On Energy Invested

Thomas L. Wayburn, PhD in chemical engineering

Consider the following thought experiment:  Suppose a man sell a complete solar photovoltaic off-grid outfit installed on the customer's roof and maintained for thirty years for 100,000 USD and the ER/EI is accurately computed to be 5.0.  Now, change the price from 100,000 USD to 200,000 USD.  Does the ER/EI change?  I claim that it does because the seller will spend the extra 100,000 USD, which is pure profit based upon charging what the market will bear, on items that have embodied energy.  That energy must be included in the energy invested because, if the transaction had not taken place, it would not have been consumed.  Moreover, the additional energy can be found approximately by multiplying 100,000 USD by the E/GDP, which is not changed appreciably by a transaction of only 100,000 USD.  Most ER/EI studies do not account properly for business expenses, which, admittedly, would not occur in a properly planned economy.  Whenever the total cost (both capital costs and operating costs) of an installation for primary energy is multiplied by E/GDP to get an EI much higher than that acknowledged by the study, one can be pretty certain that business expenses have been omitted.  But, commerce consumes a large part of our energy budget.

Let us assume that the ER/EI takes place in a capitalistic setting.  Under such conditions, any business person will tell us that sales and marketing, for example, are a necessary adjunct to every business enterprise even the purveying of alternative energy.  Moreover, every salesman will admit that part of his business is printing copy, making phone calls, filing taxes, etc. Now, if the alternative energy technology cannot exist without the salesman, and the salesman cannot function without his phone, some portion of the sales and marketing of cell phones must be included in the energy invested (EI) in the solar installation.  This will indeed be small as it is only the appropriate pro-rata share of the energy expenses of marketing cell phones that should be charged to solar, but there are so very many such little indirect costs that they must add up eventually to more or less the 22% of the national energy budget of the US, say, that is devoted to commerce.  (Actually, they amount to more than 22% because commerce consumes commodities from other sectors.)

Now, the businessman will tell us, also, that unless there is some hint of profit, no one will venture forth to take the risks necessary in a capitalist society to launch an enterprise to manufacture and install solar power installations.  No one, in a capitalist economy, places an a priori limit upon the extent of the profits; therefore, if they should amount to half of the sale price of the installation, thus doubling its cost to the consumer, they must be considered a necessary adjunct to solar power.  Now, what are the energetic costs of profit?  They are any increase in the energy consumed by the profiteer over and above what he would have consumed had he not made that profit, which, if you will remember, is a necessary adjunct to solar power in a capitalistic economy.

But, you say, what if the profiteer puts the profit in the bank rather than consuming it?  Worse and worse, because of the multiplying effect of banking, even more money will enter the economy and eventually someone will use it to purchase energy either as exergy, which is the emergy of primary fuels, or emergy, itself, the embodied energy of manufactured goods.

In the combination of socialism and capitalism we have in the US, we must charge any technology for its share in supporting the government, whether by including taxes or by some sort of pro-rata computation that accounts for such 'services' of government as are used by the technology even if undesired (e. g., regulation) but not for punitive taxes.  On the other hand, it does seem unfair to credit the technology for tax subsidies that may be withdrawn momentarily.

Let us add a wrinkle to the thought experiment: Suppose we switch the enterprise under investigation from a purveyor of solar energy installations to a large nuclear power installation.  Now, since it is large, it requires a personnel department. Nothing unusual about that, except that the company decides to place it on the plant site for convenience.  Now, will you agree that the energy consumed daily by the on-site personnel office should be charged to energy invested?

Suppose, then, we agree to compute the Energy Invested by including the energy costs incurred by the commercial sector in running the market and the energy costs incurred by the stakeholders in any of the sectors to whom payments are made that have energy ramifications.  Let us call this term EI* to distinguish it from the EI (or EIo) normally computed in peer-reviewed journal articles that is independent of the political economy into which it is to be embedded.  The EI* of an energy technology under investigation pertains to the combination of a hypothetical system to produce energy and a hypothetical economy.  For example, in an American-style commuter economy, the energy cannot be produced without an investment of energy in commerce, commuting, and other consumer energy costs unique to US America; but, in a Natural Economy on an Earth as a Garden, the energy invested will be much, much less.  (We do NOT count the energy supplied by Nature in the Energy Invested.)

Houston, Texas

June 28, 2006