* To establish feasibility, it is necessary to include some items in the energy invested term that are normally not thought of as investments. For example, the cost of sequestering such carbon dioxide as will be produced by the energy technology under investigation should be added to the energy invested term because feasibility requires that our society be sustainable (until astronomical events intervene). In this thought experiment, the support of an alternative energy technology would be the sole concern of every citizen.

Friday, June 28, 2013

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).

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