Alternative Socioeconomics and Energy

Accounting
Dr. Andrew Wallace BEng(hons) PhD EurIng
Earth Organisation for Sustainability
Abstract -
he current socioecono!ic syste! uses a debt based !onetary syste! to enable "eo"le to "urchase
goods. his syste! has a nu!ber of "roble!s with it# it results in a s!all "ercentage of the
"o"ulation controlling !ost of the resources of the "lanet$ it results in "o%erty and star%ation$ and it
has a funda!ental unsustainable nature. hus$ EOS "ro"oses an alternati%e syste! based on the
energy it ta&es to "roduce goods within the syste!. Our "ro"osal starts fro! the fact that the
"roduction of goods for!s an e'a!"le of a "hysical resource allocation syste! and as such re(uires
energy to run. he energy a%ailable "laces a li!it of what the syste! can do. his "a"er has the
following layout) first$ an o%er%iew of our current syste! and e'"onential growth and why we need
to e'"lore an alternati%e# second$ socioecono!ic syste!s as a resources allocation syste! and third$
an o%er%iew of energy accounting.
Introduction
Econo!ists !easure econo!ic growth in ter!s of "ercentages of changes in *ross Do!estic
Production (*DP) or *ross +ational Product (*+P). ,or e'a!"le$ in -.assanSanche/0u1 the
authors re"ort on the finical de%elo"!ent and econo!ic growth where they gi%e econo!ic growth
%alues in ter!s of *DP of$ for e'a!"le$ about 2.34 for East Asia and the Pacific and 5.64 for
Euro"e fro! 5789 to 2993. In -.ongweiPing1 the authors re"ort on the econo!ic growth in :hina
fro! 5738 ; 2998 where econo!ic growth reached a "ea& of 5<.58 4 in 578=.
Econo!ic growth for!s an e'a!"le of e'"onential growth. E'"onential growth has two interesting
characteristic of rele%ance to sustainability)
Doubling ti!e
:o!"arati%e growth rate
Doubling time
E'"onential growth syste!s ha%e a fi'ed doubling ti!e. ,or each doubling ti!e the syste! will
utilise twice the resources of the "re%ious doubling ti!e. ,or e'a!"le$ ta&ing the classic chess and
rice scenario$ each s(uare on the chess board re"resents the doubling ti!e so$ !o%ing fro! one
s(uare to the ne't the a!ount of rice will double fro! one to two and then fro! two to four and
fro! four to eight and so on.
Comparative growth rate
E'"onential growth syste!$ when co!"ared to other for!s of growth such as liner growth or
"olyno!ial growth syste!s$ begins slowly but at so!e "oint it will o%erta&e and then ra"idly grow
faster than other syste!s.
Natural systems and Exponential growth
+atural syste! such as bacterial growth or ani!al "o"ulations can e'hibit e'"onential growth in
certain "hases of their growth cycles. .owe%er$ natural syste! tend to either colla"se or switch
o%er to a sustainable for! of growth such as when a bacteria colony colla"se or the hunter > "rey
state of dyna!ic e(uilibriu!.
Econo!ic syste!s based on the e'"onential !odel will$ therefore$ !ost li&ely e'hibit the sa!e
characteristic of other e'"onential growth syste!s and our current syste! will hit growth li!its and
"ossibly colla"se -?eadows@anders*reen1.
A Sustainable Socioeconomic System
If we re!o%e !oney and use an alternati%e for! of socioecono!ics we ha%e the "otential to
i!"le!ent a sustainable syste!. Such a syste! would "robably ha%e a cyclic characteristic$ where
"roduction facilities would "roduce goods that we can recycle and ha%e a long life e'"ectants to
!ini!ise energy and !aterial usage.
he Earth Organisation for Sustainability (EOS) "ro"oses a holoinc based socioecono!ic syste!
based on obser%ations of nature and their a""lication. he design for a future$ balanced$ goal
orientated$ sustainable$ !oneyless$ o"en$ socioecono!ic syste! has two sides# a "eo"le side and a
technology side. he "eo"le side consists of a networ& of autono!ous co!!unities and grou"s of
such co!!unities. Each co!!unity (or grou" of) runs their own affairs and can ha%e their own
culture$ language or other characteristics.
he technology side consists of all the !eans of "roduction fro! far!s and !ines to factories as
well as the trans"ort syste!$ heath care$ education and "ower syste!s. his side also follows a
holonic structure where local grou"s of e'"ert !anagers !anage the local syste! but also tea! u"
with other local grou"s to for! larger structures as needed. he syste!$ therefore$ has a highly
distributed nature where "ower beco!es localised and e'"erts !anage the syste! to achie%e the
holistic goal of the highest standard of living for everyone for the longest time possible.
