Although the question of the planet’s natural resources, especially crude oil, is much discussed, there has been an agreement regarding its future. It is improbable that natural resources will finish, and humanity will face economic, environmental, and social jeopardy. Finding an alternative source of energy is a natural response. Thus, the development of renewable energy production is a persistent reaction to the potential outcomes of the crude oil era. Therefore, renewable energy poses the greatest challenge to the traditional oil industry. However, these issues have been raged unabated as policy-makers, interested parties, and supporters of alternative ideas still argue that renewable energy is not an issue, at least nowadays. Thus, the following study argues a standpoint that renewable energy is persistent and effective, that is, it poses a serious challenge to the conventional oil industry.
The paper includes a brief description of the current state of both industries and discusses the central argument from the perspective of three main benefits associated with renewable energy: environmental, social, and economic sustainability. It is appropriate to make a general comment as certain reasons or assumptions may be generalized reflecting global impacts of renewable energy adoption worldwide. Moreover, suggested benefits and their outcomes will cause certain disruptions in policy-making, so that making a wrong choice may turn the benefits of renewable energy into adverse consequences. Proper management and transparent policy-making are the preexisting conditions for gaining benefits of renewable energy and substitution of the oil industry with an adequate model of macroeconomics.
Current State of Oil Industry and Renewable Energy
Despite frequent speculations in the current decline of the oil industry, it is confronting a temporary peak but it is likely to be the last rise of the oil industry’s influence on global macroeconomics. As soon as the industry uses all of its primary resources within locations of feasible mining, the industry will be saturated within several decades, as an absence of new sources and higher risks of mining from sub-oceanic sources will force the global industry to develop a new source of energy and power production (Sorrell et al., 2010). Conventional oil supplies will run out by 2020 – 2030 provided that consumption rate remains stable during these years. Such an economic model appears to be no longer sustainable nowadays (Murphy & Hall, 2011). The weakness of the oil industry is obvious, especially in consideration of the fact that the majority of contemporary innovations are oriented towards renewable energy production rather than economizing on finite amounts of crude oil, which will finish relatively soon.
A subject of renewable energy production is often discussed and even has been used as a part of various agendas. A real state of this industry and whether it can sustain itself in the future should be discussed. Ellabban, Abu-Rub, and Blaabjerg (2014) conducted a study that suggests that renewable energy is a persistent means of power production, as rates of its adoption obviously grow each year. Measurements and comparisons witness a substantial advancement in productivity in renewable energy assets. Wind energy, solar batteries, and biomass gas provide energy, which comprises 98-99% of initial supplies for its production. In such a way, renewable energy proves to be extremely cost-effective. Furthermore, Ellabban, Abu-Rub, and Blaabjerg (2014) argue that their complex allocation and integration will create a flexible and sustainable power grid infrastructure, which can be adopted in any location on the planet. Eventually, the traditional benefits of renewable energy should not be ignored: environmental considerations, as well as safer living conditions, are strong factors that will pose inevitable challenges to the oil industry (Apergis, Payne, Menyah, & Wolde-Rufael, 2010). This tendency is becoming particularly distinct with consideration of economic implications for renewable energy production.
Concerning various reasons for supporting renewable energy, it is necessary to say that unlike crude oil, renewable sources are capable of gaining sustainability within its three pillars: environment, economics, and society. In spite of general speculations on the environmental benefits of renewable energy, domestic and industrial applications of renewable energy render the positive environmental impacts as follows. Reduction of carbon, carbon dioxide, hydrocarbon, and particulate emissions is typical for the majority of the related renewable energy assets, that is, a direct benefit for the environment (Panwar, 2011). Moreover, wind renewable energy assets affect the reduction of the greenhouse effect and ozone layer destruction. Generally, the means of renewable energy present alternative fueling sources as a single alternative to the oil industry that is reported shrink within several decades (Panwar, 2011). Hence, basic environmental benefits are evident, and their credibility is sufficiently proved in some instances.
Besides, the mitigation of environmental harms by the adoption of renewable energy addresses issues beyond this scope. The means of renewable energy will decrease the demand for energy and associated services, thereby, sustaining economic and social aspects all over the world (Arvizu et al., 2011). Lowering emissions will also result in better welfare of the entire population, as health conditions and life expectations will respectively improve. These drastic changes will preserve the environment from further adverse impacts. Thus, contemporary science will be able to sustain its stability and norms of coexistence with the planet’s population (Arvizu et al., 2011). The conventional oil industry takes a different approach which presupposes changes in a current environment, regardless of the potential consequences (Arvizu et al., 2011). This affects not only the environmental but also economic and social pillars of global sustainability.
