The Use of Renewable Energy in the UK

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The use of renewable energy sources is becoming a concern for many businesses in the UK as many business and government agencies. The European Commission Regulation requiring 20% of the energy sources by 2020 to be renewable energy is creating pressure for businesses in the UK to comply with this policy (Sajadi et al. 2012). The increasing emission of carbon into the environment is creating concerns about global warming (Calzolari, Casari and Ghidoni 2018, p.170). Environmental protection and Air Quality (AQ) acts in the UK require government, businesses, and individuals to minimize the use of energy forms that would have a negative impact on air quality and the environment. Research by Lewrick, Omar and Williams (2011, p.50) expresses that businesses use more 80% of the energy provided in the UK while households use about 18%, creating the need for companies in the UK to prioritize the use of renewable energy. Therefore, this paper investigates the benefits of using green energy sources by businesses and its impacts on the environment, businesses, and customers.

Benefits of Using Renewable Energy to Businesses and Environment

Meadowcroft and Steurer (2018) note that businesses benefit from using renewable energy sources by increasing marketing opportunities, reducing emissions and low energy costs. However, Lewrick, Omar and Williams (2011) suggests that using renewable energy might have negative impacts on the environment and therefore, the effects of renewable sources on the environment needs evaluation. Meadowcroft and Steurer (2018) highlight that a healthy environment requires the use of renewable energy sources. Meadowcroft and Steurer (2018) confirm that business can enhance their competitiveness by using creativity and innovation in producing their products, which attract many customers and increase sales. The use of renewable energy sources (RES) lowers energy bills. Brower, MacKinnon, and Michael (2018, p. 70) specify that using oil and natural gas as sources of energy inflates the energy bills of businesses and reduce their profitability. The use of solar energy helps in reducing energy bills while contributing to the protection of the environment and improving the quality of air (Lewrick, Omar and Williams 2011, p. 57). Although the initial acquisition cost may be high, Meadowcroft and Steurer (2018) confirm that the benefits of using solar energy offset its costs as it dramatically reduces competition for the available energy sources.

Moreover, Sjöstrand (2018) underscores that using the RES boost public relations image of the company. He emphasizes that the use of green energy makes customers feel that you care about their health and build their confidence in the company. In addition, using RES may not benefit the business directly by creating employment opportunities for people to work in the new RES projects (Lewrick, Omar and Williams 2011, p.60). Solar Energy, hydroelectric power and geothermal energy are more labor intensive than traditional energy sources (Soleimanjah and Sajadi 2012, p. 970). Cheng and Hammond (2017) denote that developing RES reduces service disruption, as the business become in charge of their power plants. Research by Sjöstrand (2018) suggests that using RES increases returns on investments, reduce global warming emissions.

Although some renewable sources project still carbon into the air, the damage is significantly reduced (Calzolari, Casari and Ghidoni 2018, p.174). Sjöstrand (2018) highlights that most customers in the UK are beginning to adopt a conscious purchasing and marketing business as a green company may attract environmentally conscious customers and make such businesses market leaders. Besides, research by Zahlen and Fakten (2018) reveal that the use of coal and natural gas in energy production causes serious health problems such as neurological damage, heart attacks, cancer, and premature deaths. Businesses using RES will have a healthy workforce and less expenditure on health insurance thereby boosting productivity.

Profits Generated by Using Renewable Energy to Traditional Fuel

A study by Sajadi et al. (2012) demonstrates that the revenue generated by businesses in the UK that use RES is insignificant when compared to similar companies in the United States. Soleimanjah and Sajadi (2012) observe that the initial cost of constructing the renewable energy facility may significantly reduce business revenue in the short run. However, with the cost of producing renewable energy sources projected to fall by 2020 while the rate of global energy consumption by businesses rising from 40% to 60%; the competitive landscape may shift. Brower, MacKinnon, and Michael (2018, p. 75) propose that the increasing demand on energy by leading firms in UK and US will create pressure on available resource that might lead to depletion of coal and natural gasses. Subsequently, Meadowcroft and Steurer (2018) predict that businesses operating in the UK are going to gain more competitive advantage than United States businesses using fossil fuel in production. Although the UK companies may realize small profit margins in the short term, Lauren (2015) highlight that the profitability of the firms will increase as the initial infrastructural facility fee is reduced over time.

