Saturday, January 29, 2011

More Thoughts on the Thermodynamic Imperative, What's the Maximum Population on our Planet, & Thought Experiment/Game on Maximizing Entropy Production

So, in my previous blog (Thoughts on the Thermodynamic Imperative), I didn't talk much about the problems with believing in the Thermodynamic Imperative. This post is intended to show the problems associated with the Thermodynamic Imperative, and the blog will end with a Thought Experiment/Game involving three Colonies building solar power plants (one of which believes in the Thermodynamic Imperative.) Read on, and you'll see which Colony wins the game.

As a summary before proceeding, the Thermodynamic Imperative states that we should try use the available exergy to the best of our ability. (Note: Exergy is related to the potential to do work if there were no irreversible processes.) Normally, the people who believe in the Thermodynamic Imperative think that we should maximize the efficiency of any process that consumes exergy.

It turns out that this is a decent philosophy to hold if there are a finite number of resources available, but this is a very dangerous philosophy if the sources of exergy grows as we convert the potential to do work (i.e. exergy) into actual work (i.e. electricity or motion of your car.)

It turns out that we are no where near the limit of exergy resources here on Earth. For example, there are roughly 125,000 TW of sunlight that strike the Earth at any given moment. Let's imagine that we could convert 1/125 (0.8%) of this sunlight into electricity, then we would be generating 1,000 TW of electricity. On average, the power consumption per person is 300 W. (Though, in the US it's closer to 1500 W. So, let's use a round number of 1 kW per person.) But let's also assume that for each 1 kW of electricity, each human needs the equivalent of 9 kW from plant and animal sources supporting him or her. So, even with an equivalent electricity consumption of 10 kW per person, the Earth could support a human population of 100 billion people. If we can increase the efficiency of sunlight to electricity, we might be able to support an even larger population, but let's just say 100 billion to be conservative. (We're a tenth of the way to the rough limit.)

But so far, we've only started counting the number of people who can live on Earth. There are many other places to live. Both the Moon and Mars will be livable once we send self-replicating solar machines to start collecting sunlight and generating/storing electricity for us to use to construct buildings to protect us from their harsh environments.

So, one of the problems we face today is that we are living in a world in which many people do not realize the philosophy they are practicing is not helpful for the world in which we live in. The philosophy of the Thermodynamic Imperative is hidden inside of a lot of well-meaning philosophies today, such as environmentalism and conservationism.

I don't necessarily have a problem with environmentalism or conservationism. I value life and I value preserving life. I value life so much that I want to see it spread to other planets, and eventually other solar systems. My problem is with the Thermodynamic Imperative, and the idea that we must use exergy with the greatest efficiency possible. Instead, we need to be using exergy to maximize the rate of return on investment. Then, we can increase the size of the population and make us all wealthier at the same time. Eventually, as mentioned above, we'll send robotic missions to the Moon and Mars with self-replicating solar machines.

It turns out that there's a reason why we want to maximize the rate of return on investment. (There will probably be people out there that agree with the statement "we want to maximize the rate of return on investment," but will disagree with the following statement.) Maximizing the rate of return on investment is actually the best way to increase the entropy production rate of the universe, and the fastest way to bring the universe to equilibrium. It turns out that the goal of life processes is to bring the universe to equilibrium as fast as possible.

So, here's a thought experiment I came up with:

There's a near-infinite source of exergy (let's say from sunlight). There are three different groups living on Earth: Colony A, Colony B, and Colony C.

Each Colony lives by a different philosophy.
In Colony A, the philosophy is to maximize the rate of return on investment.
In Colony B, the philosophy is to maximize the efficiency of electricity generation.
In Colony C, the philosophy is to maximize the initial rate of entropy production.

