Albert Bartlett's Exponential Lecture

Here are wmv and mp4 versions of Albert Bartlett's famous talk on the exponential function:

http://eroei.net/bartlettexp.mp4

http://eroei.net/bartlettexp.wmv

Approximation of ERoEI for nuclear energy in the US

Jay Hanson’s America 2.0 Google group

The problem of estimating the ERoEI of nuclear energy has arisen once again.  In 2005, I read the MIT report and the University of Chicago report and, as part of a much larger project, wrote as follows:

Commentary Continued: The Nuclear Option

The positive characteristics of nuclear are easy to dwell upon if one is an exponent of growth such as John McCarthy http://www-formal.stanford.edu/jmc/index.html or the late Julian Simonhttp://www.freedomsnest.com/simjul.html.  On the other hand, they are likely to be ignored by Soft Energy zealots.

A Renewable Energy Resource

Regardless of the finiteness of uranium resources, nuclear energy must be considered renewable because of the existence of fast breeder reactors and the likelihood that their technological limitations will disappear over the coming decades.  Therefore, nuclear power should be admitted to the competition with wind, solar, biomass, and other sustainable technologies.  If there is some reason why nuclear energy is not sustainable, it has yet to be demonstrated.  (What is not sustainable is growth itself – not nuclear energy.)

The Hydrogen Economy

Suppose that we agree that the hydrogen economy means hydrogen from nuclear power installations (NPIs).  Suppose that we agree that the hydrogen economy means hydrogen from nuclear power installations (NPIs).  [However, see [http://www.phoenixprojectpac.us/user/Phoenix%20Project%20for%20America%20PAC.pdf] for a non-nuclear approach to the hydrogen economy.]  In their article “Large-Scale Production of Hydrogen by Nuclear Energy for the Hydrogen Economy” [http://web.gat.com/pubs-ext/MISCONF03/A24265.pdf], K.R. Schultz, L.C. Brown, G.E. Besenbruch, and C.J. Hamilton suggest that hydrogen can be produced with a 50% efficiency by thermal splitting of water using a Sulfur-Iodine cycle in conjunction with the Modular Helium Reactor (H2-MHR).  The efficiency of the H2-MHR bypasses the objections to using electricity as an intermediate step as discussed by Ulf Bossel, Baldur Eliasson and Gordon Taylor [http://www.oilcrash.com/articles/h2_eco.htm].  Other drawbacks of  hydrogen have been addressed by Graham Cowan in his interesting paper Boron: A Better Energy Carrier than Hydrogen?  [http://www.eagle.ca/~gcowan/Paper_for_11th_CHC.html]

Also, associated with the hydrogen economy and whatever residual industrial tasks cannot be converted to electrical power are the huge changes in our technological and industrial infrastructure associated with conversion to the use of  hydrogen for fuel.  This will involve energetically costly re-tooling for the production of different types of industrial equipment.  Although the period of amortization can be prolonged, ultimately such costs must be charged to the energy invested in nuclear energy.

The cost of liquefying hydrogen might be paid in part at least by using hydrogen to facilitate transmission of electricity through ‘high-temperature’ superconducting transmission lines that might run through the middle of liquid hydrogen pipelines.  I do not know if this is feasible nor do I have a reference for it as I have no idea if it exists outside of my own imagination.  However, I have noticed that the fractional losses of electric power listed in the reference case from Annual Energy Outlook 2005 (Early Release) (AEO2005), published by the Energy Information Administration of the US Department of Energy (DOE), are rather large so that the potential savings, at least, are documented.  (See Appendix A of AEO2005Full.pdf.)  [Note.  The term ‘high-temperature’ means that, while the temperature is still cryogenic, it is well above absolute zero.]

Energy Returned over Energy Invested (ER/EI)

If the Energy Returned by NPIs is less than the Energy Invested, nuclear energy is infeasible.  Therefore, the frequently discussed ER/EI analysis is crucial to this discussion.  Probably, the ER/EI ratio for nuclear power is less than comparable ratios for fossil fuels, which is a drawback insofar as market penetration is concerned; however, so long as it exceeds 1.0 the introduction of nuclear energy is feasible.  There are a number of factors, however, that point to the possibility that ERoEI is less than 1.0.  In particular, elsewhere in this section, a number of requirements of  NPIs are mentioned that might be easy to overlook in an analysis of ER/EI.

The identification and quantification of every component, both direct and indirect, of the energy invested in nuclear power is not a simple thing to do.  In particular, if any such study of Energy Invested includes the ancillary business expenses, including the expense of doing the very study in question, I have not seen it.  But, in the American economy, for example, the energy consumed by commerce is 22% of the total energy budget.  This is corroborated by employment statistics.  (See [http://stats.bls.gov/oes/home.htm].)

Computation of Energy Invested by multiplying the sum of capital and operating costs by the ratio of Total National Energy Budget over Gross National Product (E/GDP) tabulated by the DOE provides an approximation to the correct value that does not omit the energy consumed by commerce.  (See “Energy Flow in a Mark II Economy” [Mark-II-Economy.html].)  Using cost data from the Shultz et al. study [http://web.gat.com/pubs-ext/MISCONF03/A24265.pdf], the University of Chicago Study [http://www.nuclear.gov/reports/NuclIndustryStudy.pdf], and the MIT study [http://web.mit.edu/nuclearpower/], I computed an ER/EI ratio of 4.63.

However, it is not clear that all ancillary costs have been included, e.g., desalination of sea water, remediation of environmental change, etc.  A pro-rata share of the costs of providing and maintaining railways to carry heavy equipment, fuel, and waste, highways to transport workers, conduits to transmit electric current, pipelines to transport hydrogen, and easements through which electrical power lines and hydrogen pipelines can be run must be charged to the plant.  Some locations for NPIs are unsuitable for this necessary infrastructure, and, therefore, unsuitable for NPIs.

At the start of this exercise, I considered the notion that I might be able to determine the feasibility of nuclear by looking at the energy balance for France.  (http://www.eia.doe.gov/emeu/world/country/cntry_FR.html)  France produces about three quarters of her electricity from nuclear, but France has to import about half of its energy.  Is it possible that nuclear power consumes more energy than it produces?  Despite the inclination to prove the affirmative, I have not been able to determine the answer to this question by looking at the available data.  In fact, France seems to be doing rather well insofar as energy is concerned; and, therefore, is much less of a problem for the rest of the world than is the United States.

Finally, and we shall have to await a more thorough discussion of this topic, the author wonders if the cost of restoring the land and the water employed by NPIs to its pre-nuclear condition should be charged to the Energy Invested even if  there is no possibility that the land will ever be used for any other purpose than nuclear power into the foreseeable future.  Clearly, decommissioning costs must be included, but does decommissioning include restoring the land to its original condition as a beautiful, natural, wildlife habitat?  Quite frankly, I believe that it does.

Money

Although the capital costs of NPIs are sufficiently high that market penetration under the standard short-sighted micro-economic model might be prohibitively difficult, as a fraction of the projected Gross Domestic Product they are quite manageable by a society that possesses the political will to manage them as we shall see in the sequel.  The final irony might be that a capitalist-style market economy can be maintained under a centrally-planned socialist energy economy and only under such an economy.

