Exergy for Resource Accounting

Written by Andrew Wallace on 2025-10-10. Posted in Economy, Energy. No Comments on Exergy for Resource Accounting

EXERGY FOR RESOURCE ACCOUNTING

Written by Dr. Andrew Wallace PhD BEng(hons) EurIng

INTRODUCTION

Since its beginning, the technocracy movement has advocated a thermodynamic interpretation of economics [Tec]. This comes from foundation works in thermodynamics and the works of Professor Soddy [Sod] .

In thermodynamics, we can model all processes as converting energy from one form to another and in the process generating work or forming structures of low entropy. Nothing gets done without the conversion of energy. We lose no energy but we done change the form of the energy and as we do so the resulting energy forms have less use [YoFr].

Although originally scientists developed thermodynamics for heat engines such as steam trains the laws of thermodynamics have much wider application. We can apply them to the human body and to society as a whole and to information [Cha, Geo]. It was from this realisation that the technocrats in the US used thermodynamics as a way to interpret economic and resource allocation system.

Since the 1930s science has progressed and a number of concepts have become unified in a thermodynamic understanding. For example, we can understand information as a form of entropy as well as economics and social history and life (as processes that try to maximise low entropy).

EXERGY

Entropy measures a negative concepts; disorder or the uselessness of energy. The higher the entropy the more the disorder and the less use we can obtain from a given quantity of energy. We can look at this another way and measure the amount of useful energy we have; the negentropy or exergy [Wall]. The term “Exergy” means external energy; its a measure of our ability to do work. Our ability to do work has a dependence on the environment. For example, if we have a high temperature difference between a heat source and the outside world we can gain more work than if we have heat at a lower temperature and if we had heat at the same temperature as the surrounding environment we could get no work out of it. Thus, exergy has a relationship to environment and a relationship to value. Ice in the desert has a higher exergy content and thus higher value. Ice in the Arctic has low exergy and low value.

The entropy concepts allows us to capture a number of other concepts in thermodynamics such as Gibbs energy and Helmholz energy which measure useful energy in relation to heat and heat and pressure reservoirs. We can also measure exergy content of materials through measuring the Gibbs energy in relation to the environment form of a material and the concentration of that material.

We can extend exergy to measure information. Entropy was linked to information in the work of Shannon [Sha]. The more states a system has the greater the potential the system has for storing information and, thus, the more useful the system from an information perspective. Thus a system with high information potential has low entropy or high exergy. The information potential also has a link back to the environment as known information (information that matches the environment) has no value but information that differs from the environment (from what we know) has value.

EXERGY AND RESOURCE ACCOUNTING

In energy accounting we measure the production capacity, in terms of energy, we have for personal use and then divide that with the number of people we have. We then issue Energy Credits (ECs) to each person for them to allocate to production. In the system we produce and then consume energy credits. Actually, we really measure the amount of useful energy used in production not the energy itself; we measure the amount of exergy consumed in production.

A resource allocation system, however, does more than just allocate energy for production; it also allocates materials. Each item produced takes a certain amount of raw materials to produce it and this needs taken into account when managing the system. Exergy offers a way we could do this in common with energy used in production. In using exergy as a measure we not only measure more closely what we do in production but also have a common unit to measure the materials used as well. As a hi-tech society not only consumes exergy but also utilises information, exergy also gives us a common unit of measure for measuring information. Thus exergy gives us a common unit of measure for energy usage, materials and information.

CONCLUSION

As we can use exergy as common unit for energy usage in production and materials as well as information the exergy concept becomes a possible accounting method for a energy accounting system or a resourced based economy.

REFERENCES

[YoFr] “University Physics”. Young and Freedman. Addison Wesley

[Wall] “Exergetics.” Göran Wall. Bucaramanga 2009

[Geo] “The Entropy Law and the Economic Process”. Nicholas Georgescu-Roegen. Harvard University Press. 1971.

[Cha] “The Physical Foundations of Economics”. Jing Chen. World Scientific Printers. 2005

[Sha] “The Mathematical Theory of Communication” C. Shannon. The Bell Systems Technical Journal. 27, 379-423, 623-653.

[Sod] “Wealth, Virtual Wealth and Debt” George Allen & Unwin. Frederick Soddy. 1926

[Tec] “Technocracy Study Course”. M. King Hubbert et al. Technocracy Inc.

Thermoeconomics: The use of Exergy in Alternative Socioeconomics

Written by Andrew Wallace on 2025-10-08. Posted in Economy, Energy. No Comments on Thermoeconomics: The use of Exergy in Alternative Socioeconomics

Thermoeconomics: The use of Exergy in Alternative Socioeconomics

Written by Dr. Andrew Wallace PhD BEng(hons) EurIng

Abstract

As our current socioeconomic system does not have a sustainable nature thus, it will collapse. This paper presents an alternative to today’s system that utilises exergy as a common accountancy unit for a sustainable resource base socioeconomic system. An item’s cost, in terms of exergy, reflects the physical cost of the item. The system utilises management techniques such as optimisation, Life Cycle Analysis and Cost Based Analysis to produce items efficiently and minimise their exergy and environmental cost.