Here are the ground rules for the game:
1) It takes 1 round to build a new solar power plant
2) On the 10th round after a solar plant started being built, it is decommissioned. (The cost to decomission is zero. i.e. you can sell the equipment for exactly how much it takes to decommission it.)
3) Each Colony builds power plants of varying capital costs, exergy efficiency, and rate of return on investment.
4) If the Colony has the money to build a new power plant, it must build a new power plant.
5) Each Colony starts with $40 and no power plants at Round Zero

Colony A builds power plants with a capital cost of 10 monetary units ($), a exergy efficiency of 25%, and a Rate of Return on Investment (RROI) of 20% per round. We'll ignore fuel, labor and maintenance costs. So, this means that each solar power plant generates $3 per round. RROI is calculated as:  [($/round) / (Capital Cost $)]  -- [ 1 / (Lifetime in rounds) ]  with overall units of % per round.  (similar to %/yr for RROI in real life)   The exergy destruction rate of each plant is equal to $12 per round.  (Remember that the entropy generation rate is equal to the exergy destruction rate times the temperature of the planet.)

Colony B builds power plants with a capital cost of 40 monetary units ($), a exergy efficiency of 50%, and a Rate of Return on Investment (RROI) of 10%/round. So, this means that each solar power plant generates $8/round. The exergy destruction rate of each plant is equal to $16/round.

Colony C builds power plants with a capital cost of 10 monetary units ($), a exergy efficiency of 10%, and a Rate of Return on Investment (RROI) of 10%/round. So, this means that each solar power plant generates $2/round. The exergy destruction rate of each plant is equal to $20/round.
Each Colony is trying to maximize something that their philosophy tells them is good to maximize. Colony A wants to grow and become larger. Colony B wants to maximize efficiency (because everybody believes in the Thermodynamic Imperative.) Colony C thinks that the best way to maximize the entropy generation rate of the universe is to operate inefficient machines that generate a lot of irreversibility.

Only one of the Colonies will win the game of life: to maximize the entropy generation rate of the universe, and bring the universe to equilibrium sooner. Only one of these Colonies will win in the end, and you can guess which one.
Clearly, Colony B will come in last place. Colony B is trying to minimize entropy generation and does a pretty good job at this. Colony C starts off really well. In fact, in the first 13 rounds, Colony C is in first place as far as total exergy destruction (and hence entropy production.) But in Round 14, the industrious Colony A pulls out into the lead. By round 100, Colony C is puny compared to the size of Colony A. (And let's not even talk about Colony B!)
In the end, an exponential grows always wins out over the initial higher rate of entropy generation.
This thought experiment/game is just here to show you that the largest exponential growth rate wins out, and we should always try to maximize the rate of return on investment, and in the end, we'll end up winning the game of entropy generation, even though that was not our intention.

For those of you who are interested, here's what the game looks like in the first 11 rounds:
AP = Colony A's # of Solar Power Plants at the start of the round
A$ = Colony A's $ in the bank at the start of that round
ATED$ = Colony A's Total Exergy Destruction in units of $
BP = Colony B's # of Solar Power Plants at the start of the round

Round     AP     A$    ATED$            BP      B$    BTED$          CP     C$    CTED$
0             0       40           0                0        40         0             0       40          0
1             4         0           0                1          0         0             4         0         0
2             4       12         48                1          8       16             4         8        80
3             5       14         96                1        16       32              4      16       160
4             6       19       156                1        24       48              5      14       240
5             7       27       228                1        32       64              6      14       340
6             9       28       312                1        40       80              7      14       480
7            11      35       420                2          8       96              8      20       620
8            14      38       552                2        24     128             10      16      780
9            17      50       720                2        40     160             11      26      980
10          18      51       924                2        16     192               9      28     1200
11          23      55     1140                2        32     224              11     26     1380
12          28      74     1416                2        48     224              13     28     1600
13          34      88     1752                3        24     224              14     34     1860
14          41     110     2160                3        48     336              16     32     2140
15          51     123     2652                3        32     384              18     34     2460

Note that you can guess that Colony A will win out after ~ 11 years from the following formula.

10*(1.1)^(x)  =  4*(1.2)^(x)     x ~ 10.7 rounds

(This formula neglects a lot of the dynamics of the game above, but gives you a feel for how many rounds in which Colony C will lead over Colony A as far as cumulative destruction of exergy.  Also, note that I used units of $ for exergy, and the reason for this goes back to my equating $ with kW-hr in a society with electricity backed currency. See the link below for further details.)

