FourFourtwo’s Energy Equation has calculated the energy costs of the three biggest oil and natural gas companies based on the energy equation and is calling for the companies to invest in renewable energy.
The energy equation was created by Professor Andrew McLeod and Dr David O’Neill and shows the total energy cost of producing one unit of energy and producing another unit of that energy in the same period.
This is based on an energy value, which is the amount of energy a unit of electricity or gas will deliver if it is used in the average period of its lifetime.
If the energy value is less than the energy cost, the company does not have a choice but to invest into renewable energy, according to the calculations.
FourFourTwo’s analysis has highlighted the importance of investing in renewable energies in an increasingly expensive world.
In addition, it shows that companies that invest in wind and solar energy are better able to cope with climate change.
Energy Equation says: “The energy cost for each unit of solar energy or wind power is higher than the value of the fossil fuel used to generate that energy, so it is unlikely that the fossil fuels are a major factor in reducing CO2 emissions from burning fossil fuels.”
The Energy Equations calculations also show that oil and coal are more likely to be affected by climate change if they are not pumped with carbon dioxide, as is the case in the US.
“If fossil fuel companies continue to pump CO2 into the atmosphere, climate change may be unavoidable,” the analysis said.
However, if the US has more coal plants, then there is a better chance of reducing the effects of climate change by pumping more CO2, it said.
“The oil and fuel companies may be reluctant to invest if their coal and oil plants are located in the states with the worst emissions,” it said, “but if they have more natural gas plants and are not constrained by the climate in these states, then they will be more willing to invest.”
EnergyEquation said that energy companies could use its analysis to help them reduce their carbon emissions and increase their return on investment from renewable energy projects.
“Companies should look at their investment strategy, and think about how they can get their energy cost down to zero,” the report said.
“If energy costs are increasing at an accelerating rate, it is likely that the company will not be able to afford to invest more in renewables in future.”
It is also important that companies do not underestimate the impact of climate and climate change on their bottom line.
“It urged the governments of Australia, Canada, the US, UK and the European Union to “move forward with the introduction of carbon pricing schemes to help companies reduce their costs and increase returns on investments in renewables”.
The report said the energy industry was “on the cusp of a paradigm shift” in which renewables could be a part of the “innovation” economy.
Australia has a carbon tax of $US1.15 per tonne, while US states have introduced a similar levy of $2.50 per ton.
Canada has a $US20/tonne levy on oil and diesel emissions and is expected to introduce a similar one of $20/ tonne on next year.
While the report highlighted the benefits of using carbon pricing, it warned that it was important to keep in mind the impact that a carbon pricing scheme would have on the world’s economy.”
In addition to climate change, carbon pricing is also likely to have a negative impact on our ability to grow our economy and provide for our families and communities.” “
We are now seeing the benefits, and the negative consequences, of carbon taxation in the form of energy cost increases, job losses and carbon emissions.”
In addition to climate change, carbon pricing is also likely to have a negative impact on our ability to grow our economy and provide for our families and communities.
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