Gupta et al. (2016) argue that while the cost of energy production rises with increasing exploitation of coal and gas by US businesses, the demand for electricity will increase. Based on the Engels model of demand and supply, the cost of fossil fuels will rise. Sjöstrand (2018) confirms that the increasing cost of fuel will have a negative impact on the cost of production thereby reducing profit margin among US firms. Therefore, Diaz-Rainey and Ashton (2011) underscore that UK firms will yield more profit in the end than United States firms will. Besides, investing in biofuel by companies in the UK brings additional costs associated with labor and acquisition capital (Boyle 2012, p.77). As the companies create employment for the people within the European market through investment in solar and nuclear-powered energy, the cost of labor rises that substantially reduces the profit the companies are making. As such, a comparative analysis of the UK and US firms regarding profitability and productivity asserts that while productivity increases in the UK, the US companies are marshaling huge profits from using fossil fuels.

Strategy Businesses in the UK Employed for Successful Use of Renewable Energy

Dent (2018) notes that the use of solar energy, wind energy, geothermal, water, and nuclear energy by businesses in the UK as alternative forms of clean energy is rapidly gaining acceptance within the region. Companies are coming up with new strategies to use green energy efficiency in the production of goods. Research by Dent (2018) pinpoints that Asda, which is an affiliate of Walmart, adopted renewable technology information in creating awareness and developing the capacity of employees to use RES.

Furthermore, Dent (2018) discovers that creating public awareness will enable people to understand the role of the technology, its benefits, and ecological significance, appreciate the purpose of the technology in producing goods. Additional examination of the strategies reveal that establishing information system services, workshops and capacity building improves the competency of service providers, engineers, investors, engineers, and financial institutions in supporting the implementation of RES projects (Gupta et al. 2016).

In addition, Meadowcroft and Steurer (2018, p. 760) highlight that business in the UK enhances renewable technology market through infrastructural development. Meadowcroft and Steurer (2018) confirm that solar technology economic viability and feasibility relies on demonstration and simulation projects. The demonstration enables the business to understand the benefits of technology and its improvement through intensive research and development (Dent 2018, p. 730). Businesses are sponsoring research in ways to improve the capacity of photovoltaic cells to transform sunlight into solar energy used for lighting, running machines, drying food and in textile industries (Diaz-Rainey and Ashton 2011). Besides, UK businesses are creating organizational policies in response to the environmental protection and clean air act, to promote the use of alternative forms of clean fuel. The best renewable energy enables a business secure energy supply, reduce the risk of exposure to volatile energy prices, reduce carbon emission into the environment and enhanced positive branding through effective environmental performance (Calzolari, Casari and Ghidoni 2018, p.178).

Sajadi et al. (2012) propose the use of a four-step strategy, which involves assessing energy need of the firm and its environmental policies, identify strategic needs through resource mapping and staying ahead of other businesses in the market. Subsequently, UK businesses educate employees and the public on the need for environmental conservation by using renewable energy source by packaging products in biodegradable papers with messages advocating for the emission-free environment. Large manufacturers use purifiers to filter smoke before being released into the environments.  As such, creating infrastructure and information sharing provide a better approach for renewable energy advocacy for environmental conservation.

Cultural Differences between the UK and US

Research by Gupta et al. (2016) indicates that there is no significant culture difference between the US and the UK. The United States has a multiracial society that reflects the cultures of all countries across the globe. Both the two countries are developed and Anglophones. Sjöstrand (2018) highlights that the two countries have advance economic, political, technological and historical background. However, despite the two countries having unique environments, Americans are more aggressive and risk-taking compared to the Britons. Murphy (2016, p. 15) observes that numerous American companies operate in Europe such as Asda and Apple. Americans are more oriented democratically and like a consultative system where decisions are made from a bottom-up approach. The United Kingdom is a small country with a stable market and common policies that govern the conduct of business (Murphy 2016, p.16). On the other hand, the United States is a large country with a highly segmented market based on geographical and demographic segmentation. Consequently, it is not easy to make effective policies on renewable energy use as the country still boast of substantial coal reserves that it can use to produce cheap energy. Although America businesspersons are profit driven and tend to maximize productions, Britons are more concerned with environmental protection than they are.