As "art of the technical side$ we "ro"ose a syste! of energy accounting as a !eans of !anaging the
distribution and "roducing of goods.
Energy Accounting
Energy accounting has its roots in the a""lication of ther!odyna!ics to society. he ter!
thermodynamics refers to the science of energy e'change between two syste!s that result in a
te!"erature change. he ter! heat refers to this energy transfer. Scientists largely de%elo"ed the
science of ther!odyna!ics during the 57th and 29th centuries where they de%elo"ed three laws of
ther!odyna!ics (which has since had the addition of a fourth A/eroth lawA).
Within energy accounting$ we use e'ergy as the accounting unit. he ter! Ae'ergyA refers to the
usable energy for a "hysical syste! and follows fro! the second law of ther!odyna!ics# we
cannot fully change heat to wor&. Energy co!es in different for!s such as "otential$ che!ical$
&inetic and electrical energy. +ot all for!s of energy ha%e the sa!e "otential to "roduce wor&. We
can con%ert electrical energy co!"letely to wor& but cannot con%ert heat energy fully to wor&$ for
e'a!"le -Wall1.
As any socioecono!ic syste! re(uires energy to wor& we can !easure how !uch a%ailable energy
(as e'ergy) we ha%e and that will gi%e us a !easure of the syste!Bs ability to "roduce.
A socioecono!ic syste! not only needs energy but also !aterials. We can also use e'ergy as a
!easure of !aterials. his follows fro! the !aterials ha%ing a che!ical "otential. hus$ the e'ergy$
E'$ we ha%e beco!es)
Where C stands for the heat in the syste!$ P the "ressure$ D the %olu!e$ the te!"erature$ S the
entro"y and the internal che!ical energy. In addition$ infor!ation can also ha%e an e'ergy %alue.
his follow fro! the a""lication of statistical !echanics and infor!ation theory where we can
define a "article as ha%e one bit of infor!ation.
As we can use e'ergy to !easure usable energy$ !aterials and infor!ation that a socioecono!ic
syste! utilises$ e'ergy$ therefore$ for!s a common accountancy unit for any socioecono!ic syste!.
E'ergy has an additional "ro"erty of use for a socioecono!ic syste!# e'ergy has a relationshi" to
the en%iron!ent. he greater the difference a syste! e'hibits between itself and the surrounding
en%iron!ent the greater the e'ergy beco!es. hus ice in the tro"ics has a higher e'ergy %alue than
ice in the Arctic. .eating has a higher e'ergy cost in the winter than in the su!!er -Wall1.
As e'ergy for!s a co!!on accountancy unit and has a relationshi" to the en%iron!ent we can use
e'ergy as a control %ariable for a resource allocation syste! such as a socioecono!ic syste!.
A Distributed Resources Allocation System
A socioecono!ic syste! based on e'ergy beco!es a resources allocation syste! where we could
ha%e a syste! that uses state %ariables to control the syste!. he syste! would use e'ergy to
!easure the "roduction cost of an ite! so each ite! "roduced would ha%e a cost that reflects the
"hysical cost of that ite! rather than a subEecti%e !onetary %alue. A society would also ha%e a
certain a!ount of e'ergy a%ailable for the "roduction of each ite! and the "rocesses that go into
!aintaining and running society.