Electricity Backed Currency

Saturday, January 22, 2011

Generation of Work and The Wealth of Nations

If you've been following my previous posts about maximizing the rate of return on work invested, you may be asking yourself the following questions:
a) Which country produces the most work?  (force times distance definition of the word 'work')
b) Which major country has the largest rate of return on work invested?
Before reading on, you probably can guess the answer to both of these question, and most likely your guess is correct. My calculations for each of these questions are below.

I recently went through the data collected on energy use per country per year over the last decade (BP's statistical review of energy). I estimated the total amount of work generated per country per year for each year between 2000 and 2009, for eight major countries: the U.S., China, India, Russia, Japan, Canada, Germany and France. (The UK and Brazil are next on my ToDo list.) I estimated the total work generated by summing the following:
1) Electricity generated that year
2) Work done by vehicles against friction (this value was calculated by multiplying the consumption of petroleum by the average efficiency of 20%. I did not take into account efficiency differences between countries or the fact that there is consumption of petroleum for non-work purposes, such as production of plastics.)
3) Estimated that 70% of natural gas consumption went into generating non-electrical work with an efficiency of 20%. (This includes natural gas for vehicles, but mostly natural gas heating of one's home as an offset for the electricity that would have been required to operate a heat pump to heat one's home during the winter.)

Items not included in the summation, that should be included in a more detailed analysis, are: a) work done by humans & b) work done by animals associated with human projects (horses used for farming, etc...) Rosen and Scott estimated in 2003 that humans consume 20 times less exergy in food than the exergy consumed by the machines they use. So, ignoring human work is a safe assumption.

I'll have more time in the future to refine the estimates of total work. In the mean time, the graph below shows my estimates for the total work done per country:

What you can see is that China's generation of work has been increasing rapidly over the last decade whereas almost all of the other countries, except India, have been stagnant. It appears that China may pass the US as the country that produces the most total amount of work within the next decade, depending on whether it can maintain the rate of increase. I've also graphed the average rate of return on work invested between 2000 and 2009. The average value was calculated using the following formula:

 Rate [%/yr] =  {(Work Generated in 2009)/(Work Generated in 2000)}^(1/9)  - 1

This is the formula for the average rate of return on an investment if the rate is compounded yearly for nine years  (i.e. from 2000 to 2009). The average rate of return is graphed below:

It's easy to see here that China has the largest rate of return of any of the major countries, followed by India. The rate of return from the US, Japan, German and France is zero or less than zero. This means that these countries are not growing, and this is a major problem. In my earlier posts, I've pointed out that money is the capability to do work (in the force times distance sense of work.)
Electricity Backed Currency
[Note that money is not the same as value or utility, and I'll write a post on this topic in the next few weeks. So, value/utility is not the same as the capability to do work, just as the price of an object is not equal to the amount of money/work spent creating the object.]

So, if money is the capability to do work, then the following is true:    the Wealth of a Nation is equal the amount of work it is capable of generating, and hence the wealth of a nation can be calculated by measuring the amount of work it generates each year.

So, I wanted to compare the total work generated with the country's GDP. To do so, I looked up the values of GDP from the World Bank in 2009 and compared these values with the values I calculated for the total work. Often, economists take a ratio between the electricity generated and GDP to determine the overall efficiency of converting electricity into $'s.

However, here's the problem with the standard way of thinking.
1) Work comes in many different forms, and there's no reason to just choose electrical work. For example, there's also the work done by a car against a friction or the work done by humans moving about in the world.
2) The wealth of a nation is equal to the work it generates each year. There is no efficiency factor. The wealth is the work it is capable of doing.

So, I've plotted below a graph that compares the 2009 values of GDP (in trillions of USD) against the total work I calculated that each country generated in 2009. What I found was that the data was rather scattered. I could roughly fit a straight line through the data points for the U.S., Japan, Germany and France, but the data points for the other countries were far away from the line. While I calculated that China's total work was only 68% less than the U.S.'s total work, the World Bank estimated that China's GDP was still three times smaller than the U.S.'s GDP. While the World Bank thinks that China's economy is roughly the same size as Japan's, I estimate that it is twice as large as Japan's economy.

