution. As part of human adaptation to global warming, many economies are investing in renewable and sustainable energy.
The use of energy has been a key in the development of the human society by helping it to control and adapt to the environment. Managing the use of energy is inevitable in any functional society. In the industrialized world the development of energy resources has become essential for agriculture, transportation, waste collection, information technology, communications that have become prerequisites of a developed society. The increasing use of energy since the Industrial Revolution has also brought with it a number of serious problems, some of which, such as global warming, present potentially grave risks to the world. [1]
In some industries, the word energy is used as a synonym of energy resources, which refer to substances like fuels, petroleum products and electricity in general, because a significant portion of the energy contained in these resources can easily be extracted to serve a useful purpose. After a useful process has taken place, the total energy is conserved, but the resource itself is not conserved, since a process usually transforms the energy into unusable forms (such unnecessary or excess heat).
Ever since humanity discovered various energy resources available in nature, it has been inventing devices, known as machines, that make life more comfortable by using energy resources. Thus, although the primitive man knew the utility of fire to cook food, the invention of devices like gas burners and microwave ovens has increased the usage of energy for this purpose alone manyfold. The trend is the same in any other field of social activity, be it construction of social infrastructure, manufacturing of fabrics for covering; porting; printing; decorating, for example textiles, air conditioning; communication of information or for moving people and goods (automobiles).
Production and consumption of energy resources is very important to the global economy. All economic activity requires energy resources, whether to manufacture goods, provide transportation, run computers and other machines.
Widespread demand for energy may encourage competing energy utilities and the formation of retail energy markets. Note the presence of the "Energy Marketing and Customer Service" (EMACS) sub-sector. [2]
The energy sector accounts for 4.6% of outstanding leveraged loans, compared with 3.1% a decade ago, while energy bonds make up 15.7% of the $1.3 trillion junk bond market, up from 4.3% over the same period. [3]
Since the cost of energy has become a significant factor in the performance of economy of societies, management of energy resources has become very crucial. Energy management involves utilizing the available energy resources more effectively; that is, with minimum incremental costs. Many times it is possible to save expenditure on energy without incorporating fresh technology by simple management techniques. [4] Most often energy management is the practice of using energy more efficiently by eliminating energy wastage or to balance justifiable energy demand with appropriate energy supply. The process couples energy awareness with energy conservation.
The United Nations developed the International Standard Industrial Classification, which is a list of economic and social classifications. [5] There is no distinct classification for an energy industry, because the classification system is based on activities, products, and expenditures according to purpose. [6]
Countries in North America use the North American Industry Classification System (NAICS). The NAICS sectors #21 and #22 (mining and utilities) might roughly define the energy industry in North America. This classification is used by the U.S. Securities and Exchange Commission.
The Global Industry Classification Standard used by Morgan Stanley define the energy industry as comprising companies primarily working with oil, gas, coal and consumable fuels, excluding companies working with certain industrial gases. [7] Add also to expand this section: Dow Jones Industrial Average [8]
Government encouragement in the form of subsidies and tax incentives for energy-conservation efforts has increasingly fostered the view of conservation as a major function of the energy industry: saving an amount of energy provides economic benefits almost identical to generating that same amount of energy. This is compounded by the fact that the economics of delivering energy tend to be priced for capacity as opposed to average usage. One of the purposes of a smart grid infrastructure is to smooth out demand so that capacity and demand curves align more closely. Some parts of the energy industry generate considerable pollution, including toxic and greenhouse gases from fuel combustion, nuclear waste from the generation of nuclear power, and oil spillages as a result of petroleum extraction. Government regulations to internalize these externalities form an increasing part of doing business, and the trading of carbon credits and pollution credits on the free market may also result in energy-saving and pollution-control measures becoming even more important to energy providers.