Many people believe that the United States economy is in such bad shape, principally because of the trade deficit and the national debt, that it could not possibly support the massive spending necessary to install a hydrogen economy.  If the government continues to run a deficit, the public costs of such a project might very well multiply that deficit by a large factor.  While this may be true, it does not necessarily represent the prohibition of the Apollo Plan, so long as American workers are willing to accept government debt in the form of fiat money as payment of wages.  This study shows that capital costs are well within the capabilities of the US economy.  The results are presented as the final two computations done on the spreadsheet explained in the body of this report.

Unfortunately, nuclear facilities are operated sometimes for the personal profit of their owners, managers, and other stakeholders who might be inclined to place their personal interests ahead of other considerations such as good engineering practice and safety.  Mere prudence dictates that we be suspicious of enterprises run for profit.  Since it will require huge investments by the federal government to penetrate a market economy with current nuclear technology, the federal government might just as well own and operate whichever nuclear plants it chooses to subsidize.  The Apollo Plan amounts to some sort of Socialism; hopefully, it will not be Corporate Socialism, i.e., Fascism.  Thus, the evils of the profit motive can be avoided, but only by compromising Capitalism.  However, as critics of Socialism will be quick to attest, this does not necessarily protect society from incompetence.

Water

Nuclear Power Installations (NPIs) need fresh water.  Many experts believe that we are even closer to Peak Water than we are to Peak Oil if we are not past both.  Since some experts disagree, this must be regarded as an open question.  If fresh water is used as cooling water, it must be returned to the environment at the original temperature with all contaminants removed and all nutrients restored.  If fresh water is split to produce hydrogen, it may end up as atmospheric water only part of which will return to Earth as fresh water, in which case the losses in our fresh water supply will have to be replaced somehow.  If some of our NPIs are used to desalinate sea water, the energy expended must be subtracted from the Energy Returned in computing ERoEI.

As an example of water use by an existing nuclear power facility, nuclear Plant Hatch in Georgia withdraws an average of 57 million gallons per day from the Altamaha River and actually "consumes" 33 million gallons per day, lost primarily as water vapor, according to the U.S. Nuclear Regulatory Commission (http://www.cleanenergy.org/programs/water.cfm).  Plant Hatch, consisting of two 924 MWe reactors each with a capacity factor of 0.8453, consumes water at the rate of 3.2903 x 10¹¹ kgs/emquad.  Thus, if every NPI in the year 2100 used water at the rate Hatch Plant did in 2000, we would need 1.1442 x 10¹⁵ kgs of water per year to satisfy the modest economic growth assumed in my Reference Case for the Conservation-within-Capitalism Scenario.  According to http://www.american.edu/TED/water.htm, we have about 3 x 10¹⁵ kilograms of renewable fresh water total.  Thus, power plants would use more than one-third of all of our renewable fresh water.  According to http://oldfraser.lexi.net/publications/critical_issues/1999/env_indic/resource_use.html, the US has 2.5 trillion cubic meters of water or 2.5 x 10¹⁵ kgs, which corroborates the previous estimate.  Also, see http://www.worldwater.org/table1.html.

Some of the energy produced can be used to desalinate sea water for reactors on our East, West, and South coasts where the population is dense and fresh water dear.  Moreover, energy from ocean waves can be used to assist desalination.  [http://www.malibuwater.com/OceanWaveEnergy.html]  Let us compute a lower bound for the energy cost of desalination of sea water to make the case against nuclear as conservative as possible.  According to Allan R. Hoffman (GlobalWater.htm), “energy requirements, exclusive of energy required for pre-treatment, brine disposal, and water transport, are: reverse osmosis: 4.7 – 5.7 kWh/m³and multi-stage flash: 23 – 27 kWh/m³”.  To establish a minimum, I shall use 4.7 kWh/m³ to obtain

i.e., an increase in Energy Invested of 1.6% of the Energy Returned, which should not present a problem.  However, if the higher value for multi-stage flash were the best one could do, the costs would soar to nearly 9% of the Energy Returned.  If the ratio of Energy Returned to Energy Invested (ERoEI) were 5.0, the energy costs would increase by 44.9% and the ERoEI would be reduced to 3.45, which would certainly be an unwelcome surcharge on nuclear power.  In addition to the costs of pre-treatment, brine disposal, and transport, the cost of desalinating water to be split into hydrogen and oxygen would have to be borne.  The cost of transport might be considerable if sea water were needed in Minneapolis, say, but the scarcity of fresh water is most acute in places much closer to the ocean.  The calculation of these additional costs shall be postponed to some future study.

Land

The final limitation upon economic growth is the area of the surface of Earth.  NPIs require a smaller fraction of Earth’s surface per unit of power generated than any of the competing technologies, namely, wind, solar, and biomass – despite the fact that solar and wind power installations can coexist with other land uses.  Even if every other obstacle to growth were removed, ultimately we should run out of space – unless some means of miniaturizing NPIs, for example, should be discovered such that the rate of increase of power density could keep pace with growth.  (If emquads per square meter increases at the same rate as emquads, we would be able to produce the energy budget of the future in the space we use now.)  Even in the unlikely event that NPIs could be stacked, a limit would be reached after which they could be stacked no further without the expenditure of more energy than an NPI can produce during its lifetime.  Also, there are limits to power density that, if none other could be found, would be set by the atomic nature of matter – although, admittedly, if the concentration of the space per unit of power were limited by atomic considerations alone, growth might continue for a very long time.  Probably, though, by the time the individual Earthling could wear an NPI strapped to his wrist like Dick Tracy wore a radio, we shall no longer be living on Earth, a situation to be deplored for other reasons as stated previously.

To return, for a moment, to more realistic considerations, the land needed for NPIs includes not just the plant sites and infrastructure for transportation and power transmission but also the space occupied by facilities for mining and enrichment, fabrication, maintenance, recycle, hydrogen compression and liquefaction, waste management, sea water desalination, fresh water remediation, and the ubiquitous office buildings that seem to be a necessary part of every enterprise engaged in the pursuit of profit.  Engineers and scientists will need workplaces; and, if I am not mistaken, the greater the complexity of our energy economy the greater the superstructure of command and control, which, in the case of nuclear, must be multiply redundant.  Moreover, many areas on the face of the Earth are not suitable for NPIs, namely, the tops of mountains, earthquake zones, crowded cities (perhaps), and, if we wish to observe the ethical treatment of animals, wildernesses, swamps, prairies, etc. – in short, any place where humans have not yet evicted animals from their natural habitats, which, for all practical purposes, amounts to saying that future nuclear installations may be placed nowhere.  Finally, it must be decided whether the space occupied by outmoded and obsolete facilities can be reused for new facilities or if it must be restored to the pristine condition in which Nature bequeathed it to us.  If the latter, the energetic costs will very likely overwhelm the Energy Returned in the ratio (or difference) represented by ERoEI, which brings me to the next point:

Danger

Quite obviously, while operating as designed, nuclear power plants do not contribute directly to Global Climate Change nor air and water pollution regardless of the effect of their ancillary facilities, e.g., mining, etc.  When nuclear facilities are operated properly, the dangers are rather minimal; nevertheless, nuclear radiation is extremely dangerous.  In addition to radiation poisoning, nuclear plants have a non-zero, but very small, probability of exploding; but, if there are many of them, the probability of explosion increases accordingly.  Admittedly, there is no physical reason why the problems associated with pollution, radiation, explosions, waste, and decommissioning cannot be solved, however they must be solved; and, to the extent that they have not yet been solved, they represent impediments to the introduction of nuclear power and the hydrogen economy, which brings us to the next topic.

