Origin Energy Climate Change Economics

Question: Discuss about theOrigin Energy forClimate Change Economics. Answer: Introduction: The climate change is an issue which is shaping the government policy regulations in most of the countries. The government of Australia had imposed a carbon tax before 2012 which had a short-term effect on the heavy polluters of Australia. The Direct Action Plan introduced by the Coalition government of the country has increased the competition among the companies by cutting their emission levels. According to Nyberg, Spicer and Wright (2013), these organizations are looking more for renewable energies in order to reduce greenhouse gas emission. This increases the importance of companies like Origin Energy who are producing renewable energy and related product and services. The report regards to the effects of the government policies on the organization, its risks and opportunities in the climate changing scenario, and the strategies which can help the organization to flourish. About the Sector: MacCallum, Byrne and Steele (2014), stated that the renewable energy sector of Australia is a substitute for non-renewable energy sources of the country. The objective of this sector is to protect the natural resources which are scarce and reduce pollution caused by the energy consumption incorporates the consumption of electricity, fuels for transport, and thermal energy. The total renewable energy consumed by the citizens of Australia in 2015 is 5.9 percent of the country's total energy consumption. It is 1.6 percent greater than 2011-12 levels. 61.1 percent of the country's renewable energy consumption comes from bioenergy. As stated by Gurran, Norman, and Hamin (2013), the countrys authorities have encouraged renewable energy by introducing energy policies. The main concern of these policies is to address climate changes, energy independence, and a stimulus for the economy. The sector gets its revised target of producing renewable energy from the prescribed policies of the government. The industry consists many large and small scale renewable energy suppliers devoted to the mission given by the government. The government of Australia is looking for more private and public sector investments in this industry with the objective of making renewable energy the primary source of energy. Appropriation of efficient techniques to reduce greenhouse gasses has been made mandatory by the government to reduce the impacts of climate change. Impact of Climate Change on Origin Energy: According to Fnfgeld and McEvoy (2014), the impact of climate change is havoc on the world. Climate change is causing a rise in sea level, increasing risks in the food chain, and much more harmful impacts on the planet. There exists a negative correlation between the climate change and common well being of most of the world. In the case of the Origin Energy, the predicted impacts of climate change are causing increased demand for the company's products. The present usage of nonrenewable energy is reducing the supply for future needs. This aspect is increasing the demand for renewable energy sources, of which Origin Energy is a huge name in Australia. According to Webb (2015), climate changes will increase the usage of electricity and other energy resources. Accompanied by the increasing demand and decreasing supply of energy the need for Origin Energy will rise rapidly. The climate change in the form of increasing temperature, precipitation, and sea level rise will inversely affect t he general health, agriculture, forests, and water resources. Al these impacts affect the Origin Energy in a positive way by increasing the demand for the goods and services produced by it. Differences Between Carbon Tax and Direct Action Plan and their effect on Origin Energy: According to Jotzo (2012), the Carbon tax is commonly known as the carbon pricing in Australia was introduced in 2011 and was implemented in the year 2012. It was proposed by the Gillard Labor Government as the Clean Energy Act. It was revoked in the year 2014. Due to the short existence, the organizations operating in Australia took it in an informal manner. The act was backed by minimum investment due to this short period. Hence, it can be concluded that the impact of the carbon tax was lesser than it was expected. The main objective of this Act was to ensure that the emission of greenhouse gasses, such as carbon dioxide had to be purchased from the government regarding carbon units by the organizations in order to operate in the Australian market. The aim of the regulation was to reduce greenhouse gas emission in the country by 5 percent by the year 2020 and below 80 percent by the year 2050. As stated by Head et al. (2012), it was believed that this rule would increase efficiency in the companies which are heavy greenhouse gas emitters. The act was applied to the industrial sector at the prime stage. The transport and agricultural sector were not under this act. As stated by Robson (2014), the coalition government of Australia has replaced the Labor Governments Carbon Tax policy with their Direct Action Plan. The fund for emission reduction is budgeted to cost $3 billion over four years. The common target of both the plans is to reduce the emission of the greenhouse gas to 5 percent below 2000, by the year 2020. While the carbon tax policy made the polluters pay for the amount of pollution they create, the Direct Action Plan makes the organization compete to win tenders which will provide them payments for undertaking emission reduction projects. The process is like a reverse auction, where the organizations undercut each other to win the tenders. The auctions take pace quarterly. According to the government of Australia, this is the most efficient way to reduce emissions. The projects given by the organizations have to follow two ground rules set by the government, the emission reductions must be additional measures and not just business-as -usual, the reduction estimates must be credible and verified. The projects costing the least will be considered by the government. In the case of not reaching the targets set by the government, the funds will not get in the future. The achievements will b compared to other countries. The industry of renewable energy has a new target set by the Direct Action Plan of reaching 20 percent by the year 2020. The Labor Party of Australia has supported the target. The government also created a fund to give solar panel rebates to low-income