View
214
Download
0
Tags:
Embed Size (px)
Citation preview
The Macro-Macro View – Fundamental Principles
• Energy flow in systems• Work and products• Energy laws and consequences• The economy as a system
raw energy
raw material
system work
waste heat
product (low entropy material)
waste materialhigh potential/concentrationsource(s)
low potential sink
diffuse/degraded
boundary and geometry
A More Refined View
• The Economy: Energy, work, and goods/services
usersentropic decayconsumption
equipment, maintenance, & improvements
raw energywaste heat
energy capture & conversion
tools
physical assets
work processes
value added
stocks
usable energy
services
raw material
A Biological Analog
• Cell metabolism and structural component synthesis
food
digestion
metabolites
oxidation
mitochondria
ribosome – protein synthesis
all other synthesis
enzymes
complex organelles, membranes, etc.
raw components
ATP
heat losses
investment!
replacement of above structures from stocks of complex structures not shown
Information Flows
Exchange
message
message
Proc. A Proc. B
material sources
energy source
waste material sinks
waste heat
Information is transmitted between ‘entities’ to coordinate flows of matter and energy
Information is encoded in ‘messages’ using very little energy and matter
Processes contain mechanisms, ‘receivers’ that can amplify the information into work responses
Agriculture as an Economic System
solar energy
waste heat
food plants
farming equipment,
maintenance, & improvements
tools
physical assets
Humanpopulation
Laborfood
services
raw material
An agricultural society
discretionary goods
waste matter
labor
labor
hand tools, houses, etc.
Principles of Agriculture• Clear land area for single crop (monoculture)
– maximize the area of sunlight capture– plant crops close together, leave room to work
(cultivation)– when necessary, bring water to the field
• Choose plants that grow best in given climate• Choose seeds from best yielding plants
(horticulture)• Focus on grains and legumes for long-term
storage
Types of Agricultural Practices• Haphazard – throw the seed out there and
hope• Slash & burn – move on• Cultivate and renew soils – a systems
approach– crop rotation with legumes to renew nitrogen– tilling residues back into the soils after harvest– adding manures to revitalize organic content
• Permaculture (new) – whole systems/intensive cultivation
Solar Input to AgricultureAverage insolation ~ 250 W/m2 in sunny locations
Photosynthesis efficiency ~ 0.5 - 3%
Roughly requires about 0.75 – 1 hectare per person (vegetarian)
Trophic Levels
Microbial life
Humans
Photosynthesis
Warming
Plant Life – Primary Producers
nutrient release
Domestic Animals
Warming
& some PS
person
agriculture
shel
terclothing
transportation
ente
rtainm
ent
Labor support
Sun fossil fuels
wind energy
Our Energy CocoonOur Energy Cocoon
hydr
o en
ergy
infrastructure
health care
governmental
servicespr
otec
tion
utili
ties
serv
ices
work
orga
niza
tion
serv
ices
Petroleum
• Whale oil for lighting to kerosene (Gesner, 1853) a distillate of oil
• Drake, 1859, went looking for and found oil• Otto, 1876, first four-stroke internal
combustion engine• Diesel engines, turbines – burn fuels in the
cylinder for maximum power transfer• The prime movers using oil and natural gas
Transportation• Liquid fuels (stable and themselves
transportable) served best• Kerosene, gasoline (petrol), and even diesel
fuels are relatively light (compared with water)
• Modes of use of ICEs– Land: automobiles, trucks, and buses (trains
remained coal-fired until the early 20th century)– Water: large ships of all kinds– Air: airplanes of all kinds
Petroleum Composition• Oil types
– Kerogen (shale oil) to bitumen (oil sands)– Extra heavy (sour)– Heavy – Light, sweet or regular
• Components– Long chain molecules – oils– Medium chains – lighter liquid fuels– Short chains – gasses such from methane to
butane
Electricity
• Electro-magnetic force– Dynamos – producing electricity– Lighting and heating – using electricity– Motors – using electricity
• Conduction of current over long distances• Flexibility• Production from
– Heat engines (coal-fired boilers and steam turbines– Hydroelectric plants
Energy Return on Energy Energy Return on Energy InvestedInvested
• The energy content of the fuel varies by grade, so simple barrel counts are insufficient.
• Energy must be expended to invest in energy extraction and conversion infrastructure, e.g. derricks, platforms, ships, pipelines, refineries, tanker trucks, etc.