A hiFtech society consists of "eo"le who re(uire goods. Production faculties "roduce these goods
using resources$ such as ores e'tracted fro! the ground or food cro"s grown on far!s. his syste!
re(uires energy to function. herefore$ we can define an Energy Accounting syste! as a resources
allocation syste! consisting of a tu"le @a(@$ E$ P$ *$ .) where)
R(x: is a resource)
E (x: x is an exergy producer),
P(x: x is a production facility),
(x: x is an item) and
!(x: x is a person)
he "roble! then beco!es one of allocation @(r) and E(e) to P(") to "roduce *(g) and allocating
*(g) to "erson .(h).
Where " re"resents the de!and and # the !anufacturing ca"acity.
he resource allocation "roble! then beco!es one of allocating e'ergy to "roduction based on the
user initiated de!and for goods and the !aintenance re(uire!ents of the syste!. We could do this
through calculating how !uch e'ergy we would ha%e a%ailable for the syste!$ within a gi%en ti!e
"eriod$ as a whole allocate ' a!ount for the syste! !aintenance and large co!!on "roEects then
distribute the re!ainder e(ually a!ong the user base as AEnergy :reditsA (E:). he E:s effecti%ely
represent production capacity and the users can then allocate E: to "roduction to ac(uire "ersonal
ite!s.
he ele!ents of this syste! ha%e different geogra"hical locations. he resources tend to ha%e
locations different to the !aEor cities which for! the location for !ost of the "eo"le which can
differ again for! the "roduction facilities. hus$ raw !aterials re(uire trans"orting to "roduction
facilities and good re(uire trans"ortation to the "eo"le. hus$ the syste! has the essential
characteristics of a distributed syste!. Scientists ha%e conducted !uch research into distributed
resource allocation syste!s.
his syste! does not fall into the classification of a "lanned econo!y as "eo"le$ h$ dri%es the goods
"roduction and resource allocation so the syste! instead for!s an e'a!"le of a de!and dri%en
syste!. .owe%er$ de!ands often follow "atterns which can !ean so!e "lanning can ta&e "lace
within the syste!. ,or e'a!"le$ the syste! tends to e'"erience a rise in de!ands of seasonal goods
around certain seasonal festi%ities such as the !idFwinter holidays and so!e goods tend to ha%e a
!ore or less constant de!and throughout the year$ such as day to day do!estic goods.
Energy Accounting Design
An energy accounting syste! should "resent a !eans of resource accounting and allocation of
"roduction ca"acity to "eo"le. As all "rocesses for!ing a socioecono!ic syste! re(uires energy
and !aterials to wor& the energy accounting syste! should !onitor the !aterials and e'ergy
a%ailable as well as de!and on the syste!.
he "roduction of goods has two as"ects to it. he e'ternal and the internal.
5. he e'ternal as"ect. he "eo"le "lace de!ands on the syste! for the !anufacturing of
goods. he "eo"le "lace their de!ands through the allocation of energy credits to the
"roduction of goods.
2. he internal as"ect. E'"erts !anage the "roduction facilities to insure !a'i!u! utilisation
of resources$ the sustainability of the syste! and to ensure the needs of the syste! re!ain
within the li!its of nature and balance with those of the ecoFsyste!.
hus$ the design for the Energy Accounting Syste! has two "arts.
5. he user interface in the for! of Energy :redits (E:). Each E: !easures the "roduction
ca"acity in ter!s of energy (or e'ergy). Each citi/en has an e(ual share of E:s allocated to
the!. hey can then allocate their E:s to the "roduction of personal goods.
2. echnical !anage!ent of the syste!. his in%ol%es the !easure!ent of the "roduction
ca"acity and !aterials a%ailable. he allocation of E:s to indi%iduals as well as carefully
!anaging the resources for "roduction.
Energy Credits
Energy :redits for!s "art of the resource allocation syste!. In such a syste!$ the "eo"le use
Energy :redits to allocate "arts of the syste! to the "roduction of goods. We ha%e resources$
"roduction and goods "eo"le want. We ta&e the resources !o%e the! to "roduction and "roduce the
goods needed. hat ta&es energy to do$ so we can !easure the "roduction ca"acity in ter!s of
e'ergy. We can then di%ide that u" e(ually a!ong the citi/ens. hose citi/ens can then allocate
"roduction ca"acity to the "roduction of goods.