The data points for Russia and India were also far off from the line set by the U.S., Japan, German and France. This leads me to the following conclusion:  either a) my calculations for the total work are incorrect, b) my assumption that money = work is incorrect, c) the calculations of GDP by the World Bank underestimate the GDP of non-Western countries, such as Russia, India and China, or d) some combination thereof.

My guess is that the answer is some combination of a) and c). I recognize that my calculations are very rough, but I also recognize that it's really easy to miscalculate GDP in economies with significant rural or collectivized populations. This is the case for India, China and Russia, but not for the U.S., Canada, Japan and western Europe. I don't know why the data point for Canada is so far below the line, given that I would have expect it to be in line with other Western countries.

In conclusion,
1) The U.S. is the wealthiest country, but perhaps not in one decade.
2) China has the largest rate of return on investment of the work it generates (of the eight countries I studied.)
3) The calculations of GDP significantly underestimate the wealth of China, India, and Russia.
4) It is likely that China's economy is actually twice as large as Japan's and that Russia's economy is comparable to Japan's.

Let me know what you think.

Wednesday, January 19, 2011

Comparison between the Supply-Demand Curves and a Fuel Cell V-I Curves

One of the main topics in any microeconomics course is the supply-demand curve, and how the two curves meet together at an "equilibrium" point.
Note: The term "equilibrium" stems from the fact that the economists in the 1800's borrowed from the language of mechanics & physics at the time (as is often done, sometimes for good and sometimes not.)

We need a new formulation of economics: one that does not assume that the universe is in equilibrium. Instead, we need a new economics for open, far-from-equilibrium systems trying to maximize the production of entropy via the maximization of the rate of return on investment on work invested.

So, I was thinking today about the supply-demand curve and it seems to me that there are some similarities between supply-demand curves of economics and the V-I curves of fuel cells & electrolyzer. In this blog, I hope to point out the similarities once you convert currency [$] into units of work [kW-hr].

This is the summary of what will be presented below:
If one makes the substitution of work for currency, then one can convert the demand curves of economics into a voltage-current plot of a fuel cell and convert the supply curves of economics into a voltage-current plot of an electrolysis unit. The operating voltage of an electrolysis unit is the marginal work required to move an additional mol of charged species, and is analogous to the marginal cost of producing one more product. The operating voltage of a fuel cell is the marginal work generated in moving an additional mol of charged species, and is analogous to the marginal value of demanding one more product. (See the following post for the difference between price, cost and value.)

Thursday, January 13, 2011

Thoughts on the Thermodynamics Imperative

I was unaware until yesterday that there was such thing as the "Thermodynamic Imperative." It's been given in different form, but here are a few:

Bayliss' Free Energy Imperative
"Waste not Free Energy; treasure it and make the best use of it."

Lindsey's Thermodynamic Imperative
"While we do live, we ought always to act in all things in such a way as to produce as much order in our environment as possible."

Both the Free Energy Imperative and the Thermodynamic Imperative seem to be a little bit off, but generally close to what we actually should be doing. What I like about the first version is that we should not waste free energy. The problem is that it doesn't tell you how to make best use of "free energy", i.e. exergy. The second version tells you how to make use of free energy (to produce order.) But as we know, there is no thermodynamic quantity for "order." In fact, there's no agreement on what "order" is. So, the second version leaves us hanging. Worse is the fact that the real motivation behind the second version is that Lindsey wants us to minimize the production of entropy in the universe. (Since then, there's been all sorts of pseudo-science trying to link entropy with pollution or waste exergy with pollution. This is just silly. One life-form's "pollution" is another life-form's "cornupopia." There is no thermodynamic variable that corresponds to "pollution" because there is no thermodynamic variable that changes value depending on whether we are talking about humans or vultures or bacteria.)

In general, my issue with the Thermodynamic Imperative (as given above) is that it doesn't mention what the real goal of life is:

The universe is currently not-in-thermodynamic equilibrium, though it is in the process of getting closer to equilibrium with every irreversible process (such as diffusion of heat, mass, charge, etc...). Life is a means of increasing the entropy of the universe at a faster rate than if there were no life. Increasing the entropy of the universe brings the universe closer to equilibrium. Since this is the goal of life, then it too should be the goal of human life.

