subject: Challenges Faced By The Energy Sector [print this page] There is a global crisis as far as energy resources are concerned. It is a huge challenge that the energy sector faces especially after the Committee on Climate Change presented its recommendations concerning carbon budgets that were legally sanctioned. As per the EUs commitment as much as 15% of the overall energy usage has to be derived out of renewable sources of energy. This implies that a rather high percentage of electricity produced for consumption has to be generated out of renewable sources of energy.
In this context, it is also important to state that maintaining high standards of energy security when it comes to electricity and gas supplies is a must. The levels of gas that can be generated from the Continental Shelf in UK have declined considerably as the North Sea reserves are depleting fast. In the future, the reliability of gas supply will be dependent on the levels of gas storage and the import infrastructure.
Though there have been huge investments in the sector, there are a number of factors that can play spoilsport and thus prevent the energy target been met.
Drawbacks in the Supply Chain: It is necessary that the supply chains are scaled up to ensure effective delivery of goods, at par with the investments made in the sector. It is only this way that appropriate contractor resource, equipment and expertise can be availed at a price that leaves scope for a profit margin.
Need for Effective Planning: There is external regulatory influence on energy supply investments, be it for health and safety, technical or economic reasons. It is necessary to plan in advance and thus avoid the imminent delays as a result of the regulatory approvals.
Comprehending Project Economics: There has to be a proper economic case meant for individual projects. There have been instances of cost elements been volatile in the past years.
Understanding Regulatory and Policy Risk: It is necessary that investors show adequate confidence in the fact that the regulations will not be changed by the government without any kind of prior notice.
If the above mentioned issues are not dealt with, then there are chances that industry might have to bear the consequences of:
Drastically low investments
The renewable energy and climate change targets set would thus be jeopardised and energy supply security issues would face extreme pressure
This implies that there would be 40,000 less number of energy jobs and this would amount to a loss of around 3 billion that is vital to the economic benefit of the region
It is necessary to build an environment that boosts investor confidence and thus prompts them to invest more. A carbon market mechanism can be established which alters the investor behaviour. This would obviously have an impact on jobs in oil and gas .
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