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close this bookBioconversion of Organic Residues for Rural Communities (UNU, 1979)
close this folderAnalysis of energy cost of integrated systems
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Energy cost and energy requirement

The words "energy cost" are no longer used among professional energy analysts. Cost is a word reserved for money, and the term now used is "energy requirement", and the process of analysis, energy analysis. Energy cost is relegated to its old meaning, that is to say, the cost (in money terms) of energy used. Money cost is what must be paid in the marketplace to buy a product or have a service rendered. By the time it reaches the market, that cost reflects all the inputs that have gone into making the product or providing the possibility of the service, including raw materials, energy, labour, profit, rent, royalty, interest, and so on. Only experience with the market allows judgement on whether the price is fair or exorbitant.

It is important to note that money cost can be judged by experience - an empirical process. If I am suddenly transported to a country with whose currency I am unfamiliar and seek to buy a shirt, I am at a loss to know whether I am getting a bargain or being cheated. I need much experience with that currency before I can make sensible economic decisions. This is because money is a value judgement, an abstraction. It has neither weight nor volume nor intensity. It is not a vector. It is a singularly clever invention, and because we all grow up with money as an everyday part of our lives, we have a feeling for it, but, as many learned works have demonstrated, no one quite under stands it, and as a device for estimating future costs it becomes steadily less reliable as we move into the future. Economists try to circumvent this by carrying out their accounting in constant money units, such as the current dollar, but even this invention fails eventually, because in due course what represents the average basket of goods changes, so like is no longer being compared with like. Nevertheless, money, as a basis for making an economic decision today about today, has no equal. Only as the future approaches does money fail us.

It was in this environment of uncertainty about money that energy as a numeraire of "cost" entered the picture. it was, of course, stimulated by the 1973 oil crisis, which for a time gave many people the feeling that the world was about to run short of energy. Unfortunately, as a result, energy analysis came to be associated with a pessimistic view of resources, and was thus instinctively rejected by anyone of a more optimistic turn of mind. It was also rejected by the economics profession (3). Energy analysis, with its methodological procedure for finding the energy requirement to provide a given good or service, is now an accepted activity, with reasonably well defined conventions. It is the job of energy analysts to use the numbers derived to interpret situations in the same way as economists use the computations of accountants or statisticians as the starting point for their broad analyses. Very rarely does an economist do an accountant's work, however. Some energy analysts do both the accounting and the analysis. Such is the nature of a young discipline.

To return to the words "energy requirement", they were chosen so that they would not be ambiguous. For example, if I wear a nylon shirt, the "gross energy requirement" (GER) of that shirt refers to the amount of the earth's energy stock that had to be sequestered in order to deliver it to me. Clearly, such a definition embraces all the energy that went to acquire the hydrocarbons that were subsequently changed into nylon, the energy to drive the process, the capital equipment, the transport, the life support system of the workers, and so on - even the operation of the store that sold it to me.

This definition can best be understood through the concept of system boundary. When carrying out an accounting procedure, one draws an envelope around the activity whose cost is to be accounted, e.g., a shirt factory. Perhaps the shirt factory buys in nylon thread. What it pays for that thread reflects many costs upstream. In an integrated system the thread may be made by the same company, but the company's accountants may wish to know the costs and profits of each section of the enterprise, so they divide the system into two or more envelopes, and work within two-system boundaries and thus compare added costs with added value.

In energy analysis there is the same choice, but it means less. In order that all energy requirement numbers be comparable to each other, and with money, it is necessary every time to go back to the same system boundary as money; that is to say, the point where the energy resource was as yet unexploited, i.e., as energy in the ground, and down-stream, the point of sale. The value so derived is the gross energy requirement mentioned earlier. Figure 1 depicts the analytical process illustrated by the simple example of crude oil from an offshore well. In the ground, crude oil has an energy content (as heat, burned in air) of about 45 MJ/kg, but to get it out of the ground requires some energy and much capital investment, which itself has an energy requirement.

Figure. 1. Energy Requirement of Scottish Off-shore Oil (Source: R. Peckham and K. Klitz, EUR 6062 EN, JRC Ispra, 1978)

In the North Sea this sum, in energy per kilogram of oil, is not large, yet by the time it reaches a pipeline in Scotland the value has risen to about 45.7 MJ/kg, and when refined and delivered through the refinery gates, may be something of the order of 49.8 MG/kg. That is to say, for every kilogram of refined oil that is delivered, some 49.8 MJ of energy resource has been irrevocably consumed. We can say that 49.8 - 46 = 4.8 MJ energy were needed to deliver 1 kg of oil. This kilogram of oil may be used in manufacturing a tractor, fertilizer, or even a nylon shirt.

When an energy analyst wishes to consider the energy used in only a part of the process, e.g., the step from natural gas to fertilizer, the number so derived is called the "process energy requirement" (PER), It is important to note that, whereas properly derived values of GER can always be compared, PER values can only be compared where the system boundaries are clearly described and identical. Personally, I never use PER values for too often find them misleading.

This definition of the GER affords no room for solar energy, and this is quite deliberate. GER refers to the amount of the earth energy stock used up (and it is irrevocably used up, for energy can only be used once). Solar energy is a flux, and falls upon us day in day out whether we use it or not. Often we use energy stocks for the manufacture of a product like fertilizer to catalyze the capture of solar energy, which is why, in an early paper (4), I used the phrase "energy subsidy to food production." Energy analysis makes a clear distinction between solar flux and stock energy consumption. Energy analyses of intensified land-based food production have demonstrated how wise it is to separate these two energy sources, for by computing only the GER we can quite accurately relate intensity of husbandry to intensity of energy use (Figure 2) (5).

Figure. 2. Protein Yield versus Energy Intensity of Food Production Systems (Source: M. Slesser et al. [5])

One final point is that I have been using the word "energy" in a quite incorrect manner. According to the first law of thermodynamics, energy can neither be lost nor gained. When I say that energy is irrevocably lost, I refer really to its second law potential: at the end of a transformation there is as much heat as there was at the beginning, but the quality of the energy has been degraded. This question of energy quality has to be treated carefully in energy analysis calculations, and leads to a number of different conventions (1, 2).