Complexity

Nuclear power is the key to a much larger and complicated economy with much greater opportunities for unanticipated environmental catastrophes both because it makes a larger economy possible and because it makes a more complicated economy necessary to supply an energy budget that is growing exponentially.  Now, the economy is sufficiently complicated in 2005 that the average person must necessarily depend upon the opinions of experts to determine which public policies are in his best interests and which are not.  Moreover, experts disagree.  The average man or woman is held hostage to the complexity of the economy, and this situation is not conducive to democracy.  Soon enough, under a scenario of modest growth, this situation will be exacerbated many times over.  The interests of ordinary private individuals will be taken out of their own hands almost completely.  Presumably, a technocracy is better than a plutocracy (unless technocrats become plutocrats); but, in either case, it represents social degeneration – not progress.

[snip]

As one can see, this was written before - but just before - I began to consider ERoEI by drawing my control surface around an entire community, a community living in an Autonomous Alternative Energy District as in http://dematerialism.net/remarks.htm.  However, without repeating the earlier computation, one can take new data such as (1) the Energy Information Agency's cost per kilowatt-hour (electrical) of electricity from nuclear energy of $0.108 in 2013 from http://en.wikipedia.org/wiki/Economics_of_nuclear_power_plants; (2) the Gross Domestic Product of the United States in 2012, which is close enough to 2013 for our purposes, of 16.25 Trillion US Dollars; and (3) the Total Energy Budget of the US, which was 95.14 quads.  Thus, since most components of the energy investment contribute a corresponding component to the monetary cost, we can compute an upper bound for the ERoEI of  0.54.   Wow!  I must have made a mistake.   I haven't got time for Microsoft's equation editor; so, I had better scan a pencil calculation and include it as a jpeg.  I will place this on-line in case Google doesn't print equations or figures.  See http://eroei.net/nuclear.htm .  The actual ERoEI* must be less than this because society does not require some of the measures that would have to be taken to achieve genuine sustainability; however, the technology is infeasible as it is.

The mistake is in the conversion of quads/year to terawatts.  It should be 0.0334372 NOT 0.334372.  Thus, Dilip Kale is right and I thank him.  The ERoEI of nuclear is no greater than 5.4, which agrees with my 2005 paper.

Alexander Carpenter is rather skeptical about this computation because the levelized cost represents the amount that nuclear energy would have to sold for to just break even.  I believe that the break-even price includes all obligatory payments to investors and lenders.  We don't care if the industry makes a profit or not; but, if it does make a profit, the additional energy consumption of those who earn it must be charged to the technology.  This is accounted for by the price.  The energy associated with every single component of the price including the taxes collected must be reflected appropriately in the energy investment term.

This, then, is a slightly edited version of my reply to him on the America 2.0 forum:

Rather than re-send the post I sent earlier tonight from the wrong email account, I would like to ask Alexander to take a moment to read this carefully.  Obviously, he has a great deal to contribute to this discussion; but, I am not interested in ROI.  I may not understand what GDP means nowadays; so, I will tell you what I think it means with the hope of being corrected if I am behind the times: GDP is supposed to be the sum total of  all goods and services purveyed and purchased domestically during a given year.  It is the flow of money through the economy as in Odum's famous diagram, which was first rendered when the US GDP was only 1.4 trillion USD/year.

Next, I need to be sure what the levelized cost is and how it is intended to be used.  I think that's where Alexander got the idea that I am after ROI.  I think I should use the average price to the consumer regardless of sector because this is how much money enters the economy when one kilowatt-hour of electricty is sold regardless of origin.  This was 0.1045 USD according to http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a which is assumed to be a reliable source of raw historical data.  In my experience, these bureaus are staffed by serious, competent people who would rather not be pushed around by unscrupulous businessmen.  I don't think these people are much influenced by political pressure, which is exerted much farther downstream in the dissemination of data.  Are they not tenured?  I have had serious discussions with the people who supply my data and they have had a lot to teach me.  In addition, they seem to be pleased to show the general public how useful they are. It doesn't matter to us if the average price to the consumer is affected by subsidies; however, since it does not reflect things like environmental reparations that should be done but are not done, the figure I come up with delineates feasibility rather than sustainability as I defined these terms at http://eroei.blogspot.com/ in the post of August 14th, 2013.  Finally, I believe we are in agreement on the total energy budget, E.  The ratio of E to GDP is the quantity of energy flow through the economy counter-current to one USD of monetary flow. The new value of ERoEI is higher, then, by the ratio of levelized cost to the average price to the consumer or 0.108/0.1045 X 5.4 =  5.6.  This result is subject to the determination that 1 KWH(e) is really 1 KWH and not a third of a kilowatt-hour, the electric energy generated by the expenditure of 1 KWH of fuel at the conventional power plant.  I would like some input on that question.

To make absolutely clear what I mean by this technique, I illustrated it for the Mark II economy in http://dematerialism.net/Mark-II-Economy.html where it is crystal clear how each term was computed and, therefore, what it means.

Tom Wayburn, Houston, Texas

My Websites, Blogs, and Wikis Relevant to Net Energy and ERoEI

http://eroei.blogspot.com/   This is where I say the most important things about sustainability – against all odds and in the face of strong opposition.   Sometimes my frustration shows.

http://sustainabilitymath.blogspot.com/   This has a few documents that are found elsewhere.  This was my protest regarding the people who grabbed http://sustainability.blogspot.com/

http://dematerialism.net/   This was my principal website for many years and has most of my earlier work only some of which is worth reading.

http://dematerialism.blogspot.com/   This is where I write down anything new that occurs to me, including new ways to explain the parts that few people understand.

http://dematerialism.wikispaces.com   This was a practice shot to get into the Wikipedia.  I now have a better idea of what to say.  After all, dematerialism is a limiting case.  It is on the boundary of the space of all possible political and economic systems.  It should be in the Wikipedia.

http://eroei.net/  This stuff can be found elsewhere.  Someday, I’ll make it a “quick start” guide to dematerialism.

This was excised from http://tomwayburn.net/ - a list of links to my interests on the web.  It is so little accessed that I can afford to put private messages on it, which shows one useful side of obscurity.

Gail the Actuary almost gets it right.

 Gail the Actuary almost gets it right.

In the entry of July 11^th, I commented on Gail Tverberg’s list of monetary problems that arise in connection with energy technologies.  The EROI that was already too low was computed using the methodology employed by Charles Hall.  (In his recent collaboration with Pedro Prieto, Hall added many (but not all) of the items to the energy investments necessary to determine sustainability, quasi-sustainability, or feasibility as defined in my post of August 14^th.)  I include part of Gail’s article and my comments below.  

In my earlier comment, I neglected to mention that, if the monetary deficits are known, there is no reason not to convert money to energy according to the methodology mentioned in the comment and get a better estimate of ERoEI.  In case, Pedro’s methods were employed, one must be careful not to double count the energy consumed by employees to maintain their standards of living.


Now, Pedro said that he accounted for the employees; but, he did not promise that he counted the total increase in the world energy budget due to the employees being paid at all.  The energy invested term should be increased not only by the entire energy budgets of the employees but also by the increase in the energy budgets of everyone who receives any of that money when it is spent.  There are multiplication factors to aid the analyst in doing this. 
  