The problem is that there is no way to calculate how to maximize the production of entropy in systems far-from-equilibrium (such as the Earth and the universe in general.) This means that there is no real Thermodynamic Imperative, since we don't know how to maximize the production of entropy. All we can do is come up with algorithms that helps us reach the goal.
And therefore, there is no way to prove that one algorithm is better than another.

The Thermodynamic Imperative is one algorithm for how to live life, but it doesn't seem to be a very good one because it suggests the opposite of what we should be doing. It asks us to slow down the increase of entropy in the universe.

The algorithm that seems the best at maximizing the entropy production in the universe is:

"Maximize the average rate of return on work invested."

Although this doesn't seem related to maximizing entropy production, what humans have found out is that maximizing work invested causes an exponential increase in the amount of work available, and along the way, an exponential increase in the amount of entropy generated, even though at every step along the way we tried to minimize entropy production so as to maximize the work done by the system (e.g. power plant.)

This is a Catch-22 situation. In order to maximize the global entropy production, we need to minimize the production of entropy at each step of the way to produce work. All the while, we continue to invest the work we generated into producing more work.

So, in conclusion, if we find sources of "free energy" (i.e. exergy or money), we should not waste it. Instead, we should put that "free energy" (i.e. exergy or money) to use in building a device that can convert "free energy" (i.e. exergy or money) into even more "free energy" (i.e. exergy or money). And then repeat over and over again.

This sounds simple. The problem is that there's no way to calculate the best route to maximize the average rate of return on work invested (ARROWI). So, we are left with having to make simplifications to the equation so that the optimization calculations don't consume more work than can be derived from the maximization.

Here's the recursive paradox.

The equation for maximizing the "average rate of return on work invested" calls itself as a function because that act of calculating consumes work and must be included in the equation.

One way to get around this paradox is to not include the work spent in calculating how to maximize ARROWI. This might be safe in some cases (such as powerplant design), but it highlights the fact that there is no right way to calculate how to maximize the entropy production rate in the universe.

Any sufficiently powerful algebra (that is capable of referring back to itself can not be both consistent and complete. (Godel's incompleteness theorem...paraphrased)

Similarly, any sufficiently power algorithm for maximizing ARROWI or entropy production rate is capable of referring back to its, and therefore can't be solved exactly.

Sunday, January 9, 2011

Top Ten Problems with the Energy Research Community

Here's a list I've composed of the top ten things that annoy me about the energy research community from a scientific point of view:  (and by energy research community I mean industry, gov't and academic research related to transportation fuels and electricity generation)

1. Calculating a powerplant's system efficiencies with respect to the enthalpy (sometimes called the heating value of the fuel) instead of the exergy of the input fuel.

2. Optimizing a system for high values of system efficiency instead of a large rate of return on investment.

3.  Lumping together energy flow from different types of energy. For example, the US Energy Information Administration lumps together chemical energy in fuels (like coal, biomass, and oil) along with electricity from nuclear power plants. In one case, they are using the enthalpy (heating value) and in one case they are using the exergy value (because electricity can be directly converted into work.) The EIA should start using the word exergy. It'll save themselves a lot of time. What's important is the flow of exergy and places of exergy destruction, not the flow of energy.

4. Using the term "energy consumption" because energy is neither created or destroyed. (I can consume coal...just like I can consume a hamburger, but I can't consume energy. I can convert potential energy into thermal energy, but I can't make it disappear.) (Note: I'm probably guilty of using the term "energy consumption" because it's such a misused buzz word.)

5. Forgetting to account for the fact that plant capital cost increases if the price of oil increases. For example, cellulosic ethanol or coal-to-liquid companies often make statements like:  "Our product will be commercially viable when oil prices hit $X per barrel."  The problem is that these companies did their capital costs estimates when oil was $Y per barrel (let's say $70/barrel), and then forget that these capital cost estimates are no longer valid when oil prices are $X per barrel (let's say $120/barrel.) They may think to themselves, "Oh, well, there's no oil used in our process."  But the problem is that our economy is dependent on oil, and if the price of oil increases by 50%, then the cost of everything will increase between roughly 10% and 50%. (This problem can be resolved by comparing the average rate of return on investment for cellulosic ethanol or coal-to-liquids with the rate of return of drilling for transportation liquids. What you'll find is that, if the rate of return for drilling decreases, then this will cause the rate of return of the biomass/coal-to-liquids plant to decrease. This means that start-up companies often underestimate the price of oil at which their process is economically viable.)