Consumption of energy resources, (e.g. turning on a light) requires resources and has an effect on the environment. Many electric power plants burn coal, oil or natural gas in order to generate electricity for energy needs. While burning these fossil fuels produces a readily available and instantaneous supply of electricity, it also generates air pollutants including carbon dioxide (CO2), sulfur dioxide and trioxide (SOx) and nitrogen oxides (NOx). Carbon dioxide is an important greenhouse gas, known to be responsible, along with methane, nitrous oxide, and fluorinated gases, for the rapid increase in global warming since the Industrial Revolution. In the 20th century, global temperature records are significantly higher than temperature records from thousands of years ago, taken from ice cores in Arctic regions. Burning fossil fuels for electricity generation also releases trace metals such as beryllium, cadmium, chromium, copper, manganese, mercury, nickel, and silver into the environment, which also act as pollutants.
The large-scale use of renewable energy technologies would "greatly mitigate or eliminate a wide range of environmental and human health impacts of energy use". [9] [10] Renewable energy technologies include biofuels, solar heating and cooling, hydroelectric power, solar power, and wind power. Energy conservation and the efficient use of energy would also help.
In addition, it is argued that there is also the potential to develop a more efficient energy sector. This can be done by: [11]
Best available technology (BAT) offers supply-side efficiency levels far higher than global averages. The relative benefits of gas compared to coal are influenced by the development of increasingly efficient energy production methods. According to an impact assessment carried out for the European Commission, the levels of energy efficiency of coal-fired plants built have now increased to 46-49% efficiency rates, as compared to coals plants built before the 1990s (32-40%). [12] However, at the same time gas can reach 58-59% efficiency levels with the best available technology. [12] Meanwhile, combined heat and power can offer efficiency rates of 80-90%. [12]
Since now energy plays an essential role in industrial societies, the ownership and control of energy resources plays an increasing role in politics. At the national level, governments seek to influence the sharing (distribution) of energy resources among various sections of the society through pricing mechanisms; or even who owns resources within their borders. They may also seek to influence the use of energy by individuals and business in an attempt to tackle environmental issues.
The most recent international political controversy regarding energy resources is in the context of the Iraq Wars. Some political analysts maintain that the hidden reason for both 1991 and 2003 wars can be traced to strategic control of international energy resources. [13] Others counter this analysis with the numbers related to its economics. According to the latter group of analysts, U.S. has spent about $336 billion in Iraq [14] as compared with a background current value of $25 billion per year budget for the entire U.S. oil import dependence [15]
Energy policy is the manner in which a given entity (often governmental) has decided to address issues of energy development including energy production, distribution and consumption. The attributes of energy policy may include legislation, international treaties, incentives to investment, guidelines for energy conservation, taxation and other public policy techniques.
Energy security is the intersection of national security and the availability of natural resources for energy consumption. Access to cheap energy has become essential to the functioning of modern economies. However, the uneven distribution of energy supplies among countries has led to significant vulnerabilities. Threats to energy security include the political instability of several energy producing countries, the manipulation of energy supplies, the competition over energy sources, attacks on supply infrastructure, as well as accidents, natural disasters, the funding to foreign dictators, rising terrorism, and dominant countries reliance to the foreign oil supply. [16] The limited supplies, uneven distribution, and rising costs of fossil fuels, such as oil and gas, create a need to change to more sustainable energy sources in the foreseeable future. With as much dependence that the U.S. currently has for oil and with the peaking limits of oil production; economies and societies will begin to feel the decline in the resource that we have become dependent upon. Energy security has become one of the leading issues in the world today as oil and other resources have become as vital to the world's people. However, with oil production rates decreasing and oil production peak nearing the world has come to protect what resources we have left in the world. With new advancements in renewable resources less pressure has been put on companies that produce the world's oil, these resources are, geothermal, solar power, wind power and hydro-electric. Although these are not all the current and possible future options for the world to turn to as the oil depletes the most important issue is protecting these vital resources from future threats. These new resources will become more useful as the price of exporting and importing oil will increase due to increase of demand.
