 | Wind power set to decline under Obama? | The Oil Drum: Europe | SER-2 [03] Communication of the Security and Solidarity Action Plan |  |
247 comments on The energy efficiency of energy procurement systems
Comments can no longer be added to this story.
| Show without comments | PDF version
247 comments on The energy efficiency of energy procurement systems
Comments can no longer be added to this story.
| Show without comments | PDF version
User login
Personnel
Editors
Contributors
Peak Oil Primers
Archives
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- March 2006
Vital Trivia
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
Well said Euan. Energy and natural resources are what we have to spend. And those with the money currently control the energy. How we spend our energy is of the utmost importance.
There are two other related issues I would address:
1)Non-oil energy technologies 'harness' energy with very different properties (density, intermittency, spatial diffusion, etc.) than oil - nor are all energy alternatives of equivalent quality with respect to social use/demand. The current crop of economists parse all commodities into money - which in the process nullifies all physical differences between the commodities themselves. This leaves the market especially unqualified to predict any change in physical relationships between the commodities that society may depend on that have production time lags more than a few months to a year. Electricity is currently more expensive per BTU than liquid fuels, yet in the coming years, liquid fuels will become much more limiting. So the net energy graph you indicated, to be holistic, must account for TIMING of energy flows, and the TYPE of energy that societies infrastructure currently, or in the future will require. On a business as usual path, liquid fuels will be the dominant limiting energy input for some time to come.
2)the reason ERoEI in itself isn't the whole story is it assumes non-energy inputs remain in constant proportion whichever direction the energy efficiency of energy procurement (ERoEI) moves. If a low ERoEI process (say 3:1 netting out 2) replaced a higher ERoEI technology (say 9:1 netting out 8), this in itself wouldn't be deleterious. The problem would arise if 4 times as much of some other limiting input also had to be used (like land, water, soil, GHGs, etc.) High quality crude oil required little of these other inputs so a big problem in moving to lower energy gain systems is the vast amount of non-energy inputs required. If a 3:1 process Z somehow didn't need any land, water, minerals, etc. we could scale it Z^n times and it would solve the energy crisis. In sum, net energy is the KEY statistic policymakers should be spending resources in trying to assess, but they also need to look at natural resource returns on other limiting resources. We should be optimizing the return of a portfolio matrix of limiting resources, many of which are currently not included in the market system, and others which are priced incorrectly (due to economists conflation of biophysical work necessary outside of 'dollars').
In sum, it is feasible that new oil and gas fields have far inferior 'energy returns' (and financial returns) than SOME alternatives. So even though spending energy on them would be better allocated elsewhere, we need those liquid fuels in order to create a demand side infrastructure that can thrive beyond oil. So again, ERoEI is vital, but TIME and QUALITY need to be considered as well.
Well, presumably the current crop believes that prices are the result of marginal conditions (the intercept of supply and demand), which means that the prices themselves are specific to a particular set of circumstances. This has always been a problem with aggregate measures like GDP, national wealth, and the like. Various policies, reallocations, etc., change the prices, or so the theory goes. Economists frequently ignore their own theory on this point, though...
More to the point, I've been lurking these boards for a little over a month, and a lot of the issues related to energy "aggregation" remind me of the capital controversies that have emerged over various periods in the development of economic thought. The Cambridge rounds seem the most relevant, when the question was roughly about whether capital could be sensibly thought of as some aggregate, in the presence of heterogeneity of the underlying goods (the "sensible" applies to the notion of a supply of capital). A billion dollars of tractors cannot be magically turned into a billion dollars of greenhouses...
In a growing world with no forseeable limits, I think capital COULD be aggregated as such. Now I don't think it can (though most would disagree).
Yes, I disagree ... it never could be, so it still can't be. Or it always could be and it still can be.
Depending on whether you mean plant and equipment and productive capacity, or accumulated stock of financial assets. With the former, the aggregation for the normal purposes was always a polite fiction, while with the latter, it still can be aggregated, its just that people don't like to do it because they don't like what's happening to the total given the "financial obligations that can and will in fact be met" qualification.
Consider modern capitalism as an economic system that allocates its resources by encouraging individual citizens to decide to which group of strangers engaged in productive enterprise to entrust their wealth tokens, they being motivated to do so by a common expectation that the value of the obligations thereby created will become greater than that of the wealth tokens they handed over.
Whatever your definition of "capital", whatever your view of whether it could in the past be accumulated, or will in the future be capable of being accumulated, permanent economic contraction seems likely to bring the end of capitalism as a dominant feature of civilization.
Nate,
Might not some of the other factors be converted into energy equivalents since energy use would be involved in transforming or acquiring those resources. In other words, things like transporting water to a site would involve second-order ERoEI inputs. In each of the cases I have been looking at, the limiting factor (other than energy) could be mitigated if we had the energy to do so. Thus it still comes down to an energy problem when looked at that way. At least that has been my thinking. Interested to hear your thoughts.
George
Technically yes, but the amount of energy to remediate polluted water from say tar sands or Marcellus nat gas drilling would be extreme, and to parse that into energy terms would then make the energy return less meaningful - energy return is the biggie no doubt, but in the end we need a portfolio approach, just like in finance. To take it one step further, we want the highest return on scarce resources adjusted for risk (not just mean return). Same goes for energy (high standard deviation on biofuels, solar, wind, etc. though with more installations the dispersion on techs like wind decreases).