Renewable Energy and Customer Trust

Green marketing is rapidly being adopted by businesses to appeal to environmentally conscious customers. Brannan, Heeter, and Bird (2012, p. 9) define green marketing as a strategy used by businesses to communicate the environmental attributes of a product by using labels and logos. Why would businesses communicate the nature of their products to the customers? Lauren (2015) confirms that consumers are more concerned about the impact of the products they consume now than before.  Brannan, Heeter, and Bird (2012, p. 9) presents that ongoing marketing research has identified a rapidly expanding market for consumers with heightened concern for the environment creating a market niche targeted by green marketers. Despite green market becoming a niche, 80% of consumers in the US are interested in protecting the environment and buy products from retails stores and manufacturers who invest in environmental conservation with RES (Brannan, Heeter, and Bird (2012). Companies are printing environmental friendly messages to inform their customers about the nature of their products either by using product logos or by communicating through their websites (Diaz-Rainey and Ashton 2011). Although communicating the use of RES in production targets the green market, most customers are having growing concern about the quality of the materials used to make the products. For instance, research by Brannan, Heeter, and Bird (2012) indicates that customers consider products made from recycled products to be inferior. Consequently, using renewable energy sources does not improve the quality of the products.

The environmental element of a product positively influence consumers purchasing decisions such as the type of energy the manufacturer uses to make products. A global consumer survey suggests that 65% of consumers prefer products made using wind energy (Brannan, Heeter and Bird 2012). Companies have commenced manufacturing products using green energy, communicating their environmental ethics and differentiating products by clearly outlining its ecological activities. In the United States, 50 companies label their products using green market logos expressing 100% use of green energy in manufacturing their products (Gupta et al. 2016).

Brannan, Heeter, and Bird (2012) investigate the motivation for promoting products made from RES. He discovers that companies in the UK and the US promotes such products to comply with domestic environmental legislation, to stabilize the cost of energy and strengthen the relationship between the company and key stakeholders (Brannan, Heeter and Bird 2012). However, what motivates business to promote their use of renewable energy on products? The research conducted by global marketing research in the US involving 20 participants answering a structured questionnaire reached the following conclusions (Dagher, Bird and Heeter 2017). Renewable energy promotion communicates the company method of production to consumers to enhance brand image, targeting consumers who are environmentally conscious, product differentiation and enhance price premium for their products. Research by global market survey indicates that renewable energy promotion on products builds consumer confidence on products and that 50% of consumers can pay 10% more on products made using renewable energy sources (Brannan, Heeter and Bird 2012).

Limitations of Using Renewable Energy in Business

Pérez Donsión (2016) confirms that using RES is beneficial to both businesses and enthe vironment. However, there are problems that using renewable energy presents to the business. Pérez Donsión (2016) underscore that the RES may not generate suffa icient quantity of energy required by businesses in comparison to fossil fuel generators. Consequently, businesses supplement RES with other sources, which increases energy costs. Secondly, Pérez Donsión (2016) observes that supply of energy relies on the prevailing weather condition and climate. Hydropower relies on rain, wind turbines require wind to generate electricity while solar panels require clear sky and sunshine to generate energy. If these resources are not available, the generation of renewable energy may not be sufficient to run the machines hence causing breakda own in operation. The cost of RES is higher than traditional fuels hence reducing profit margins of businesses (Pérez Donsión 2016). Therefore, renewable energy sources are highly dependent on natural resources and hence natural resource endowment of a country determine the quantity of energy created.

Solutions to the Problems affecting Renewable Energy Sources

The following are the critical solutions to the problems affecting the consumption and supply of renewable energy sources. First, there is a need to research innovative techniques to help in generating and supplying renewable energy (Pérez Donsión 2016, p.600). Secondly, facilitating the global corporation through infrastructural growth and technological development with the aim of improving the supply of RES to moderate climate change and the effects (Pérez Donsión 2016, p.542). Moreover, there is need to create public awareness on the importance of the sustainable renewable energy sources. Pérez Donsión (2016) recommends that business should have alternative clean energy sources like nuclear plants to supplement solar energy, wind energy, geothermal and hydropower. As such, the use of RES is projected to increase and help in protecting the environment from pollution.

