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Finance & Management Essay

“The nexus between economic and environmental problems is clearly evident in the widespread and serious social and economic impacts associated with soil erosion, desertification, deforestation, urban congestion and squalor and excessive and unmanaged emissions of pesticides, heavy metals, air pollutants, and solid and liquid industrial and residental waste (Long, 1990 cited by Daniels, 2005, p.454).

From restrictions forced through politics on Chlorofluorocarbon (CFC) in 1987, the restriction on the emission of CO2 of the “Kyoto Protocol” in 1997 to the “Restriction of the Use of Certain Hazardous Substances in EEE” (RoHS) and “Waste Electronics and Electronical Equipment (WEEE) in 2008, the rise of international environmental regulations and popular environmental consciousness of consumers would bring significant impacts to industries in the world (Chen et al., 2006). In the past 150 years where about the industrial revolution had its birth, economic growth seemed to undermine any other aspect of social or environmental considerations.

Through the rising environmental issues undeniable by corporations and obvious for almost every citizen in the world at least through news and television, the importance of sustainable development processes cannot be neglected. Achieving sustainability is the real issue for humanity, and it is our need to learn to live sustainably, within

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the bounds of the global ecosystem, and moreover signs of dramatic sustainablility problems through growing economies, such as China or India, is threatening an ecological meltdown and its already affecting people’s livelihoods and health.

In China the life expectancy is now declining again due to air and water pollution (Borland et al., 2011). And moreover “less dependence upon fossil fuels would help ameliorate this major source of global conflict and instability that seems to be undermining the peace and understanding necessary for sustainable societies (Daniels, 2005). One first step towards achieving the goal for sustainability for the coming generations would be reducing the energy demand throughout the world. This can be achieved by endorsing, supporting and fostering renewable energy supply. The EIA, U.S. Energy Information Administration, defines renewable energy as “Energy sources that are naturally replenishing but flow limited. They are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time.

Renewable energy sources include: biomass, geothermal, solar, wind, ocean, thermal, wave action and tidal action”(U.S. EIA, 2007). As mentioned before through several citations green energy supply, whereby in this elaboration I will give green energy and renewable energy the same denotation, is not only reducing C02 emissions. In the further paragraphs I will investigate other positive effects of green energy to environment and society and this paper will end up in giving ideas to companies, nations and non-governmental organizations how this sustainable development approaches can be effective and well reveived.

Renewable energy supply and reducing the energy and raw material demand is a global issue, therefore a collaborations between nations, especially between governments through regulations, laws and policies are needed to make restrictions to decrease harmful developments. But more information about this topic will be given later on. First, different positive aspects relating to society and environment concerning the reduction of C02 emissions are taken into account.

Looking at this circle diagram it is obvious that the world’s energy supply highly depends on Crude Oil, Natural Gas and Coal. More than 75% of the supplied energy depends on these 3 factors. The abbreviation NGPL stands for Natural Gas Plant Liquids, and therefore doesn’t belong to renewable energies. Hydro power which can be included to renewable energies( i.e. hydro electric power plants are inexhaustible in duration), and differ to other renewables,such as solar by its stable energy supply. Together with Geothermal & Other (i.e. solar, wind) these green energies are not reaching one-tenth of the world’s enery supply. Exact numbers are in this case not relevant only the energy allocation and distribution are important and centered in this elaboration.

The most obvious and evident reason for supporting green energy is reducing C02 emissions and the demand for oil, coal and natural gas which are all exhaustible raw materials. Therefore green energy contributes to decrease global warming through the greenhouse effect. But using renewables for power supply do have more differs aftereffects for the environment and societies around the world. Non-renewable energies, besides nuclear power, are using raw materials, to supply energy and therefore it endangers sustainability for future generations. Through the further development of new renewable energy plants and increasing efficiency sustainability approaches can be fostered. Moreover especially oil is used in various products and the demand for oil will never be down to zero. Apparently this can’t be stated for sure, but the list of products made from oil is enormous.

First, a figure illustrates products, the major diversification, made from a barrel of crude oil and then a distinctive list of products is shown to clarify the importance of supporting renewable energy: Figure 2: Source: In close restrospect to : Products Made from a Barrel of Crude Oil (Gallons) (2008) Photo : U.S. Energy Information Administratition (Howard, 2010) Short excerpt of products made from oil : Antiseptics, Aspirin, Carpets, Clothing, Creams, Cutlery, CD`s and DVD`s, Deodorant, Dishes, Film, Footballs, Glasses, Ink, Guitar strings, Ink, Nylon, Plastics, Shoes, Soap, Toothpaste, Tires, Toys, Vitamin capsules (http://www.ranken-energy.com/Products%20from%20Petroleum.htm)

These references clearly show the need to reduce energy demand, especially reducing the demand for oil. The neediness is evident and cannot be neglected. Short-term strategies by nations and cooperations undermine the sustainability approaches and therefore threatens the future of coming generations. Moreover the greater importance of oil compared to coal is hereby well-defined. Now by looking closer on the effects of non-renewables ( coal is a minor effect in this aspect ) to society and environment, I will mention 5 different positive aftereffects if the dependence and demand for oil will be reduced in the future.

These positive effects are : sustainability for future generations, reducing dependance and regional concentrations, reducing the risk of transportation and exploration, decrease global warming and stimulate new innovations. In this report especially energy resources are considered, and the usage of raw materials, f.e. gold, lithium,diamonds etc. are not taken into account. Sustainability for future generations : The risk of finite resources Non-renewable resources are finite and in the future the citizens of our world will be faced with the scarcity of non-renewables. Due to the fact that our transport system highly depends on oil and will be for future generations the risk of finite resources is obvious. Through the rising scarcity of these raw materials and rising demand as a result of the immense economic growth in China, India and many other countries prices will rise consecutively.

Economic growth is hooked on the conveyance and transportation of oil, seen through the massive decrease in the oil price in recessions, and the scarcity and rising prices will determine future growth possibilities. According to the “Bundesanstalt Geowissenschaften und Rohstoffe (BGR)” in Germany, an national department in favor of geoscience and raw materials, the peak-oil will be reached not later than 2035 (Pieprzyk und Kortltke, 2011).

Peak-oil and peak-coal describe the point in time at which the maximum global production rate of these raw materials is reached and the rate of production will enter to decline. Other scientific studies estimate that oil will peak sometime between now and 2040 and evidently the world discovery of oil fields is declining since 40 years (GAO, 2007). The peak-oil production depends on uncertain factors, especially how quickly the remaining oil is used, including the amount of oil not yet explored and future oil demand. Whereby more than 60 percent of world oil reserves are in countries with unstable political conditions (GAO, 2007).

But this will be closer scrutinized in the third positive aftereffect of reducing the oil ( partly coal and gas ) demand, the reduction of regional concentration. Looking at the future demand of oil it is estimated that an annual growth rate of 3 percent is followed by an increase in 1,3 percent per year (Aleklett et al, 2009). Raising growth rates due to the massive dependence of oil in our transport system always result in an higher demand of oil as mentioned before, and these figures give evidence to it.

Therefore it is just a matter of time until every oil reserve will be exploited. The seeking of non-conventional oil, which is defined by the IEA (International Energy Agency) as oil sands, extra-heavy oil, gas-to-liquids, coal-to-liquids, and chemical additives with an annual growth rate of 8 percent, shows that conventional oil fields are already declining in furtherance. For closer information about non-conventional oil fields Aleklett et al. (2009) and GAO (2007) can be suggested. The risk taken by companies to flow oil and explore new oil fields are increasingly threaten the environment and sustainability approaches.

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