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:
In particular, the energy industry comprises:
- the fossil fuel industries, which include petroleum industries ( oil companies, petroleum refiners, fuel transport and end-user sales at gas stations) coal industries (extraction and processing) and the natural gas industries (natural gas extraction, and coal gas manufacture, as well as distribution and sales);
- the electrical power industry, including electricity generation, electric power distribution and sales;
- the nuclear power industry;
- the renewable energy industry, comprising alternative energy and sustainable energy companies, including those involved in hydroelectric power, wind power, and solar power generation, and the manufacture, distribution and sale of alternative fuels; and,
- traditional energy industry based on the collection and distribution of firewood, the use of which, for cooking and heating, is particularly common in poorer countries.
Energy consumption
in kilograms of oil equivalent (kgoe) per person per year per country
(2001 data). Darker tones indicate larger consumption, while dark grey
areas are missing from the dataset. Red hue indicates increasing
consumption, green hue indicates decreasing consumption, in the time
between 1990 and 2001.
History
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.
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 as 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).
Economics
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.
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.
Management
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.
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.
Classifications
Government
The United Nations developed the International Standard Industrial Classification, which is a list of economic and social classifications. There is no distinct classification for an energy industry, because the classification system is based on activities, products, and expenditures according to purpose.
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.
Financial market
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.
Environmental impact
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 which is thought to be responsible for some fraction of the rapid increase in climate change
seen especially in the temperature records in the 20th century, as
compared with tens of thousands of years worth of temperature records
which can be read from ice cores taken 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". 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:
- Fuel switching in the power sector from coal to natural gas;
- Power plant optimisation and other measures to improve the efficiency of existing CCGT power plants;
- Combined heat and power (CHP), from micro-scale residential to large-scale industrial;
- Waste heat recovery
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%). However, at the same time gas can reach 58-59% efficiency levels with the best available technology. Meanwhile, combined heat and power can offer efficiency rates of 80-90%.
Politics
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.
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 as compared with a background current value of $25 billion per year budget for the entire U.S. oil import dependence.
Policy
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.
Security
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. 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.
Development
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.
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.
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.
Transportation
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.
Crisis
Oil prices from 1861 to 2007
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.