Energy credits ha%e a nu!ber of characteristics )
5. :iti/ens cannot sa%e Energy :redits as we cannot use "roduction ca"acity not used in one
accounting "eriod in another accounting "eriod.
2. he syste! allocate Energy :redits to indi%iduals and as we ha%e an internal !anage!ent
of the syste!$ we do not allow the transfer of Energy :redits for! one "erson to another.
Figure acro!economic model o" energy accouting
he abo%e diagra! gi%es the circulation of energy (E)$ !aterials (?)$ goods (*) and Energy :redits
(Ec). ?aterials flow fro! a !aterial source$ such as !ines$ to "roduction. Production "roduces
de!anded goods which then flow to the households. When the goods reach the end of their life
e'"ectancy then flow bac& as raw !aterials. Energy credits flow fro! the households to the
"roduction. he energy generator "roduces the energy re(uired in "roduction and for the household.
Energy co!es fro! so!e source. he central e'"erts !anagers bloc& !anages the "roduction$ raw
!aterials and energy "roduction. hey also issue new energy credits after each accounting "eriod.
Determining an item#s cost
Physical %ariables deter!ines the cost of an ite! in the "resented syste! rather than the subEecti%e
%aluation of a (free) !ar&et as in the current syste!. We e'"ress the cost in ter!s of e'ergy so each
ite! has an e'ergy %alue gi%ing the a!ount of e'ergy consu!ed in the ite!s "roduction. We can
use Gife :ycle Analysis (G:A) as a !ethod for deter!ining an ite!s cost or e!bodied energy
analysis.
he ter! G:A refers to a !ethod of deter!ining the "rocesses and their i!"act for the "roduction
of an ite! fro! the beginning of "roduction until the dis"osal of the ite!. ,ro! the ac(uisition of
the raw !aterial to the "roduction of the "arts to the "roduction of the final ite! and then later the
dis"osal of the ite!. G:A assess the contribution to en%iron!ental da!age and resource de"letion
but it could also record how !uch e'ergy the "rocess of "roducing an ite! consu!ed at each stage.
.ow !uch in ac(uiring the raw !aterialsH In trans"orting the "artsH In "roducing the wholeH and in
dis"osing of the ite!H
G:A analysis begins with defining goals and boundaries for the study. It then goes on to "erfor! an
in%entory analysis. During the in%entory analysis the assessors collect data on the syste! for the
ite!s "roduction as well as !odel the whole "rocess.
After data collection$ the assessors e%aluate the i!"act of the "rocess in %arious categories. We can
then e%aluate these i!"acts and deter!ine the actual "hysical cost in ter!s of e'ergy for a gi%en
ite!.
he ter! e!bodied energy refers to a si!ilar "rocess of assessing the a!ount of energy that is gone
into a "roduct u" s"ecified in ?I>&g. ?uch wor& has gone into this "rocess and we do ha%e
standard tables for %arious different ti!es of ite!s. ,or e'a!"le$ alu!iniu! has a s"ecific energy
costs of 258 ?I>&g and steel J<.= ?I>&g !a&ing a "roduct in alu!iniu! !ore costly in energy
ter!s than the sa!e "roduct in steel -bath1.
In addition$ we can use e'ergy to e'a!ine the flows of energy -E'er1. his !eans that !uch of the
wor& we need to i!"le!ent Energy accounting we already ha%e a%ailable.
Abundance
he syste! of Energy Accounting relies on Aabundance.A We can see the ter! abundance in two
ways# as syste! that "roduce !ore than "eo"le can consu!e regardless of consu!"tion le%el or as a
syste! of intelligent !anage!ent that !eets the de!ands. he first syste! sees resources as
unli!ited$ thus beco!es unrealistic. he second syste! sees resources as li!ited but !eets de!and
thorough the intelligent !anage!ent of those resources. Energy accounting for!s an e'a!"le of
the second syste!. In Energy Accounting e'"erts !anage the resources to !eet de!and but also
ai!s to reduce de!and to within the li!its of the resources a%ailable. We can reduce de!and )
5. hrough "ro%iding li!ited nu!ber of "roducts (instead of 595 !obiles "hones we would
"ro%ide one$ !odula$ "hone).
