J
Jim Logajan
Don Lancaster said:
I have discovered that this debate is not new and raged between
economists and "net energy analysts" several decades ago, and the
following is a quote from reference [1] (a document which you may find
worth studying - it even discusses the use of exergy, its computation,
and merits as an analytical tool):
"The energy events of the 1970's raised the issue of whether economic
measures such as price or cost accurately captured all the relevant
features of an energy supply process. Economists generally argue that, by
definition, the price of a fuel automatically captures all such relevant
features. Yet, a strong case can be made that the standard economic
approach to measuring the economic usefulness of a fuel yields one type
of information and only partially informs us about all relevant aspects
of resource quality. Net energy analysis, through the calculation of
EROI, informs us about some of those other qualities, such as the
potential for a fuel source to yield useful energy to the rest of the
economy. Such qualities may or may not be reflected in a fuel's price. As
Peet et al. (1987, p. 240) stated:
...we believe the conventional economic perception of the 'value' of
primary energy resources is incomplete and potentially misleading, in
that it does not adequately take account of the factors which constrain
a society's ability to obtain useful consumer energy from such sources.
In part because it rejects economic measures of value as necessary and
sufficient expressions of resource quality, net energy analysis has been
a very controversial analytical tool, generating vigorous and sometimes
acrimonious exchanges between net energy analysis practitioners and
economists. The debate between net energy analysts and economists became
a very heated one for several reasons. One reason is that many economists
viewed net energy analysis as another physical model of scarcity which,
like the classical economic scarcity model and The Limits to Growth
physical models, is obviously inferior to the neoclassical view of
scarcity. Many grandiose and unsubstantiated claims were made about the
immunity net energy analysis enjoyed from many of the problems facing
economic analysis, making it a superior decision-making tool (e.g.
Gilliland, 1975). Some energy analysts proposed a theory of economic and
social value based on energy (Odum, 1971, 1977; Hannon, 1973; Costanza,
1980, 1981) which economists were quick to criticize.
Economists naturally, and quite justifiably in some cases, reacted very
strongly to some of the extreme claims made by some energy analysis.
Economists questioned the assumptions and methods of net energy
calculations as well as the usefulness of net energy results for energy
and economic policy. At the same time, many critics rejected net energy
analysis in it's entirety based on the reasonableness of claims made by
some energy analysts which were not shared by energy analysts in general.
In the process, the nuts and bolts of net energy analysis and it's
usefulness in assessing resource quality escaped the objective discussion
it deserved. A review of this literature also indicates that some
economists engaged in the net energy debate lacked sufficient knowledge
of basic ecological and thermodynamic principles to accurately judge the
assumptions and methods of net energy analysis, much less its
conclusions. Due to this lack of knowledge and to the perceived threat of
net energy analysis as a purported replacement for economic analysis,
some economists criticized and rejected net energy analysis on the basis
of claims never made by its practitioners." [1]
[1] http://www.oilanalytics.org/neten/neten.html