• Energy must be expended to search for new oil deposits
• Energy must be expended to drill and pump the oil• EROI (also called EROEI) is the ratio of energy
returned for the energy invested – energy returned is the net energy available
Bursting All Kinds of BubblesBursting All Kinds of Bubbles
Why is our economic reality one of many bubbles bursting?
The housing bubbleThe credit bubble
The stock market bubbleThe political bubble
The understanding of economics bubble!George Mobus University of Washington Tacoma
The Neoclassical ViewThe Neoclassical View
Firms Households
Products & Services
Land, Labor, & Capital
Purchases
Wages & Profits
Resources
Wastes
?
?
The Economy As A Closed System
8
8
George Mobus University of Washington Tacoma
The Economy
Externalities
Growth in a Closed SystemGrowth in a Closed SystemAssumptions in Neoclassical Economics
• Technology will always provide more efficient means of production
• Money supplies can be expanded through acceleration (higher rate of throughput)
• Debt can be used to finance expansion• Resources are essentially infinite (esp. with
substitution)
George Mobus University of Washington Tacoma
Obvious Fallacies Obvious Fallacies • Infinite resources
– Renewable (only if rate of renewal is sufficient)– Non-renewable (always depleting)
• Technology cannot be guaranteed to increase efficiency indefinitely – Carnot limit: Every machine has an upper limit – Moore’s Law not applicable to non-digital
machines
• Growth of natural (physical) systems is always constrained by negative feedbacks (covered later)George Mobus University of Washington Tacoma
• Embedding the human economy in the global ecology
• Ecology, economy – same root: ECOS Greek for HOME
Ecological Economics Ecological Economics – First – First Approximation of RealityApproximation of Reality
Households
PurchasesResources
Waste recyclingWages & ProfitsFirms
Organics, water, & gasses
Minerals
Solar energy
Geothermal energy
DepositsRecycling Processes
Solar energy
Purification
Ecological System
Economic System
Products & services
Land, labor, & capital
Photosynthesis
Fossil fuel
formation
Purchases
Biophysical Economics
• The Economy: Energy, work, and goods/services
usersentropic decayconsumption
equipment, maintenance, & improvements
raw energywaste heat
energy capture & conversion
tools
physical assets
work processes
value added
stocks
usable energy
services
raw material
The Concept of AssetsThe Concept of AssetsAnything and Everything Created
by Human Endeavor• Tangible
– Appropriated natural resources - land, cut timber, ores– Fixed (long-term) – plant, equipment, houses, etc.
• life expectancies in decades• wear down with age (entropy) and use, require maintenance
– Fixed (intermediate-term) – automobiles, appliances• life expectancies in fractions of decades (e.g. 1 ½ ~ 15 years)• wear out with use and need repair and replacement
– Supplies (short-term) – clothing, paper– Consumables (very short-term) – food, plastic packaging
• Intangible• Biomass
George Mobus University of Washington Tacoma
The Concept of Assets The Concept of Assets (cont)(cont)• Tangible• Intangible
– Has value but limited physical extent– Knowledge – human memories, documents, patents– Social relationships – organizations, institutions,
communities; process frameworks• Biomass – non-food related
– People– Pets– Ornamental plants
George Mobus University of Washington Tacoma
The Concept of Assets The Concept of Assets (cont)(cont)• Possession – exclusive right to use
– control over how and when used– may require on-going work to maintain
• Obtained through effort expended– created by work process– either directly produced or obtained via a value
transaction – traded for something of equal value• Presumed to have a future benefit
– can be used to accomplish a valued end– special case – tools, or capital, allow more work to be
done (increase income)
George Mobus University of Washington Tacoma
The Concept of Assets The Concept of Assets (cont)(cont)• Capital assets – Needed to produce more assets in the
future; Investment– Physical plants, equipment, and tools– Land– Buildings
• Consumables – Objects that are degraded to waste as a result of use (various time scales, but generally short-term)
• Discretionary – Objects that are not ‘needed’ but desired (esthetics beyond functionality, e.g. luxury cars, artwork)
• Mixed purposes assets – Objects that may be used as either capital or discretionary (esp. in households), e.g. automobiles, computers
George Mobus University of Washington Tacoma
Assets and Work ProcessesAssets and Work Processes• All assets derive from work processes
– All work processes consume energy (from the definition of energy in physics)
– Energy inputs must be of a high potential able to drive the process
– All work processes take time– Energy consumed over time = power