6. Co-generation efficiencies are lumped together. (This really annoys me because it really shows that the researcher does not understand  the term 'exergy.') First, they are dividing by the enthalpy of the fuel instead of the exergy, which is related to my #1 issue. Second, they are lumping together electricity along with thermal energy, which is related to my #3 issue. (Instead they should convert the heat used in co-generation into an equivalent amount of electricity that would be required to operate a heat pump to provide the same heating. This amount of electricity should be added to the electricity generated at the power plant, and then divided by the total exergy of the input fuel. Then, you would have an accurate system efficiency. But then, who cares about system efficiency? What's important is the average rate of return on work invested.) So, when somebody quotes a co-generation "system efficiency" of 80%, my blood starts to boil for multiple reasons!

7. Calculating the dollars per kW-hr of a power plant in order to determine the economic viability of the plant. My problem with this that the units are problematic. First, if you are giving results in $'s, then there should always be a year next to the dollar. But even worse is the fact that by quoting in $'s/kW-hr, you don't have feel for whether that value is too large. For example, if I say that the price of electricity is increasing from $0.2/kW-hr to $0.4/kW-hr, you may not freak out. But if I say that the total return on investment decreases from 4 to 2, and that if the price were $0.4/kW-hr, then one in every two people in the US needs to be building the new type of power plant, then you may start freaking out. (which you should...though, don't quote me on the exact conversion between $/kW-hr and ROI because it obviously changes with time, which is my whole problem with $/kW-hr.) So, "we in the energy research community" need to start using dimensionless variables (such as total return on work invested) or rate variables (such as rate of return on work invested, ARROWI). Another advantage here is that we can compare our work easily with people in different countries. It's a lot easier to compare results if you remove the units of $'s. (Also, when we say that our liquid fuel will cost  $X/barrel, how do we now that there's actually any return on work invested? At what value of $'s/barrel is there no actual return on investment?)

8.Getting excited about ways to convert CO2 into chemicals that consume more electricity than were generated by the power plant that created the CO2 in the first place. I see this all of the time, and I'm getting really fed up with people who've designed some process for turning CO2 into chemicals using plasmas or electrolysis. These schemes end up consuming more electricity than were generated by the power plant. While most of these schemes don't violate of the Laws of Thermodynamics, they end up having negative returns on work invested, so they violate the goal of life: to maximize the rate of return on work invested. Even worse, I saw one scheme in which the person designed a process for turning coal into CO2 and generating electricity, then capturing the CO2 and converting it into graphite. This is silly because there are ways to convert coal directly into graphite. Stuff like this drives me crazy.

9. Using the terms "Primary energy" and "secondary energy." The US EIA uses these terms to differentiate between natural gas, biomass, coal and oil (primary) from electricity and hydrogen (secondary), which is fine, but it's also arbitrary. As in #3, what's important is the exergy value of the material. The US EIA needs to start calculating the total work (force times distance) accomplished within the US each year rather than all the lumping together of "energy" sources. It would also be meaningful for them to calculate the exergy destruction across the US. (For example, check out the following post where I calculate the amount of work generated [in kW-hrs] each year by the major economies. Wealth of Nations)

10. Excessive freaking out about "Peak Oil" or "Global Warming".  Yes, it's true that the rate of return of drilling for petroleum is decreasing, but civilization-as-we-know-it is not going to end. We are getting smarter every day, and there's no stopping the ship. The goal of life is to seek greater return on work invested, and in the process increase the entropy of the universe. We're not going to stop growing just because oil supplies are diminishing. We're going to keep finding more ways of generating electricity from potential energy sources. And yes, it's been proven using satellites in the IR that CO2 is causing the temperature of the Earth to increase, but there is no reason to freak out. The metaphor Al Gore used of a "Frog in a Pot of Boiling Water" is just a metaphor. It's just words. What we need right now is research, debate and discussion. Not threats of end-of-the-world scenarios. We need to do some research into both the benefits and the damage of climate change. We need continuous and lively discussion without fear mongering on one side or the other.