Indeed, the list items are of different types.  If the project is never built because funds of one type or another are not available, we can treat the item either as a hypothetical energy investment expense or a barrier.  It is not fair to charge different rents for necessary plots of ground to different instances of the same technology; therefore, land should be given a separate account and charged at the rate of insolation or wind area number or merely counted toward Maximum Renewables as I did in http://dematerialism.net/CwC.html . 

Private profit is an energy expense.   The analyst must compute the difference in the world energy budget as he did for wages.   If sustainability is under investigation, the energy costs of pollution must be reckoned as in the post of December 8^th, 2012.  Otherwise, the best one can do is to determine feasibility. 

In any and every case, Gail’s conclusion is probably still correct, namely, that ERoEI is less than 1.0 and more research in energy technology must be supported.  This represents an energy burden that must be borne by the entire energy sector.

 Gail Tverberg’s List 

 Primary problems

 1.   Funds are not available to pay for fossil-fuel subsidies for renewable energy projects.
 2.   Wages consistent with financial solvency and private profit are too low.
 3.   Energy production companies, especially heavily front-loaded renewable energy production such as photovoltaic solar energy installations, need to borrow money that the credit system can no longer supply.
 4.   There are insufficient financial returns to pay taxes desperately needed by governments.

 Secondary problems 

1.  Private profit from energy production is seen as inadequate by corporations.2.  Rent cannot be paid for land used in energy production. This cost might be highest in bio-fuel operations, but it belongs to every process that harvests sunlight in real time.
3.  Insufficient funds are available to prevent pollution and mitigate its effects.  These costs are never paid unless mandated by law - if then.
4.  Energy production companies do not pay to prevent mineral depletion and degradation of soil or even try to nor do they pay fines for failure.
5.  Energy producers do not account for limitations in so-called free energy.  For example, there ought to be a cost premium charged to the process for using limited coastal or off-shore wind power sites.

Gail Tverberg, the actuary, in the article posted by Jay
Hanson, wrote, "Commenters frequently remark that such-and-such an energy source has an
Energy Return on Energy Invested <http://en.wikipedia
<http://en.wikipedia.org/wiki/Energy_returned_on_energy_invested>
.org/wiki/Energy_returned_on_energy_invested> (EROI) ratio of greater than
5:1, so must be a helpful addition to our current energy supply. My finding
that the overall energy return is already too low seems to run counter to
this belief. In this post, I will try to explain why this difference occurs.
Part of the difference is that I am looking at what our current economy
requires, not some theoretical low-level economy. Also, I don't think that
it is really feasible to create a new economic system, based on lower EROI
resources, because today's renewables are fossil-fuel based, and initially
tend to add to fossil fuel use."

It is true that alternative energy installations that employ photovoltaic
cells, for example, incur heavy energy investment expense before any energy
at all is returned. In a US-type market economy, the fossil-fuel debt that
must be incurred early in the life cycle of such an installation might never
be repaid. That is because, in a market economy, significant energy
investment expense is required just to operate the market [1]. This expense
is never recorded in conventional approaches to ERoEI analysis such as
Charlie Hall's methodology which has received widespread attention.
Moreover, the energy costs of private profit, borrowing money, paying taxes,
paying adequate wages to employees and other economic actors who make
part-time contributions to producing energy such as the energy employee's
health-care providers, auto mechanics, tax accountants, and other indirect
energy expenses at all levels, including, for instance, the appropriate
pro-rata share of the energy executive's insurance company's actuary, are
not counted. Thus, Gail - or anyone else - has no idea if EROI = 5 is
adequate or not.

In ERoEI* (pronounced "E R o E I star") as described at
http://dematerialism.net/eroeistar.htm and on my blog at
http://eroei.blogspot.com/ all of these and every other facet of energy
technology that influences sustainability and whether or not the technology
will actually be employed is considered; so, when the analysis is complete,
the analyst knows that an ERoEI* greater than 1.0 is adequate with as much
certainty as went into the collection of his raw data.


In "Energy in a Mark II <http://dematerialism.net/Mark-II-Economy.html>
Economy" I analyzed the meaning of the ratio of Total Energy Budget over
Gross Domestic Product for an entire economy, some form of which the DOE
records for every nation and every year. It might be interesting to obtain
similar ratios for each individual sector including the government and
finance sector to aid in converting Gail's monetary expenses into
appropriate energy expenses. If nothing else, we could then determine if
Gail's threshold figure of 5.0 make any sense at all.


[1] In "Energy in a Mark II
<http://dematerialism.net/Mark-II-Economy.html> Economy" I employed the
figure of 22% of the total energy budget that the US Department of Energy
(DOE) charges directly to commerce. Of course, some portion of the energy
consumed by transportation and manufacturing should be charged to commerce
and finance as well. Moreover, if an entrepreneur extracts a large profit
from his - usually subsidized - renewable energy business and builds an
overly large house, additional energy costs should be charged to the energy
installation. This amounts to some fraction of the energy charged by the
DOE to the residential sector. In "Energy in a Natural Economy
<http://dematerialism.net/ne.htm> " I found a rough estimate of the energy
overhead of the US market economy by looking at Bureau of Labor Statistics
data.



Tom Wayburn, Houston, Texas


P.S. In the entry of July 11th of http://eroei.blogspot.com/ I wrote the
following paragraph in connection with establishing a reasonably sane
monetary system partly in response to Gail Tverberg's list (see below):



Special Characteristics [of a monetary system] Needed to Avoid Economic
Collapse

Our crisis has a physical component and an imaginary component. The physical
component comes from limitations in the quantities of land, water,
consumable energy, and the environment itself. The ecological footprint of
the human race exceeds the carrying capacity of Earth. The imaginary
component is instability in the monetary system caused by excessive debt and
excessive monetary inequality. To ameliorate the physical crisis we must
eliminate the imaginary one. I do not mean that indebtedness, poverty, and
wealth are imaginary; but, rather, that we can eliminate all three with the
application of our imaginations without affecting the physical universe.
Stabilizing our population and reducing our ecological footprint will
ultimately have a desirable effect upon the universe.

Regardless of what the people want, the owners of the country want to retain
their positions of power, privilege, and wealth. Naturally, they despise the
idea of government control of the economy and the means of production;
however, when a crisis arises that they cannot handle, they readily accede
to crisis socialism to save them. During World War II, without adopting
socialism completely, they allowed rationing, wage and price control, and
management of vital industries by government employees even if they were
paid only one dollar per year.

To respond appropriately to resource and environmental limits, we need to
establish crisis socialism. However, to eliminate debt, we need to repudiate
the US dollar; and, to eliminate inequality, we need to pay everyone the
same even if no work can be found for them to replace the inessential work
from which they were furloughed to reduce our consumption of fossil fuels
and our ecological footprint. After all, the requirement that every citizen
does useful work to get paid and the requirement that the pay should be
commensurate with the value of the work are completely imaginary. The idea
that everyone should be allowed to get as much money as he can is completely
wrong. (One of the reasons Dematerialism is right and everything else is
wrong is that any society in which it is possible for one person to acquire
more wealth than another is doomed.)