Producing energy to sustain human needs is an essential social activity, and a great deal of effort goes into the activity. While most of such effort is limited towards increasing the production of electricity and oil, newer ways of producing usable energy resources from the available energy resources are being explored. One such effort is to explore means of producing hydrogen fuel from water. Though hydrogen use is environmentally friendly, its production requires energy and existing technologies to make it, are not very efficient. Research is underway to explore enzymatic decomposition of biomass. [17]
Other forms of conventional energy resources are also being used in new ways. Coal gasification and liquefaction are recent technologies that are becoming attractive after the realization that oil reserves, at present consumption rates, may be rather short lived. See alternative fuels.
Energy is the subject of significant research activities globally. For example, the UK Energy Research Centre is the focal point for UK energy research while the European Union has many technology programmes as well as a platform for engaging social science and humanities within energy research. [18]
All societies require materials and food to be transported over distances, generally against some force of friction. Since application of force over distance requires the presence of a source of usable energy, such sources are of great worth in society.
While energy resources are an essential ingredient for all modes of transportation in society, the transportation of energy resources is becoming equally important. Energy resources are frequently located far from the place where they are consumed. Therefore, their transportation is always in question. Some energy resources like liquid or gaseous fuels are transported using tankers or pipelines, while electricity transportation invariably requires a network of grid cables. The transportation of energy, whether by tanker, pipeline, or transmission line, poses challenges for scientists and engineers, policy makers, and economists to make it more risk-free and efficient.
Economic and political instability can lead to an energy crisis. Notable oil crises are the 1973 oil crisis and the 1979 oil crisis. The advent of peak oil, the point in time when the maximum rate of global petroleum extraction is reached, will likely precipitate another energy crisis.
Between 1985 and 2018, there have been around 69,932 deals in the energy sector. This cumulates to an overall value of 9,578 bil USD. The most active year was 2010 with about 3.761 deals. In terms of value 2007 was the strongest year (684 bil. USD), which was followed by a steep decline until 2009 (-55,8%). [19]
Here is a list of the top 10 deals in history in the energy sector:
Date Announced | Acquiror Name | Acquiror Mid Industry | Acquiror Nation | Target Name | Target Mid Industry | Target Nation | Value of Transaction ($mil) |
---|---|---|---|---|---|---|---|
12/01/1998 | Exxon Corp | Oil & Gas | United States | Mobil Corp | Oil & Gas | United States | 78,945.79 |
10/28/2004 | Royal Dutch Petroleum Co | Oil & Gas | Netherlands | Shell Transport & Trading Co | Oil & Gas | United Kingdom | 74,558.58 |
04/08/2015 | Royal Dutch Shell PLC | Petrochemicals | Netherlands | BG Group PLC | Oil & Gas | United Kingdom | 69,445.02 |
02/25/2006 | Gaz de France SA | Oil & Gas | France | Suez SA | Power | France | 60,856.45 |
07/05/1999 | Total Fina SA | Oil & Gas | France | Elf Aquitaine | Oil & Gas | France | 50,070.05 |
08/11/1998 | British Petroleum Co PLC | Oil & Gas | United Kingdom | Amoco Corp | Oil & Gas | United States | 48,174.09 |
09/01/2010 | Petrobras | Oil & Gas | Brazil | Brazil-Oil & Gas Blocks | Oil & Gas | Brazil | 42,877.03 |
10/16/2000 | Chevron Corp | Petrochemicals | United States | Texaco Inc | Petrochemicals | United States | 42,872.30 |
06/20/2000 | Vivendi SA | Water and Waste Management | France | Seagram Co Ltd | Motion Pictures / Audio Visual | Canada | 40,428.19 |
12/14/2009 | Exxon Mobil Corp | Petrochemicals | United States | XTO Energy Inc | Oil & Gas | United States | 40,298.14 |
Renewable energy is energy from renewable resources that are naturally replenished on a human timescale. Renewable resources include sunlight, wind, the movement of water, and geothermal heat. Although most renewable energy sources are sustainable, some are not. For example, some biomass sources are considered unsustainable at current rates of exploitation. Renewable energy is often used for electricity generation, heating and cooling. Renewable energy projects are typically large-scale, but they are also suited to rural and remote areas and developing countries, where energy is often crucial in human development.