So, in summary, I'm tired of the hype from start-up companies. I'm tired of the silly designs from academic professors. I'm tired of the fear mongering from lobbyists. And I'm tired of people (myself included sometimes) using the word energy instead of exergy.

I wish that we all were really intelligent and had all the right answers, but then I remember that it'd take a lot of work (i.e. electricity)for us to become intelligent. So, all I can do is to figure out how to increase the rate of return on work invested with the work (i.e. money) that I have so that the planet can eventually become smart enough to figure this all out, and then eventually become smart enough to start populating other planets.

"I guess that's the way the whole durned human comedy keep perpetuatin' it-self, down through the generations, westward wagons, across the sands a time until-- aw, look at me, I'm ramblin' again. Wal, uh hope you folks enjoyed yourselves."

Tuesday, January 4, 2011

The Problem with EROI: Instead we should be Maximizing the Rate of Return on Work Invested

There have been quite a few journal articles and web posts about the idea of Energy Return on Energy Investment (EROI).
According to the definition of EROI that I pulled from the group that uses it the most,

EROI = (Quantity of Energy supplied) / (Quantity of energy used in supply process)

I find the this definition of EROI to be vague and confusing. Perhaps the people who use this definition a lot know what they mean by EROI, but this seems like a poorly defined quantity. Energy is one of least well defined terms out there because it can sometimes mean gibbs free energy, potential energy, work, chemical energy, thermal energy, or ever perhaps exergy.

Another problem I have with EROI is that it's not actually what we're trying to maximize. It may be useful as a ballpark number to determine whether the work spent on a project can be recovered (since many alternative energy concepts can't even meet this criterion.) But it doesn't help the investment community or our politicians because it's not what we should be maximizing.
What we're trying to maximize is the Average Rate of Return on Work Investment. By Work, I mean force times distance, such as electrical or mechanical work. The Net Work Generated (for a power plant) is the gross electrical energy generated over its lifetime minus reoccurring work spent in labor, maintenance, fuel costs, and pollution credits. The work spent on these items can be calculated easily if the US had an electricity-backed money supply (if not the calculations are a little harder.) If the US had an electricity-backed money supply, the work would be calculated by multiplying by the factor that converts dollars into kW-hr's. (see my earlier post on Electricity-based Currency)

EROI doesn't tell us anything about how long it takes to realize the return on investment. Insteead, we should always chose the option with the highest average rate of return on investment (as long as that value is correctly calculated and includes costs associated with decommissioning and pollution control.)

The goal is to increase the amount of work we can do as a society. The average rate of return on work investment tells us how quickly we can increase the amount of work that our society can accomplish.

So, why do we want to increase the amount of work our society can do?
1) Knowledge requires work (in order to increase our knowledge of the universe, we need to increase the amount of work our society is capable of generating.)
2) (as per my earlier blogs) The purpose of life is to increase the amount of entropy production in the universe. Ironically, this is done by increasing the amount of work available to a society. Why? Because the increased amount of work can be used to generate more work, and along the way, the entropy of the universe increases. The entropy production actually occurs faster when you are continuously trying to generate more work. Because of the exponential nature of generating work when you try to maximize ARROWI, you end up increasing entropy at a faster rate than if you just wasted the work by turning it directly into thermal energy.

So, maximizing the average rate of return of work invested is actually another way of maximizing the production of entropy.

As I've mentioned in previous posts, there is no way to prove that you are maximizing the production of entropy (unless you're near equilibrium), so there is no way to prove that you are maximizing the return on investment. All you can do is to maximize the ARROWI with respect to certain free variables. For example, if you are drilling a well for natural gas, you might try to calculate at which depth you end up maximizing the rate of return on work investment.

Our society is expanding our knowledge of the universe and expanding our capability to do work. Ironically, this is but a means to an end. The end goal is really to increase the entropy of the universe so that the universe reaches equilibrium sooner. Either way you think about, the way to reach the goal is to maximize the average rate of return of work invested (ARROWI).