*Adequate Return for All Elements Required for Energy Investment*

In order to extract oil or create biofuels, or to make any other type of
energy investment, at least four distinct elements described in Figure
1: (1) adequate payback on energy invested, (2) sufficient wages for
humans, (3) sufficient credit availability and (4) sufficient funds for
government services. If any of these is lacking, the whole system has a
tendency to seize up.

EROI analyses tend to look primarily at the first item on the list,
comparing "energy available to society" as the result of a given process
to "energy required for extraction" (all in units of energy). While this
comparison can be helpful for some purposes, it seems to me that we
should also be looking at whether the*dollars collected*at the
end-product level are sufficient to provide*an adequate financial return
to meet the financial needs of all four areas*simultaneously.

My list of the four distinct elements necessary to enable energy
extraction and to keep the economy functioning is really an abbreviated
list. Clearly one needs other items, such as profits for businesses. In
a sense, the whole world economy is an energy delivery system. This is
why it is important to understand what the system needs to function
properly.

More here

http://www.theoildr <http://www.theoildrum.com/node/10052> um.com/node/10052

http://www.theoildr <http://www.theoildrum.com/node/10052> um.com/node/10052

Sustainability, Quasi-Sustainability, and Feasibility

An energy technology is sustainable if and only if ERoEI* (E-R-O-E-I star) is no less than 1.0.  An entire society is sustainable if and only if the compound ERoEI* of its entire mix of energy technologies is no less than 1.0.   Early on, recognizing that a community can persist for quite a long time if most of the characteristics of ERoEI* are satisfied, we considered quasi-sustainability; that is, during a transition period between fossil fuels and renewable energy, we must tolerate some slight environmental destruction and diminution of our storehouses of essential natural resources because of the large proportion of the energy investment for most renewable energy technologies that must be paid before any energy is returned.

I think it might be useful to define "feasibility" as something different from sustainability.  For example, we might say that a renewable energy is feasible if no more characteristics of ERoEI* are relaxed than are consistent with the community standards and laws of the land currently.

A Question about Sustainable Products Was Posed at ResearchGate (RG)

(In the post of July 13th, I wrote 2N where I should have written 6N.  When I tried to correct it, I found a bug in Blogger that prevented me from eliminating the original post with the mistake.  Today, I decide to replace that confusing double post with a new (corrected) post.)

My first comment on the question of "sustainable products" was as follows:

This is a not so much a difficult question as a question the answer to which is difficult to state clearly and believably. Let us begin by assuming that the whatever technology is employed to manufacture a product is coupled with or matched to an energy technology and the sustainability - or more likely quasi-sustainability - of the couple or pair is evaluated as a single process.

The second part of my response:

At eroei.blogspot.com, I have been discussing sustainability of energy technologies and, in a natural extension, of all other products consumed by the stakeholders in the energy technologies, which, in a certain sense, is everybody. Early on, it has been necessary to consider quasi-sustainability; that is, during a transition period between fossil fuels and renewable energy, we must tolerate some slight environmental destruction and diminution of our storehouses of essential natural resources because of the large proportion of the energy investment for most renewable energy technologies that must be paid before any energy is returned. When all is sustainable, the phase-space trajectory* of the environment will be required to be periodic and close to the expected natural trajectory, that is, the trajectory we might expect without human influence. Moreover, the steady state of our population and our economy must be matched by the steady state of our storehouses of natural resources.  In all of this, I assume that the Matching Problem has been solved nearly optimally, that is, consumers of energy are matched to appropriate energy technologies to minimize our total ecological footprint.  Please read the various pieces on the blog that go to defining ERoEI*.  In the meantime, I will try to gather them in one article to be posted on the blog and on Dematerialism and Energy. 

Finally, if production of a product and reasonable expectations for its use meet the same requirements they would meet in a globally sustainable economy, we might begrudgingly accord it the term "sustainable".  I say begrudgingly, because nothing short of global sustainability including the necessary political changes is satisfactory in the long run.  Clearly, economic inequality is anathema to sustainability at every level.

*      Suppose I have a system composed of one particle. If I plot the position and momentum of my particle on a piece of paper, it can be represented by one point. Its behavior in time can be represented as a one-dimensional curve in a six-dimensional space. This is its trajectory. But, the earth including its atmosphere is composed of very many particles. Nevertheless, the positions in three dimensional space and the three coordinates of momenta of all N of them - where N is a very large number - can be represented by a single point in a 6N-dimensional space and the trajectory of Earth and its atmosphere is a one-dimensional curve in a 6N-dimensional space - the phase space of Earth and its atmosphere.

Time Dependency in Net Energy Analysis

I need to add a comment here about time dependencies.  Since the prices of energy products and, perforce, the Energy over GDP ratios vary from moment to moment, ERoEI* is time dependent as well.  This is not a defect since what will work at one time may not work at another and any analysis worth doing must reflect this.  One hopes only that things change relatively slowly and that the margin of feasibility (if it is ever achieved) is sufficiently wide to accommodate reasonably slow change.  In most cases, time averages over ordinary fiscal periods are good enough for policy makers.  The most encouraging fact of all is NOT that the economic system cannot be changed – clearly it can as it is mostly incorporeal – but that, by replacing the market with efficient and honest economic planning, two-thirds or more of the energy budget can be eliminated without any diminution whatever in the standard of living per capita, which, of course, ought to be the same for every person who does not violate the fundamental principles of sustainability, e.g., to reproduce himself only or not to reproduce.  On what basis could any other distribution be justified?

Computer Simulations in Economics

On August 7^th, Jay Hanson posted the hyperlinked paper “Blame the Economists” at http://www.ritholtz.com/blog/2013/08/blame-the-economists/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

This is a very useful piece for those of us who wish to organize our objections to theoretical economic thinking.  I say “theoretical economic” not because I think that economists have discovered a useful theory such as relativity or evolution but because I don’t wish to discourage the type of thought that answers questions like “What resources do I need to live?”, “How can I reduce my ecological footprint without diminishing the quality of my life?”, etc.  In particular, it sheds some light on questions that have been bothering me. For example, “Why do economists employ fancier math than the physical mathematics I learned at Courant Institute, which is pretty much typified by the math in Courant and Hilbert, *Methods of Mathematical Physics, Vols. 1 and 2*?” 

I think the principal reason the simulations done by economists don’t work is that they try to model the entire economy which is much too complex for them.  It wasn’t necessary for me to use anything I could not have learned in high-school to do simple enough simulations that I can be certain that what I learned from them is absolutely true.  That is not to say that what I did in “Energy in a Mark II Economy” is simple.  I am not sure that I am looking forward to figuring it out once again if I want to use the Mark II spreadsheets to investigate a slightly more complex Mark III economy as per the post of July 26^th at http://eroei.blogspot.com/ .  In any case, though, if you do figure it out, you, too, can be reasonably certain that what you learned is absolutely true.  It all depends on whether or not the rules of arithmetic are correct and whether or not I have made a mistake.  How about some genuine peer review (as opposed to cronyism)?

Must every "renewable" energy technology incur a fossil-fuel debt that will never be repaid?

Gail Tverberg, the actuary, wrote the following in the article posted by Jay Hanson:

”Commenters frequently remark that such-and-such an energy source has an Energy Return on Energy Invested <http://en.wikipedia.org/wiki/Energy_returned_on_energy_invested> (EROI) ratio of greater than 5:1, so must be a helpful addition to our current energy supply. My finding that the overall energy return is already too low seems to run counter to this belief. In this post, I will try to explain why this difference occurs. Part of the difference is that I am looking at what our current economy requires, not some theoretical low-level economy. Also, I don’t think that it is really feasible to create a new economic system, based on lower EROI resources, because today’s renewables are fossil-fuel based, and initially tend to add to fossil fuel use.”