households. According to Martin and Rice (2012), due to the short existence of Carbon Tax Act, the impact of it on the renewable sector as a whole was insignificant. The informal behavior by the polluters had almost no effects on the sector and the organization. On the other hand, the Direct Action Plan has created a competition among the polluters by giving them an incentive to compete in reducing their emissions to win the tenders. This increases the demand for renewable energy sources and products. As a result, the demand for the products and services of Origin Energy increases. The increase in demand for these products and services are directly related to the degree of competition among the polluters, which is fierce due to the government policy regulations. Hence, it can be concluded that the Direct Action Plan is more significant in increasing the demand for renewable energy and related products and reducing emissions. Identification of Risks and Opportunities for Origin Energy: Risks: The organization Origin Energy identifies all the risks related to people, assets, financial objectives, reputation, customers, and the environment. With the degrading situation of the environment and change in climate the health issues has increased rapidly threatening the people of Australia (OriginEnergy 2016). This is counted as a risk by the organization as it affects the customer domain of it. Any blow to the people of the country has a negative impact on the asset situation of the organization. The degradation of natural resources also adversely affects the organization making it a risk factor. Being an organization running on profits, the financial aspects of the company is a concern to its board members. The objective of the company being, helping a social cause, the financial stability is a vital issue for the company. As stated by Freeman and Hancock (2016), the climate change has the potential to harm the financial interests of the organization. The reputation of the orga nization lies in the hand of the company's employees and helping the government in achieving its environmental goals. The Australian government not being able to meet the targets even with the help of Origin Energy is a risk for the reputation of the company. The customers' demographic of the company is changing over time. With the government's new inclusive programs more people are able to afford the services of Origin Energy. A sudden discontinuation of the government subsidy can affect the customer domain of the company which will, in turn, affect the financial status. Opportunities: According to Strengers (2012), energy has many scopes and opportunities to increase its business all over the country, as the laws and regulations are currently for the renewable energy sector. The company can increase its opportunities by increasing the general awareness of the energy situation in Australia. The consumers of the organization's products have the benefits in the form of rebates given by the government, which also adds value to the company's opportunities. With the rising change in the climate of the world and drying up non-renewable energy sources, the demand for the products of Origin Energy is increasing rapidly. Ekstrm (2015), the company has to use this situation for the benefit of the company. The company can either follow a profit maximization policy or a revenue maximization policy. Profit maximization is possible in the given situation, but it incorporates ethical issues. It leaves Origin Energy with the ethical and beneficial choice of revenue maximization th is in turn, also helps the needs of the environment of the country. Strategies for Origin Energy: Origin Energy has to follow revenue maximization policies to ensure ethical and beneficial production process. This will help the company to edge the rival companies. By producing more and reaching to more customers, the company can increase its market share. With the constant changes in the environment and the technology, the company can use the upgraded technology in the production process to increase efficiency and quality of the products and services. The company can implement the strategy of research and development. Investing in research and development will ensure better answers for the existing problems within and outside the organization. The company can hold some awareness programs on climate change and energy resources in order to educate the consumers and potential clients. The need of the organizations products can increase with increasing awareness among people (Reser et al. 2012). The company can make deals with the government of Australia to help the government reach its goals. This can ensure the company getting help from the government. The organization has the potential of updating its business model to ensure more growth. This phenomenon will help the organization to sustain in the long run. Improvement in the business model with keeping in mind the requirements of the governments laws for the environment will increase the companys market share in Australia (Burton 2014). Origin Energy can use its resources to produce variety kinds of products targeting specific consumers from the different geographical background. This strategy will help the company to expand (Arif, Oo and Ali 2013). Making deals for signing in new subsidiaries will reduce the cost of production for the organization. This way the Origin Energy can increase the quantity and quality of its products. Conclusion: With the rapid climate change, the need for organizations creating products and services which help to reduce the use of non-renewable energy is increasing. This increase is followed by several policy measures taken by the government of Australia. The Origin Energy is one of the big names in the renewable energy sector of Australia. The carbon tax act implemented by the Labor Government of Australia had no significant effect on the Origin Energy as the polluters took it more informally due to its short existence. On the other hand, the Direct Plan Action has started a competition among the emitters giving an incentive for reducing their emission. This helps the renewable sector where the Origin Energy operates by increasing the demand for their products and services. References: Arif, M.T., Oo, A.M. and Ali, A.B.M., 2013. Investigation of energy storage systems, its advantage and requirement in various locations in Australia. Journal of Renewable Energy, 2013. 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