Conclusion

The demand for the use of renewable energy sources is increasing with the advancement of environmental protection policies. Renewable sources of energy such as wind power, solar power, geothermal, electricity, and nuclear energy are projected to increase by 20% in 2020 in the United Kingdom (Dagher, Bird and Heeter 2017). Despite the initial cost being high, the increasing demand for fossil fuel will lead to the increasing cost of energy, which will create demand for alternative energy forms. Use of RES is profitable in the long run when the overhead cost is fully recovered. The use of RES is beneficial to businesses in the UK as it creates a niche for green marketing, protects environmental pollution and leading to stability in production. Besides, the use of RES in the production of goods build consumer confidence and trust in the company thereby increasing the market for products. However, there is insufficient literature on how businesses successfully use RES to improve product quality especially recycled products and change customer perception. Therefore, there is a need for further research on how to use RES to enhance the quality of products.

References

Boyle, G. (2012). Renewable energy. Oxford: Oxford Univ. Press.

Brannan, D. B., Heeter, J., and Bird, L. (2012). Made with Renewable Energy: How and Why Companies are Labeling Consumer Products. http://doi.org/10.2172/103793

Brower, J., MacKinnon, and Michael A. (2018). The role of natural gas and its infrastructure in mitigating greenhouse gas emissions, improving regional air and renewable resource integration, Progress in Energy and Combustion Science, 64, pp.62-92

Calzolari, G., Casari, M., and Ghidoni, R. (2018). Carbon is forever: A climate change experiment on cooperation, Journal of Environmental Economics and Management, 92, pp.169-184

Cheng, V.K.M., and Hammond, G.P., (2017). Life-cycle energy densities and land-take requirement of various power generations: A UK perspective, Journal of the Energy Institute, Vol 90, Issue 2, pp.201-213

Dagher, L., Bird, L., and Heeter, J. (2017). Residential green power demand in the United States. Renewable Energy, 114, pp.1062-1068.

Dent, C. M. (2018). Clean Energy Trade Governance: Reconciling Trade Liberalism and Climate Interventionism, New Political Economy, 23(6), pp. 728-747

Diaz-Rainey, I., and Ashton, J.K. (2011). Profiling potential green electricity tariff adopters: Green consumerism as an environmental policy tool, Business Strategy and Environment 20(7), pp.456-470

Gupta, S., Mahota, N.K., Czinkota, M., and Foroudi, P. (2016). Marketing innovation: A consequence of competitiveness, Journal of Business Research, 69(12), pp. 5671-5681

Hester, R. and Harrison, R. (2010). Sustainability and environmental impact of renewable energy sources. Cambridge: Royal Society of Chemistry.

Lauren, K. (2015). UK solar market could use a push. Renewable Energy Focus, 16(1), pp.12-13.

Lewrick, M., Omar, M., and Williams Jr., R.L. (2011). Market orientation and innovators success: An exploration of the influence of customer and competitor orientation, Journal of Technology Management and Innovation, 6( 3) pp. 48-62

Meadowcroft J., and Steurer, R. (2018). Assessment practices in the Policy and Politics Cycles: A Contribution to Reflexive Governance for Sustainable Development, Journal of Environmental Policy and planning, 20(6), pp.752-774

Murphy, M. (2016). The differences behind the similarities, or: why Americans and Britons don't know what the other is talking about. English Today, 32(03), pp.14-17.

Pérez Donsión, M. (2016). Renewable Energy : Selected Issues. Newcastle upon TYne: Cambridge Scholars Publishing.

Sajadi, A., Klos, M., Biczel, P., and Biabani, M. (2012). Future prospective of energy sector and energy market in EU, 2012 11th International Conference on Environment and Electrical Engineering EEEIC 2012 – Conference Proceedings 6221447, pp.600-605

Sjöstrand K. (2018). Sustainability assessments of regional water supply interventions – Combining cost-benefit and multi criteria decision analyses, Journal of Environmental Management, 225, pp.313-324

Soleimanjah, S., and Sajadi, A. (2012). British customer`s interest in paying for green electricity, 2012 11th International Conference on Environment and Electrical Engineering, EEEIC 2012 – Conference Proceedings 6221516, pp.962-965

January 19, 2024
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