Energy industry
The energy industry refers to 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 fossil fuel industries, which include petroleum industries, coal industries, and the natural gas industries ;
- 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.
History
The use of energy has been a key in the development of human societies 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 for energy resources, which refer to substances like fuels, petroleum products, and electricity in general. This is 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. Still, the resource itself is not conserved since a process usually transforms the energy into unusable forms.
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 primitive man knew the utility of fire to cook food, the invention of devices like gas burners and microwave ovens led to additional ways of how energy can be used. The trend is the same in any other field of social activity, be it the 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.
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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" 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 $1.3trillion 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 societies' economies, the management of energy resources has become crucial. Energy management involves using the available energy resources more effectively, that is, with minimum incremental costs. Simple management techniques can often save energy expenditures without incorporating fresh technology. Energy management is most often the practice of using energy more efficiently by eliminating energy wastage or balancing 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. The NAICS sectors No. 21 and No. 22 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.Add also to expand this section: Dow Jones Industrial Average
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, requires resources and has an effect on the environment. Many electric power plants burn coal, oil or natural gas 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, sulfur dioxide and trioxide and nitrogen oxides. 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". 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, from micro-scale residential to large-scale industrial;
- Waste heat recovery