Energy conservation is the effort to reduce wasteful energy consumption by using fewer energy services. This can be done by using energy more effectively or changing one's behavior to use less service. Energy conservation can be achieved through efficient energy use, which has some advantages, including a reduction in greenhouse gas emissions and a smaller carbon footprint, as well as cost, water, and energy savings.
Energy development is the field of activities focused on obtaining sources of energy from natural resources. These activities include the production of renewable, nuclear, and fossil fuel derived sources of energy, and for the recovery and reuse of energy that would otherwise be wasted. Energy conservation and efficiency measures reduce the demand for energy development, and can have benefits to society with improvements to environmental issues.
India is the third largest producer of electricity in the world. During the fiscal year (FY) 2022–23, the total electricity generation in the country was 1,844 TWh, of which 1,618 TWh was generated by utilities.
Energy policy is the manner in which a given entity has decided to address issues of energy development including energy conversion, distribution and use as well as reduction of greenhouse gas emissions in order to contribute to climate change mitigation. The attributes of energy policy may include legislation, international treaties, incentives to investment, guidelines for energy conservation, taxation and other public policy techniques. Energy is a core component of modern economies. A functioning economy requires not only labor and capital but also energy, for manufacturing processes, transportation, communication, agriculture, and more. Energy planning is more detailed than energy policy.
The energy policy of the United States is determined by federal, state, and local entities. It addresses issues of energy production, distribution, consumption, and modes of use, such as building codes, mileage standards, and commuting policies. Energy policy may be addressed via legislation, regulation, court decisions, public participation, and other techniques.
In 2022, 79.6% of Taiwan's electricity generation came from fossil fuels, 9.1% from nuclear, 8.6% from renewables, and 1.2% from hydro. Taiwan relies on imports for almost 98% of its energy, which leaves the island's energy supply vulnerable to external disruption. In order to reduce this dependence, the Ministry of Economic Affairs' Bureau of Energy has been actively promoting energy research at several universities since the 1990s.
Energy in the United States is obtained from a diverse portfolio of sources, although the majority came from fossil fuels in 2021, as 36% of the nation's energy originated from petroleum, 32% from natural gas, and 11% from coal. Electricity from nuclear power supplied 8% and renewable energy supplied 12%, which includes biomass, wind, hydro, solar and geothermal.
The energy policy of India is to increase the locally produced energy in India and reduce energy poverty, with more focus on developing alternative sources of energy, particularly nuclear, solar and wind energy. Net energy import dependency was 40.9% in 2021-22.
A low-carbon economy (LCE) or decarbonised economy is an economy based on energy sources that produce low levels of greenhouse gas (GHG) emissions. GHG emissions due to human activity are the dominant cause of observed climate change since the mid-20th century. Continued emission of greenhouse gases will cause long-lasting changes around the world, increasing the likelihood of severe, pervasive, and irreversible effects for people and ecosystems. Shifting to a low-carbon economy on a global scale could bring substantial benefits both for developed and developing countries. Many countries around the world are designing and implementing low-emission development strategies (LEDS). These strategies seek to achieve social, economic, and environmental development goals while reducing long-term greenhouse gas emissions and increasing resilience to the effects of climate change.
Energy security is the association between national security and the availability of natural resources for energy consumption. Access to cheaper energy has become essential to the functioning of modern economies. However, the uneven distribution of energy supplies among countries has led to significant vulnerabilities. International energy relations have contributed to the globalization of the world leading to energy security and energy vulnerability at the same time.
