* 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, August 9, 2013

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 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, 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.)

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