2. Ensuring o"ti!al life e'"ectancy for the goods "roduced.
J. @eusing goods as !uch as "ossible.
=. Designing for recycling.
Example
his e'a!"le loo&s at e'ergy in Sweden -Wall51. In 5789 Sweden had the following e'ergy)
About 5 !illion PI of Sun light$ which s"ace heating used 29 PI and "lants used the
re!ainder (so we count Eust the hu!an used "art).
About JJ9 PI in wood.
About J28 PI in %egetable > cro" "roduction.
About 2= PI in ani!al "roduction.
About J=9 PI in electricity fro! hydro$ nuclear and fossil fuels.
About 2= PI of iron.
About 28= PI of uraniu!.
About 55=9 PI of che!ical e'ergy (!ainly in oil)
his gi%es about 2=79 PI of e'ergy a%ailable for Sweden. Darious "rocesses lose so!e of this
e'ergy$ for e'a!"le the electricity networ& which loses JJ PI in trans"orting electricity to users
ho!es. So!e "rocesses also use e'ergy$ for e'a!"le$ the iron industry used 55= PI to "roduce 2= PI
worth of iron. ,or an energy accounting syste! the losses and the used e'ergy should also for! "art
of the cost of the ite!. hus$ if Sweden used energy accounting in 5789 the citi/ens would recei%e
2=79 PI in energy credits di%ided between the!.
Although a bit si!"listic$ this e'a!"les illustrates the general idea of energy accounting.
Discussion
An old control engineering saying goes# Kyou can not control $hat you can not measureL.
Production syste!s re"resent a ty"e of co!"le' resource allocation syste!s. We !ine raw
!aterials or grow cro"s and then trans"ort the! to %arious factories to "roduce goods. We then
du!" the waste. :urrently we use !oney to control this syste! but !oney re"resents debt and does
not correlate to the "hysical syste! itself.
Energy accounting using e'ergy "resent a way of !easuring the energy$ !aterial and en%iron!ental
i!"act of our "roduction syste!. As such$ it "resents a "ossible way forward for a !oneyless$
sustainable$ socioecono!ic syste!. .owe%er$ as the saying goes$ K$e find the devil in the detailsL.
o %erify the usability of energy accounting we need to conduct e'"eri!entation and testing. We
currently ha%e %ery little e'"eri!ental e%idence to su""ort energy accounting. We also need to loo&
!ore closely at the e'ergy cost of ite! fro! to!atoes to whole buildings. ,ortunately$ so!e of
researchers ha%e already in%estigated those details and we ha%e so!e data to wor& with for future
e'"eri!entation.
We also ha%e to consider alternati%es such as energy !e!ory (e!ergy) which !ight "resent a better
o"tion for sustainability. Again$ we need to conduct future e'"eri!entation to %alidate the
usefulness of such an a""roach.
Re"erences
-.assanSanche/0u1 K,inancial de%elo"!ent and econo!ic growth) +ew e%idence fro! "anelL.
he Muarterly @e%iew of Econo!ics and ,inance data Dolu!e <5$ Issue 5$ ,ebruary 2955. "". 88F
59=.
-.ongweiPing1 Wang .ongwei$ Gi Ping$ (2955) KE!"irical analysis of the sources of :hinaBs
econo!ic growth in 5738F2998A$ Iournal of NnowledgeFbased Inno%ation in :hina$ Dol. J Iss) 2$
2955. "".75 ; 59<.
-?eadows@anders*reen1 KGi!its to *rowth) he J9F0ear C"dateL Donella .. ?eadows (Author)$
Iorgen @anders (Author)$ Dennis G. ?eadows :helsea *reen# J edition (Iune 5$ 299=) ISB+ 738F
57J5=78<86
-Wall1 *Oran Wall. E'ergetics. 2997
-bath1 In%entory of :arbon and Energy htt")>>www.bath.ac.u&>!echFeng>sert>e!bodied> %isited
?arch 2955
-E'er1 *lobal E'ergy and :arbon Database. htt")>>gce".stanford.edu>research>e'ergy>data.ht!l
%isited ?arch 2955