It is true that alternative energy installations that employ photovoltaic cells, for example, incur heavy energy investment expense before any energy at all is returned.  In a US-type market economy, the fossil-fuel debt that must be incurred early in the life cycle of such an installation might never be repaid.  That is because, in a market economy, significant energy investment expense is required just to operate the market ^[1].  This expense is never recorded in conventional approaches to ERoEI analysis such as Charlie Hall’s methodology which has received widespread attention.  Moreover, the energy costs of private profit, borrowing money, paying taxes, paying adequate wages to employees and other economic actors who make part-time contributions to producing energy such as the energy employee’s health-care providers, auto mechanics, tax accountants, and other indirect energy expenses at all levels, including, for instance, the appropriate pro-rata share of the energy executive’s insurance company’s actuary, are not counted.  Thus, Gail – or anyone else – has no idea if EROI = 5 is adequate or not. 

In ERoEI* (pronounced “E R o E I star”) as described at http://dematerialism.net/eroeistar.htm and on my blog at http://eroei.blogspot.com/ all of these and every other facet of energy technology that influences sustainability and whether or not the technology will actually be employed is considered; so, when the analysis is complete, the analyst knows that an ERoEI* greater than 1.0 is adequate with as much certainty as went into the collection of his raw data.

In “Energy in a Mark II Economy” I analyzed the meaning of the ratio of Total Energy Budget over Gross Domestic Product for an entire economy, some form of which the DOE records for every nation and every year.  It might be interesting to obtain similar ratios for each individual sector including the government and finance sector to aid in converting Gail’s monetary expenses into appropriate energy expenses.  If nothing else, we could then determine if Gail’s threshold figure of 5.0 make any sense at all.

[1]   In “Energy in a Mark II Economy” I employed the figure of 22% of the total energy budget that the US Department of Energy (DOE) charges directly to commerce.   Of course, some portion of the energy consumed by transportation and manufacturing should be charged to commerce and finance as well.  Moreover, if an entrepreneur extracts a large profit from his – usually subsidized - renewable energy business and builds an overly large house, additional energy costs should be charged to the energy installation.  This amounts to some fraction of the energy charged by the DOE to the residential sector.  In “Energy in a Natural Economy” I found a rough estimate of the energy overhead of the US market economy by looking at Bureau of Labor Statistics data.

In the entry of July 11^th of http://eroei.blogspot.com/ I wrote the following paragraph in connection with establishing a reasonably sane monetary system partly in response to Gail Tverberg’s list, which I now repeat.

Special Characteristics [of a monetary system] Needed to Avoid Economic Collapse

Our crisis has a physical component and an imaginary component. The physical component comes from limitations in the quantities of land, water, consumable energy, and the environment itself. The ecological footprint of the human race exceeds the carrying capacity of Earth. The imaginary component is instability in the monetary system caused by excessive debt and excessive monetary inequality. To ameliorate the physical crisis we must eliminate the imaginary one. I do not mean that indebtedness, poverty, and wealth are imaginary; but, rather, that we can eliminate all three with the application of our imaginations without affecting the physical universe. Stabilizing our population and reducing our ecological footprint will ultimately have a desirable effect upon the universe.

Regardless of what the people want, the owners of the country want to retain their positions of power, privilege, and wealth. Naturally, they despise the idea of government control of the economy and the means of production; however, when a crisis arises that they cannot handle, they readily accede to crisis socialism to save them. During World War II, without adopting socialism completely, they allowed rationing, wage and price control, and management of vital industries by government employees even if they were paid only one dollar per year.

To respond appropriately to resource and environmental limits, we need to establish crisis socialism. However, to eliminate debt, we need to repudiate the US dollar; and, to eliminate inequality, we need to pay everyone the same even if no work can be found for them to replace the inessential work from which they were furloughed to reduce our consumption of fossil fuels and our ecological footprint. After all, the requirement that every citizen does useful work to get paid and the requirement that the pay should be commensurate with the value of the work are completely imaginary. The idea that everyone should be allowed to get as much money as he can is completely wrong.  (One of the reasons Dematerialism is right and everything else is wrong is that any society in which it is possible for one person to acquire more wealth than another is doomed.)

Sustainability in a Mark III Economy

 It's about time I said a word or two about energy returned over energy invested.

The Mark I economy had one useful good, which was called a potato for lack of better term.  If a citizen of that economy ate one potato a day, he survived and might be happy; otherwise, he perished.  This convinced me that it was necessary to share equally in a society where it was impossible to be happy while others were miserable or dying.  The Earth can barely produce one potato per person per day as it is.

The Mark II economy had five sectors as described at http://dematerialism.net/Mark-II-Structure.html, which makes it sufficiently complicated that I was able to deduce the results reiterated in the post of July 13th.

I would now like to further subdivide the five sectors sufficiently to demonstrate the methodology of ERoEI* as a Measure of Feasibility, the post of November 30, 2012, near the beginning of this blog.  For example, mining should be a separate sector; manufacturing should be divided into mining equipment manufacturing, as well as manufacturing for energy technology, agriculture, transportation, commerce, construction, consumer goods, and manufacturing itself.  Similar subdivisions are necessary in other sectors, but not agriculture, as we may continue to think of food as one thing, which might as well be potatoes.

This is a big job; and, it wouldn't break my heart if someone else carried it out and took all the credit.  What galls me is people taking so much credit for bad thinking, bad methodology, and bad science that supports the status quo and leaves the power and privilege to the owners of the country.

Energy in a Mark II Economy

It occurred to me today that almost no one is familiar with what I learned in "Energy in a Mark II Economy"; namely, that for an energy technology with a high ERoEI of 10.0 such as conventional oil, gas, or coal, it is possible to support a market economy for which 22% of the total energy budget goes to middle men (commerce, marketing, and finance); but, for an energy technology with ERoEI of 3.0, which is a generous estimate for a renewable energy, it is not. See http://dematerialism.net/Mark-II-Economy.html.  I will enlist the aid of Dave Kimble, my de facto editor, to suggest appropriate changes to the executive summary of that paper to make the conclusion clear.

 

We Need a New Monetary System: The complete essay as far as I got

I have entered the various parts of the following in my blog at http://eroei.blogspot.com/ ; however, since it is best read as a single idea, I have posted it to my friends, colleagues, allies, comrades, and detractors on two Yahoo! forums.  (I hope my Australian friends are not offended by a post that applies strictly to the US.)  Jay Hanson says that, if we cannot fix government, we can’t fix anything.  I agree.  We do not have to find a way to bell the cat; we need only install a government dedicated to achieving sustainability insofar as it is possible and doing the best it can otherwise.  This government must be composed of qualified scientists, engineers, ecologists, and other legitimate scholars - independent, with no corporate ties.  When the economic plan is in place, the exchange of US dollars for ANYTHING should be an extraditable capital offense.  [I am against capital punishment; therefore, I am forced to endorse a new monetary system only for those who join in an "open conspiracy" in the sense of H.G. Wells.  Then, capital punishment amounts to loss of membership in the conspiracy. The "open conspiracy" requires more discussion in the next edition of this open-ended paper.]