Nate, I believe the word for what you propose is "hubris".
cfm in Gray, ME
Ahem, shouldn't that be how THEY spend THEIR energy? is of utmost importance to THEM .
From where I sit, in a position where I don't control much of anything, I'm getting the impression that those who do control the energy don't give a rodent's rear end about the rest of us. Maybe I missed something?
They dont know us personaly so why should they care about us? It is part of human nature to only care about those who are close to us or people we have a connection with, friends and family.
Hi Nate
I don't have the time or expertise to do it, but somebody should put together a post concisely summarizing the key factors our governments should consider when evaluating energy sources -- i.e. Which sources deserve the most priority in allocating our dwindling energy/nat.resources/time. There's a lot of good discussion, but I haven't seen a post that sums it all up.
Perhaps the list should look something like this:
1. ERoEI > 1 (& the larger the better)
2. Rate of net energy production
3. Non-energy inputs for energy procurement (ex: water, land, top-soil, forest, metal ores, etc.)
4. waste output absorption limitations (ex: CO2, radioactive waste, heavy metals, waste heat, etc.)
5. Inputs required for infrastructure build-up/upkeep (ex: energy rosources, steel, copper, time, etc.)
These are just off the top of my head. Someone really smart at TOD should maybe prepare something along these lines that could be sent to the King -- like Heinberg's Real New Deal document.
thanks -- Dan
I would add payback period to your list. Longer is worse, especially in the present economic climate. The longer the payback period, the longer it is until the capital investment is recovered and freed to be re-applied to other capital projects. Longer payback periods also tend to be associated with more iffy assumptions and uncertainties; what is supposed to be a 25 year payback period could easily end up actually being 30 or 40 or 50 years - or never. At a certain point, you also have to start looking at how the payback period stacks up against the useful life of a project; you want to avoid getting on a "treadmill", where as soon as a project has broken even, you have to start thinking about replacing it.
We just don't have the horses to accomplish this in our spare time. Mandating that energy efficiency of energy procurement happened in the 1970s but has long been forgotten - data is sparse - I send this stuff to API, Matt Simmons (who recently said we nee $100 TRILLION to upgrade our rust/iron ore in energy delivery systems - I haven't heard back) -very few view the problem in these terms because they (like I) have been trained in dollars - you have to be able to look out a few steps -Chu/Holdren and others should be conducting massive research on this topic and it should be married with equivalent research on our 'ends' somewhere else in government. Instead we will evaluate things via the fantastically fast moving target of dollars.
Your suggestion is a good one - but someone more connected than us is going to have to step up -we've tried for years to even get people thinking in these terms - and many before us as well (this is related to Technocracy movement of 70 years ago...).
At least there are scientists in DC now - but even scientists succumb to politics, and the needs of the moment - they just draw the line sooner (or they should).
Nate certainly has it right, this needs to be done at the top, where the resources to do it could actually be mustered. but...
I vaguely remember back in the day Nixon giving a speech and pointing up America's current and potential productivity (I think he was equating GDP with productivity) PER SQUARE FOOT. I remember cringing, since the long term costs incurred by that productivity were always ignored. Back then these costs were always very poorly defined and lumped into that amorphous under the radar blob called 'social costs' (calling attention to their potential enormity never endeared me to my economics instructors either). By the end Reagon's time 'social costs' weren't even mentioned anymore. Short term positive cash flow had become the only god worshipped.
The challenge of trying to get a true benefit cost analysis factoring long term costs and long term benefits--which takes in every aspect of as much of the ERoRI equation as can be humanly modeled--into all government policy making is immense. It would be an almost a complete about face from what we have been doing for a long, long time. That some are undaunted and trying to do this yet is more than admirable. Unlikely as this about face is to happen, it is this society's only chance of going forward more or less whole.
Nate - I agree that non-energy inputs and outputs (pollution) need also to be considered and I believe what you are saying is that they may not be linearly correlated with ERoEI, tending to increase disproportionally towards the low end. And so I have to agree with that. But the point is that they are still positively correlated and ERoEI tends to underpin the cost of the whole energy procurement system.
The other issues of quality of energy outputs is of course vitally important. It may be argued that the quality of intermittent wind is lower than controlled hydro is lower than continuous output from nuclear. But that picture might change with plug in hybrid infrastructure that allows intermittent wind to be stored and to become more comparable with liquid fuel once it is bestowed with the quality to be used on demand for transportation.
Its kind of like in the old days when naptha was released into rivers since it was kerosene for lighting that was the target of refining. Along came electric lights, devaluing kerosene (for a while) and the internal combustion engine, transforming the value of naptha.
I would agree with this and am aware it is a framework valuation mess. But I am confident using something incorporating biophysical assets without corresponding markers will be beneficial to society in the intermediate and long run. As esoteric as these discussions become, hopefully someone will use pull these principles together into something meaningful. At what point does $1 trillion Swiss Francs or $500 billion US dollars change in it's ability to reflect true capital? Sometime soon methinks.