Household Choices in Sustainable Energy

Sources

Since the birth of industrial age, the aptitude to harness and use assorted energy has
positively charmed the lives of billions of people around the globe, empowering
them to enjoy comfort and mobility.

The energy consumption trend has tremendously contributed in the rising level of
prosperity and economic opportunities of various countries by being regular, even
and growing continuously.

Therefore, we find that energy use is an important factor contributing to economic

and social development.

Managing energy resources efficiently with affordable cost is necessary to bring

down poverty and improve living standards of people.

Recent surveys have revealed that citizens of developing countries are highly
dependent on traditional sources of energy, thus leading humanity facing up a
crucial energy challenge.

It is obvious that the current trends of energy use have negative impact on
environment. The over-dependence on fossil fuels, more precisely, is a threat to the
Earth’s climate which can lead to severe consequences.

This study is more likely to shed light on certain factors affecting households’ choice
of energy sources outlining certain government policies which can help promote the
use of less carbon intensive energy sources leading to a more efficient use of energy.

A good understanding of household behaviours towards fuel choice will help in the
designing of a cut-to-fit program and policy which can help reduce energy use
problems and promote environmental friendly sustainable developments.

Australia has been blessed with natural resources, which is a major contributing
factor in its economy. Rich in natural resources, Australia’s main export are
agricultural products (wheat and wool), minerals (iron ore and gold) and energy in
the form of liquified natural gas and coal.

Though natural sources and agriculture represent only 5% and 3% of the GDP
respectively, they have a substantial contribution in the export performance. The
growth of the mining sector (including petroleum) is one of the most remarkable
sectoral trend in the economy during the past decade. The sector realised a GDP of
8% in 2006/2007 compared to 4.5% in 1993/1994. Australia’s economic growth is
mostly accredited to areas of the country where resource based industries and
mining are mostly located. 

Australia is classified as the world’s leasing coal exporter. 487 million tonnes of coal
was mined and 261 million tonnes exported in the fiscal year 2008/2009, which
means that 225 million tonnes was used domestically. 85% of Australia’s electricity
production is sourced from coal. Although Australia exports coal its economy is
heavily dependent on the import of petroleum products and crude oil, with an
import dependency of 80% (crude oil and petroleum products).

Australia’s electricity production is generated from three main sources, namely, coal,
natural gas and renewable sources. Its electricity mix has been shared among the
three in a 74%, 15% and 11% ratio respectively. Australia started using hydro power
in the 1950’s. Hydro power constitutes the largest source of renewable electricity,
constituting up to 60% of all renewable generation and 6% of total electricity. The
other 5% constitutes of wind, bio-energy and rooftop solar panels.

Over time, Australia’s electricity production and consumption have experienced

changes as the economy, technology and infrastructures have developed. This
development will continue as renewable energy technologies become more reliable
and affordable. Australian government has been putting emphasis on less carbon
intensive energy sources to promote environmental sustainable development.
Households use of energy at home significantly plays an important role in
determining the total energy use and the level of carbon dioxide emission. Their
choice of energy will certainly affect the economy as it will be the determinant factor
for energy production(electricity generation).

As defined above the electricity mix constitutes mostly of coal, natural gas,
petroleum products and crude oil, which means, if Australian households energy
consumption increases, the production will also increase. This increase in production
will lead to more use of traditional fuels, leading to more mining of coal and more
importing of petroleum products. This increase in import will definitely affect the
economy. The use of traditional fossil fuels will not only impact the economy but will
also increase carbon dioxide emission during production as well was during
consumption giving rise to environmental problems.

On the other hand to support environmental friendly sustainable development, it the

Australian economy chooses renewable source of energy, the investment cost will
have a heavy impact on the country’s economy. Although the cost will be recovered
over years the initial investment will tremendously affect it.

Australian households are open to a wide choice of energy source. They are free to
decide what best suits their household needs. But decision-making has not always
been an easy task as it is affected by several direct and indirect factors leading the
decision-maker towards the most influenced choice. Several factors can affect
household’s choices,it can be personal preference, demand, supply, budgetary
constraints, the opportunity cost and other indirect factors. The listed factors are best
described using the microeconomics consumer’s choice theory, where preferences
are related to consumption expenditures to achieve an equilibrium between both
factors by making utility as a subject to consumer’s budget constraints.