Renewable energy commercialization involves the deployment of three generations of renewable energy technologies dating back more than 100 years. First-generation technologies, which are already mature and economically competitive, include biomass, hydroelectricity, geothermal power and heat. Second-generation technologies are market-ready and are being deployed at the present time; they include solar heating, photovoltaics, wind power, solar thermal power stations, and modern forms of bioenergy. Third-generation technologies require continued R&D efforts in order to make large contributions on a global scale and include advanced biomass gasification, hot-dry-rock geothermal power, and ocean energy. In 2019, nearly 75% of new installed electricity generation capacity used renewable energy and the International Energy Agency (IEA) has predicted that by 2025, renewable capacity will meet 35% of global power generation.
Fossil fuel phase-out is the gradual reduction of the use and production of fossil fuels to zero, to reduce deaths and illness from air pollution, limit climate change, and strengthen energy independence. It is part of the ongoing renewable energy transition, but is being hindered by fossil fuel subsidies.
China is the world's leader in electricity production from renewable energy sources, with over triple the generation of the second-ranking country, the United States. China's renewable energy sector is growing faster than its fossil fuels and nuclear power capacity, and is expected to contribute 43 per cent of global renewable capacity growth. China's total renewable energy capacity exceeded 1,000 GW in 2021, accounting for 43.5 per cent of the country's total power generation capacity, 10.2 percentage points higher than in 2015. The country aims to have 80 per cent of its total energy mix come from non-fossil fuel sources by 2060, and achieve a combined 1,200 GW of solar and wind capacity by 2030. In 2023, it was reported that China was on track to reach 1,371 gigawatts of wind and solar by 2025, five years ahead of target due to new renewables installations breaking records.
Despite abundant natural resources and a relatively small population, New Zealand is a net importer of energy, in the form of petroleum products. The ratio of non-renewable and renewable energy sources was fairly consistent from 1975 to 2008, with about 70 per cent of primary energy supply coming from hydrocarbon fuels. This ratio decreased to about 60 per cent in 2018. The proportion of non-renewable energy varies annually, depending on water flows into hydro-electricity lakes and demand for energy. In 2018, approximately 60% of primary energy was from non-renewable hydrocarbon fuels and 40% was from renewable sources. In 2007 energy consumption per capita was 120 gigajoules. Per capita energy consumption had increased 8 per cent since 1998. New Zealand uses more energy per capita than 17 of 30 OECD countries. New Zealand is one of 13 OECD countries that does not operate nuclear power stations.
Energy in Finland describes energy and electricity production, consumption and import in Finland. Energy policy of Finland describes the politics of Finland related to energy. Electricity sector in Finland is the main article of electricity in Finland.
The energy policy of Malaysia is determined by the Malaysian Government, which address issues of energy production, distribution, and consumption. The Department of Electricity and Gas Supply acts as the regulator while other players in the energy sector include energy supply and service companies, research and development institutions and consumers. Government-linked companies Petronas and Tenaga Nasional Berhad are major players in Malaysia's energy sector.
The environmental impact of the energy industry is significant, as energy and natural resource consumption are closely related. Producing, transporting, or consuming energy all have an environmental impact. Energy has been harnessed by human beings for millennia. Initially it was with the use of fire for light, heat, cooking and for safety, and its use can be traced back at least 1.9 million years. In recent years there has been a trend towards the increased commercialization of various renewable energy sources. Scientific consensus on some of the main human activities that contribute to global warming are considered to be increasing concentrations of greenhouse gases, causing a warming effect, global changes to land surface, such as deforestation, for a warming effect, increasing concentrations of aerosols, mainly for a cooling effect.
The carbon bubble is a hypothesized bubble in the valuation of companies dependent on fossil-fuel-based energy production, resulting from future decreases in value of fossil fuel reserves as they become unusable in order to meet carbon budgets and recognition of negative externalities of carbon fuels which are not yet taken into account in a company's stock market valuation.
The Energy Marketing and Customer Service (EMACS) conference/exhibition focuses exclusively on the selling of energy in competitive retail markets.