• Intangible assets are just as much a result of work processes, but generally represented by symbolic forms (e.g. contracts, patents, customer files, computer programs) or embodied in human memories as a result of discovery and education
George Mobus University of Washington Tacoma
Money is NOT an Asset!Money is NOT an Asset!• Money is a representation of asset value• Money is a claim on embodied energy• Money flows in a direction opposite to the flow of
work/energy, acting as a message to control that flow
• Money is a convenient means of conducting transactions where assets are exchanged
• Accumulated money (savings) is a virtual asset as long as the representation form maintains its relation to the underlying value in embodied energy – no inflation or deflation
Debt As MoneyDebt As Money• Borrowing from past savings
– Profit – creating excess assets through efficiency– Saving excess assets for future use and insurance– Banking and fractional reserves – short term debt
• Virtual money
• Borrowing from future earnings– Promises to pay back debt with interest from profits to
be made in the future– Longer-term investments, it will take time to recoup
the principal with interest– Creative paper instruments to represent future money
George Mobus University of Washington Tacoma
Debt Financing as BettingDebt Financing as Betting• Risks in borrowing from the past or the future
– Past savings exist as a form of insurance against future disasters – borrowing diminishes resources and puts people at risk
– Borrowing from the future is betting that the future will turn out as expected – what happens if it doesn’t?
• Both are risky in terms of future contingencies• If ‘rational’ agents have had the experience of the
present being better than the past, they will assume that the future will be better still
• This worked for most of human history but the reason wasn’t obvious
George Mobus University of Washington Tacoma
The Reason Debt WorkedThe Reason Debt Worked• For all of human history we have always
(generally) experienced increasing access to greater power sources
• Through clever observation of nature and trial and error (later science and technology) we have discovered and exploited better energy sources– Clothing and shelters decreased energy loss (effectively
increasing energy available), domestication of fire , agriculture and domestication of animals, waterwheels and windmills, coal, petroleum, hydroelectric and nuclear power
• The growth of energy resources led to expansion of work processes and accumulation of assets – economic growth – meaning profits
George Mobus University of Washington Tacoma
Limits to GrowthLimits to Growth• Appropriation of non-renewable (or slowly renewable)
natural resources from finite stocks takes increasing energy to accomplish – Best-First Principle
• Fossil fuels, which now supply more than 80% of global energy, are a non-renewable, finite resource
• Renewable energy sources can only be exploited by building an infrastructure that requires using high power energy (from fossil fuels!)
• Renewable energy sources are based on real-time solar insolation which is diffuse (you can walk around in it)
Now for a Real Inconvenient Truth – Now for a Real Inconvenient Truth – Limits on Energy FlowLimits on Energy Flow
Hubbert’s Peak – Fossil Fuels
1970
rates for lower 48 states, USA
exponential riserapid exploitation
diminishing marginal gain
declining oil extraction
?today
The Extraction of Finite The Extraction of Finite ResourcesResources
• The positive reinforcement of acquisitiveness coupled with increasing population drives increased efforts at extraction - Demand
• Eventually the Best-First principle catches up and the Law of Diminishing Returns takes over causing deceleration in extraction rates
• At some point it is no longer economical to start new extraction efforts (new wells or mines) and production is based on existing facilities that continue to deplete the resource
• There will be an exponential decline in extractionGeorge Mobus University of Washington Tacoma
Inevitable!Inevitable!• The only real question has been: when?• The answer is looking like NOW.• Hubbert’s prediction for the peak of production for the
lower 48 states in the US for early in the 1970’s (made in 1956) turned out to be right on in terms of timing (actual volume was a bit higher than expected).
• His prediction for global oil peak was for in the early 2000’s. Current models and empirical data suggest strongly that world conventional oil production peaked between 2005 and 2008.
• Because of Best-First we are now turning to nonconventional sources like tar sands and shale oil.
George Mobus University of Washington Tacoma
Gross and Net Energy PeaksGross and Net Energy Peaks• Net energy peaks in production before gross energy
peaks• The down-side of the curve is steeper than Hubbert’s
36
Effect on Asset AccumulationEffect on Asset Accumulation• Asset accumulation follows energy availability
(flow)
growth feasible growth decelerating
decline
Fossil fuels only - BAU