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Renewable energy assets can become a complete substitution for traditional industrial assets of power. Therefore, a wider range of vacant workplaces will be created like renewable energy is an entirely new untapped industry, which will involve multiple spheres and hence specialists of various fields (Mathiesen, Lund, & Karlsson, 2011). Moreover, the renewable energy grids are mainly decentralized so that each location will be provided with its regularly operated infrastructure, and that will guarantee new employment opportunities (Mathiesen, Lund, & Karlsson, 2011). Furthermore, a strong presence of renewable energy will eliminate the energy dependence of developing countries, creating a market with an adequate competition where the exchange of power supplies follows a harmonious and heterogeneous pattern (Mathiesen, Lund, & Karlsson, 2011). Undoubtedly, the traditional oil industry dictates entirely different rules of competition. Thus, income distribution triggers geopolitical instability and extremely unhealthy globalization.
Except for global macroeconomics, the experience of Germany is quite essential and applicable to this discussion. Renewable energy serves numerous functions for domestic markets. However, competition based on innovation and cost reduction may seem to amend related policies but at the same time, it ensures energy sustainability within the entire country (Lehr & Lutz, 2011). Obviously, the innovative market leadership is expensive for energy providers but investment in renewable energy suggests that an investor will not need to make any additional financial reconsiderations, except for innovative management and performance congruent with local policies (Lehr & Lutz, 2011). Such a model applies to any country. Therefore, less developed countries will be able to reach a sufficient level of energy independence supporting their national economies (Lehr & Lutz, 2011). That market model hardly satisfies contemporary beneficiaries of oil-driven macroeconomics but the change is inevitable as the society tends to adopt renewable energy in the shortcoming future.
A decentralized pattern of renewable energy distribution means a better life and health conditions, especially in developing countries where environmental impacts exceed the norm to a critical extent. In addition, decentralization of power distribution means independence from the general grids of power (Sathaye et al., 2011). It will improve living conditions in remote and rural areas that are usually heavily dependent on urban infrastructures of power. The oil industry does not provide such an opportunity as long as the distribution of energy generated with oil is determined by economic and logistic constraints (Sathaye et al., 2011). On a large scale, renewable energy will necessarily reduce the process of urbanization. First, the presence of independent sources of renewable power will provide citizens of rural areas with all benefits of urban life, since transportation and logistics are not an exclusionary expense for non-urban areas (Sathaye et al., 2011). Second, the construction of industrial assets will not be linked to urban infrastructures. Once each plant or factory can supply themselves with their own energy.
Likewise, a large-scale adoption implies a wider development of innovation and a greater demand for knowledgeable professionals. It will potentially boost the sustainability of socio-cultural welfare positively reflecting on a geopolitical situation. The incidence of social disparity, inequality, and discrimination will be minimized since a new paradigm of income distribution and cultural values will be accepted (Helgenberger, 2016). Such a forecast may seem to be generalized and extremely implicit. However, the elimination of contemporary oil-driven macroeconomic processes will determine new values and rules of competition assumed to be more coherent with basic concepts of humanity, equity, and recognition of diversity (Helgenberger, 2016). A social pillar of global sustainability is the least tangible aspect, but such worldwide changes will be made.
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Overall, renewable energy will substitute the oil industry in the forthcoming future due to the main three benefits. The world is heading towards the era when finite fossil fuels will end, and humanity will need new sources. Furthermore, the environmental and economic awareness has reached a margin, beyond which only renewable energy can move the global economy and social processes on the planet. Environmental, economic, and social benefits of renewable energy become the most feasible and commonly acceptable outcomes of the global sustainability. This goal is likely to be pursued in the future, despite the implications of policy-making and drastic macroeconomics changes reported now and then.
To conclude, this study has provided a detailed account of the argument regarding the persistence of renewable energy against the conventional oil industry. The paper has briefly described the state of both industries in order to contextualize the further discussion, which has been based on the following arguments. The central standpoint is that the oil industry is likely to saturate in the future, and renewable energy is the best option for the substitution of the oil industry for an alternative source of energy. The concept of renewable energy should be supported as it is capable of addressing global sustainability on the planet. Sustainability is based on three pillars: environmental, economic, and social. Thus, renewable energy provides apparent benefits for the environment and human health, amends macroeconomic paradigms, and influences a socio-cultural domain. All these aspects are mutually related because renewable energy influences them on a global scale as long as they contain multiple implications.
The environmental changes will become adjustable. The reduction of emissions and greenhouse effects will enable science to sustain a normal condition of human coexistence with nature. It will positively reflect on the health of the human population and their welfare.
However, an economic perspective implies drastic but sometimes ambiguous outcomes as they will not satisfy the contemporary oil industry beneficiaries and policymakers. The adoption of renewable energy will substantially reduce costs and provide greater employment opportunities all over the world. Undoubtedly, it will change the rules of macroeconomic competition: global markets will compete on the basis of power supply exchange, and domestic markets will strive for innovative leadership. These changes will facilitate economic growth in developing countries and enable them to achieve power independence. Eventually, a socio-cultural domain will promote more sophisticated and demanding views on equity, social disparities, income distribution, and globalization.