Monday, January 3, 2011

Link to Fiction Writing

Since I've been digressing recently into the realm of philosophy recently, I decided to place some of my fiction writing on the web.

My goal is help develop a sense of the sacred in the world, and I can think of no better way than through literature (as has always been the case.)

I've been slowly putting some of my past fiction on the this website, and my goal is to starting writing some new material that puts what I've been discussing on this website into fictional form...

I plan on writing a longer story in serial form (a chapter here, a chapter there.)

If you're interested, check out the link to the right (under "My Blog List") or link to:

My favorite piece of short fiction is called "Angel in White" and I just placed it on the website. My favorite poem I've written is "Vibrancy", which is at the very bottom of the site.


Saturday, January 1, 2011

The meaning of the Enron collapse

I recently watched a movie on the Enron collapse because I wanted to watch a story about how seemingly good ideas go bad.

Was it the ideas that were bad (de-regulating electricity and natural gas markets, money=good, cutthroat competition=good), or was it the people that were bad (Ken Lay, Jeff Skilling, Andy Fastow, Lou Pai)?

After watching the movie "The Smartest Guys in the Room", I came across with the underlying feeling that the executives of Enron were naive and amoral.
They were living in a world with no moral foundations (while thinking that it did have moral foundations.)

They were living in a world of ideas (money=good, cutthroat competition=good) but with no way to tie these ideas to a larger spiritual purpose. It's like the Protestant work ethic devoid of any sense of reward in heaven. It's like killing a buffalo and not giving thanks to the animal for its sacrifice. In this amoral world, the executives convinced themselves that they were good and those around them were evil.

For example, Enron purposely caused rolling blackouts in California in order to profit from the high electricity prices, but they were unable to see that this was not sustainable. This is not moral. This hurts our society. But they convinced themselves that it was California, and its politicians that were evil, not them.

Our goal should be to lower electricity prices, and a free market was supposed to help bring about lower electricity prices. Instead, a large company (Enron) manipulated the market in order to make money at the expense of people living in California.

The damage done to the market has been enormous because a 'free' market runs trust. There is no market without trust. There can never be a 'free' market if people game the system for their own personal gain, and destroy our trust in the market.

How do we move on after realizing that there are people out there that will game the system for their own benefit at the expense of society's benefit? (i.e. when they benefit, then the GDP drops... where as, you could argue that Bill Gates, Jeff Bezos, Steve Jobs generate wealth and the GDP increases.)

Here's some suggestions for how we can sustain trust in our markets.

1) Realize that when you look into the abyss, that the abyss is looking right back at you. (i.e. there is something in human nature that drives us to compete and kill one another. This includes all people, even the holiest of holy priests.)
2) Realize that we need a moral, spiritual foundation that incorporates our human nature (rather than forcing us to suppress our drive to compete and make wealth.) The competition and the wealth, however, can not be the goals in themselves... but rather means to a end in which you can link your wealth to global prosperity.
3) Figure out how to make sure that power is not in the hands of a few people, but rather in the hands of everybody. For example, one reason I like Amazon (both buying and selling) so much is that Amazon simply takes a percentage cut of the transaction amount. What we need is for all of us to be 'electricity-traders', and the Enron's of the future need to be like Amazon or E-trade (taking a known percentage of the trade.)

Sometimes competition will be moral (but other times it may be immoral, and cooperation is actually the better option for growing our society.) Sometimes wealth can be moral (Meg Whitman appears to be an example for me of moral creation of wealth), whereas the Enron exec's and Bernie Madoff are examples of immoral wealth accumulation at the expense of others.

I think that the 'Enron collapse' represents our society's lack of moral foundations. We seem to be torn between the amoral religion of 'poor=good' and the amoral religion of 'rich=good'. Neither of these concepts (when strictly held) are healthy.

We need a moral foundation that is consistent with our scientific knowledge of the world. I briefly discuss what such a moral foundation would look like in the previous blog:
"Why we need to reconcile science and religion"

Let me know what you think is the meaning of the Enron collapse.