We need a new monetary system.

And if thy right hand offend thee, cut it off, and cast it from thee: for it is profitable for thee that one of thy members should perish, and not that thy whole body should be cast into hell. - Matthew 5:30

Defects of our present monetary system

 My Incomplete List

I do not need a list of defects to be offended by the current monetary system of the US; however, I shall mention a few fatal flaws that are likely to lead to collapse soon.

 1.  Like all fiat money the United States dollar (USD) is not tied to any real wealth such as gold bullion, barrels of oil, or acres of fertile soil.  Its value depends upon what people will give for it.  (Let us agree for the purposes of this argument only that the presence of United States military personnel in hundreds of foreign countries has nothing to do with the willingness of foreign nationals to accept it in payment for real goods.)  The quantity of money can be altered by the issuance of debt instruments by banks and others - especially the federal government; hence, we are always susceptible to monetary inflation, that is, inflation caused by a larger supply of money chasing the same or a smaller amount of real goods and services.

 2. The rules according to which economic transactions are conducted so favor talented money managers that they are able to acquire a disproportionate share of the money.

 3. Etc.  (Items can be added to this list by edits and comments; but, for now, I would like, once again, to refer to Gail Tverberg’s list and paste it below.)

 Gail Tverberg’s List 

 Primary problems

 1.   Funds are not available to pay for fossil-fuel subsidies for renewable energy projects.
 2.   Wages consistent with financial solvency and private profit are too low.
 3.   Energy production companies, especially heavily front-loaded renewable energy production such as photovoltaic solar energy installations, need to borrow money that the credit system can no longer supply.
 4.   There are insufficient financial returns to pay taxes desperately needed by governments.

 Secondary problems 

1.   Private profit from energy production is seen as inadequate by corporations.
2.  Rent cannot be paid for land used in energy production. This cost might be highest in bio-fuel operations, but it belongs to every process that harvests sunlight in real time.
3.   Insufficient funds are available to prevent pollution and mitigate its effects.  These costs are never paid unless mandated by law - if then.
4.  Energy production companies do not pay to prevent mineral depletion and degradation of soil or even try to nor do they pay fines for failure.
5.  Energy producers do not account for limitations in so-called free energy.  For example, there ought to be a cost premium charged to the process for using limited coastal or off-shore wind power sites.

In conclusion 

Let us agree then to take the advice of the fictional Jesus.  I hope nobody thinks Matthew’s character didn’t have a single lucid moment.  It remains to discuss what sort of a monetary system we do need.

Monetary Systems in General

Good old Dave Kimble has offered to help me write the following in plain English, which I am trying to learn.  It deals with community currency because of the perceived benefits of decentralization.  What is needed now is a central (national) currency; but, the principal ideas in the following apply just as well if only they can be understood:

 

On Designing a Community Currency (January, 2007)

 Thomas L Wayburn, PhD

This is a draft - nay, a draft of a draft.  - Herman Melville, Moby Dick

To walk in money through the night crowd, protected by money, lulled by money, dulled by money, the crowd itself a money, the breath money, no least single object anywhere that is not money, money, money everywhere and still not enough, and then no money, or a little money or less money or more money, but money, always money, and if you have money or you don’t have money it is the money that counts and money makes money, but what makes money make money?  - Henry Miller, Tropic of Capricorn

 

Economic Value

 

Introduction

One of the principal reasons for replacing the current national monetary system is that money is created by banks when they lend more than the sum total of the money deposited with them.  This money cannot be repaid unless the economy grows, that is, the total cash value of sales and purchases is greater this year than it was last year regardless of the quantity of real wealth such as food, clothing, housing, energy represented by each unit of currency.  The total amount of currency must increase continuously; and, each unit of currency can be divorced completely from physical wealth.  We wish to replace this currency, which represents only a number in a computer somewhere and not anything tangible with a currency based upon measurable quantities of real physical wealth.

If there were one physical quantity, such as emergy (with an M), that could be used to measure all physical wealth - in particular, all wealth necessary to sustain human life on this planet - we would do well to base our new currency upon it.  We cannot do this at the present time for two reasons: (i) the emergy values of water, land, and human labor have not been established nor is there any on-going effort to establish them or even to determine how they should be established and (ii) temporarily the government will need to issue un-backed scrip with which to pay the workers to do the necessary work to transform the United States to sustainability.  The workers can use the scrip to purchase goods and services that formerly were paid for with United States dollars (USDs).  Hopefully, in time, the economy will be a net producer of real wealth and the new fiat currency will be redeemed with currency described below.  Clearly, among the necessary jobs will be the production of sufficient energy, food, and health care to sustain citizens who obey the new sustainability laws. 

I need to explain “sustainability laws” and to show that enough workers will be available for essential occupations after the government furloughs workers who serve the market currently but produce nothing that we actually need to live.  In “Energy in a Natural Economy”, I analyzed the Bureau of Labor Statistics data from one of the last years in which the United States produced almost everything it consumed.  We should now try to establish a small list of fundamental economic entities in terms of which all economic goods and services can be evaluated.

Currently, provided we use Howard Odum’s concept of emergy to as great an extent as currently possible, we can evaluate every economic good or service in terms of land, water, energy, and time.   Therefore, we could design a new rational monetary system with four types of currency: 

(1)    Emergy certificates that would pay for almost all economic goods and services in terms of energy properly weighted by transformities to account for the cost of conversion to a useful form

(2)    Water certificates to pay for fresh water as it is found in Nature - as opposed to desalinated sea water

(3)    Land certificates to pay a rent for all land use based upon ecological characteristics to be described later.  (Clearly, not all land has equal value.) 

(4)    Certificates to pay for the time spent by workers at essential jobs.  The government may not issue these any faster than they are needed to pay workers; so, they are not fiat currency in the sense that the USD is. 

The government needs to establish the conversion factors so that workers can pay for economic goods.

Special Characteristics Needed to Avoid Economic Collapse
Our crisis has a physical component and an imaginary component. The physical component comes from limitations in the quantities of land, water, consumable energy, and the environment itself. The ecological footprint of the human race exceeds the carrying capacity of Earth. The imaginary component is instability in the monetary system caused by excessive debt and excessive monetary inequality. To ameliorate the physical crisis we must eliminate the imaginary one. I do not mean that indebtedness, poverty, and wealth are imaginary; but, rather, that we can eliminate all three with the application of our imaginations without affecting the physical universe. Stabilizing our population and reducing our ecological footprint will ultimately have a desirable effect upon the universe.
Regardless of what the people want, the owners of the country want to retain their positions of power, privilege, and wealth. Naturally, they despise the idea of government control of the economy and the means of production; however, when a crisis arises that they cannot handle, they readily accede to crisis socialism to save them. During World War II, without adopting socialism completely, they allowed rationing, wage and price control, and management of vital industries by government employees even if they were paid only one dollar per year.

To respond appropriately to resource and environmental limits, we need to establish crisis socialism. However, to eliminate debt, we need to repudiate the US dollar; and, to eliminate inequality, we need to pay everyone the same even if no work can be found for them to replace the inessential work from which they were furloughed to reduce our consumption of fossil fuels and our ecological footprint. After all, the requirement that every citizen does useful work to get paid and the requirement that the pay should be commensurate with the value of the work are completely imaginary. The idea that everyone should be allowed to get as much money as he can is completely wrong.

More on Land, Energy, and Time

 

Land

 

We may assume, then, that every economic actor* in a community has been assigned a portion of contiguous land of equal value excluding the most desirable locations of all - normally coast lines, river banks, the best scenic outlooks, and the best locations for intensive energy collection, which will be retained by the community as part of the commons.  In many cases, this common land will be made available to economic enterprises owned in equal shares by their own workers according to the maxim that every worker should own his own tools - or, as stated in the ancient Hebrew rabbinical writings, a carpenter without tools is not a carpenter.  No person may control land upon which he does not live or labor.  The land upon which men and women labor is held in common by all of the workers who labor upon that simply-connected (not disjoint) piece of land.

* Dependent children are not economic actors.

Energy

 

Energy* is the most important fundamental economic quantity.  It should be the basis of every currency.  It is the life’s blood of every economy.  Howard T. Odum is famous for the following words: 

Real wealth is food, fuel, water, wood for houses, fiber for clothes, raw minerals, electricity, information, …

·       A country is wealthy that has more of this real stuff used per person.

·       Money is only paid to people and is not proportional to real wealth.

·       Prices and costs are inverse to real wealth.

·       When resources are abundant, standard of living is high, but prices low.

·       When resources are scarce, prices are high, more money goes to bring resources, a  few people get rich, but the net contribution to prosperity is small.

·       Real wealth is mostly the work of nature and has to be evaluated with a scientific ... measure, emergy.

Therefore, to place a value on an economic good or service, the first quantity to be assigned is the emergy (with an M) or embodied energy.  I have completely reworked Odum's great concept.**

* In this essay, and in the rest of my writing, the term energy refers always to either Gibbs availability or Helmholtz availability depending upon context.  Please see http://www.dematerialism.net/Chapter%202.html#_Definitions  This is not a frivolous personal definition.  To go about referring to energy consumption is barbarous and technically wrong! 

** See http://dematerialism.net/onemergy.htm

Time

 

The only time a person has is the time of his life.  Clearly, every person’s life is equally valuable to himself.  Until a thousand years have passed after an individual has died, there is no valid way to evaluate his contribution to the community.  Therefore, every person’s time must be assigned the same value, namely, one hour per hour since time is fundamental and cannot be evaluated in terms of anything else, least of all money.

But, it is said, “Some people spend many years in engineering school, medical school, apprenticed to a tailor, etc. preparing to render useful services to the community.  Clearly, the time of such people’s life when they render such services to the community must be compensated at a higher rate than the time of unskilled laborers with no preparation.”  This can be finessed in the following way:  Time spent learning a skill must be compensated at the same rate as it will be compensated when they are rendering service to the community.  Thus, if a person spends 1000 hours* in classrooms being instructed in the great art of engineering with an average of nine other people, he will have earned 900 hours that he can use to support himself and others until he is able to contribute time practicing engineering.  (Each student contributes 100 hours to the time spent by the professor.)  In addition, he will spend about 2000 hours studying alone.  This too represents earned time with which he can buy books each of which carries a price tag compounded of the land, water, energy, and time that went into its construction by the author and the book binder to name only two.

* The number 1000 is chosen for convenience in writing this essay not as a reflection of the actual time needed to learn engineering.

Accounting for Indirect Energy Costs:  A Possible Misunderstanding

The following paragraphs are my response to Gail Tverberg's latest post on Our Finite World.  You may well ask, "Why all this fuss about Gail Tverberg?"  The answer is that she has the attention of a rather large audience for a Peaker* or a Doomer** and I do not.  It strikes me as my duty to influence principally those who have the best chance to influence others, examples of which are Jay Hanson and, of course, Gail.

Certainly, the ERoEI for the principal energy technologies are too low to support an American-type economy.  Certainly, this accounts for pressure on the financial system that manifests itself in other monetary difficulties listed by Gail Tverberg, to wit:

Primary problems

1.   Funds are not available to pay for fossil-fuel subsidies for renewable energy projects.
 
2.  Wages consistent with financial solvency and private profit are too low.
 
3.  Energy production companies, especially heavily front-loaded renewable energy production such as photovoltaic solar energy installations, need to borrow money that the credit system can no longer supply.
 
4.  There are insufficient financial returns to pay taxes desperately needed by governments.

Secondary problems

1.   Private profit from energy production is seen as inadequate by corporations.

2.  Rent cannot be paid for land used in energy production. This cost might be highest in biofuel operations, but it belongs to every process that harvests sunlight in real time.

3.   Insufficient funds are available to prevent pollution and mitigate its effects.  These costs are never paid unless mandated by law – if then.

4.  Energy production companies do not pay to prevent mineral depletion and degradation of soil or even try to nor do they pay fines for failure.

5.  Energy producers do not account for limitations in so-called free energy.  For example, there ought to be a cost premium charged to the process for using limited coastal or off-shore wind power sites.

      .

Please notice that every monetary burden has an associated energy cost that should be added to the energy invested term of every energy technology or – and this is the hard part - to the combined energy technology of an entire economy after the matching problem has been solved using appropriate transformities in the sense of Odum.  This was discussed at length many years ago in Chapter 2 of On the Preservation of Species, the open-ended book in which I recorded my principal ideas for many years almost as a stream of consciousness.  Changes in the text came in the form of dated notes until I began to think that all of the mistakes had been found.  The other day, Dave Kimble noticed that the equation for the expected value of the information in my section on entropy was garbled; therefore, I must review the discussion of the matching problem and the determination of feasibility in that document before entering it in this discussion.  Nevertheless, I can address two possible sources of misunderstanding with respect to that methodology at this time: (i) the approximate nature of much of the data and (ii) the seemingly endless recursion necessary to include every level of indirect costs, i. e., indirect costs of indirect costs of indirect costs etc.  Is this a convergent process?

Undoubtedly, it will be a painful task to determine and to maintain the proper values for transformities and emergies that are necessary for an in-depth analysis of direct – and, with greater difficulty, indirect – energy costs.  Indeed, the values, once attained, must be maintained because energy extraction and conversion and manufacturing processes are constantly changing.  Moreover, the matching problem must be solved and resolved to account for the latest information.  Clearly, these calculations cannot be made with infinite precision.  There will be estimates and approximations.  This is true of all scientific computations and does not render them useless.  An approximate ERoEI that accounts for the cost of government, the standards of living of the participants, the prevention or reparation of environmental impact, the maintenance of stockpiles of essential materials by moth-balling, recycling, and mindful manufacturing etc. is better than a wild guess as to how high it needs to be. 

Finally - and this is the point alluded to in the title – although one should expect to encounter many levels of indirect costs, that is, indirect costs for indirect costs to the Nth degree, the process must come to an end because the total number of person-hours is finite as is the total energy budget (TEB) of the world.  A monotonically increasing Energy Invested term that grows as each indirect energy cost is added to it must finally stop growing because it is bounded above by the TEB.  I like to carry out the contribution of human labor by dividing the population into salary cohorts and employing average standard of living data.  As is often said, individual human behavior is unpredictable but aggregate human behavior is not.

One of my next posts will discuss how to solve monetary problems.

* A Peaker is a person who accepts Hubbard's theory of Peak Oil.

** A Doomer is a Peaker who believes that Peak Oil will result in "the end of the world as we know it" (TEOTWAWKI).