Introduction

Our current socioeconomic system comes with a number of attributes that results in the system having an unsustainable nature. The system uses a fiat money system; where banks create money, out of nothing, which they then lend out. The borrowers then pay back the money with interest. Thus our money supply takes the form of debt and we always have more debt in the system than money due to the need to pay interest and for companies to acquire profit. “Beneath” the world of economics lies the actual psychical system of resources, production and goods which we use the money system to regulate. However, the money does not represent a physical variable of the system. Instead it has a subject nature. The fiat nature of our money system and its disassociation form the physical world necessitates and allows the system to drive constants exponential growth. However, no physical system can sustain exponential growth. Although banks can create money ad infinitum, the physical world cannot keep up and our system with either collapse, change over to an alternative sustainable system or we will “cut back” the system through wars, disease, famine or other natural disasters to allow more growth.

Other reasons for the unsustainability of our current system included the dependence on finite energy sources such as oil and nuclear power as well as the liner form of production we use (from resources to production to disposal) rather than a sustainable cyclic system (from resources to production to recycling / reuse to resources) [Ekins, GowWal].

This paper presents and alternative, sustainable, economic system using exergy as a foundation.

Economic systems as a resource allocation system

Economic system represent a type of resources allocation system. In an economic system we have a set of resources, R, and set of production facilities, P, which produce a set of goods, G, used for consumption. Such a system requires energy to run. Actually, the system requires a set of energy producers that make available a supply of usable energies (exergy), Ex. People (H), though demands for goods, then drive the system.

The system then becomes:

Where D represents the demands and M the manufacturing capacity to meet those demands. We can regulate such a system using variables that represent the state of the system. Exergy forms one such variable.

Exergy as a common accountancy unit

The term “exergy” refers to the usable energy for a physical system and follows from the second law of thermodynamics; we cannot full change heat to work. Energy comes in different forms such as potential, chemical, kinetic and electrical energy. Not all forms of energy have the same potential to produce work. We can convert electrical energy completely to work but cannot convert heat energy fully to work [Wall].

As any socioeconomic system requires energy to work we can measure how much available energy (as exergy) we have and that will give us a measure of the system’s ability to produce.

A socioeconomic system not only needs energy but also materials. We can also use exergy as a measure of materials. This follows from the materials having a chemical potential. Thus, the exergy, Ex, we have becomes:

In addition, information can also have an exergy value. This follow from the application of statistical mechanics and information theory where we can define a particle as have one bit of information.

As we can use exergy to measure usable energy, materials and information that a socioeconomic system utilises, exergy, therefore, forms a common accountancy unit for any socioeconomic system.

Exergy has an additional property of use for a socioeconomic system; exergy has a relationship to the environment. The greater the difference a system exhibits between itself and the surrounding environment the greater the exergy becomes. Thus ice in the tropics has a higher exergy value than ice in the Arctic. Heating has a higher exergy cost in the winter than in the summer [Wall].

As exergy forms a common accountancy unit and has a relationship to the environment we can use exergy as a control variable for a resource allocation system such as a socioeconomic system.

Overview of an Exergy Based Socioeconomic System

A socioeconomic system based on exergy becomes a resources allocation system where we would have a system that uses state variables to control the system. The system would use exergy to measure the production cost of an item so each item produced would have a cost that reflects the physical cost of that item rather than a subjective monetary value. A society would also have a certain amount of exergy available for the production of each item and the processes that go into maintaining and running society. The resource allocation problem then becomes one of allocating exergy to production based on the user initiated demand for goods and the maintenance requirements of the system. We could do this through calculating how much exergy we would have available for the system, within a given time period, as a whole allocate x amount for the system maintenance and large common projects then distribute the remainder equally among the user base as “Energy Credits” (EC). The ECs effectively represent production capacity and the users can then allocate EC to production to acquire personal items.

Management of the Resource Allocation System

The resource allocation will need management to efficiently control the system and to minimise production and environmental damage, if we wish to have a sustainable system, as well as determine the cost of an item.

Figure 1. Macro-economic model of an exergy based socioeconomic system

G = goods M = materials E = energy / exergy Ec = Energy Credits

Determining an item’s cost

Physical variables determines the cost of an item in the presented system rather than the subjective valuation of a (free) market. We express the cost in terms of exergy so each item has an exergy value giving the amount of exergy consumed in the items production. We can use Life Cycle Analysis (LCA) as a method for determining an items cost.

The term LCA refers to a method of determining the processes and their impact for the production of an item from the beginning of production until the disposal of the item. From the acquisition of the raw material to the production of the parts to the production of the final item and then later the disposal of the item. LCA assess the contribution to environmental damage and resource depletion but it could also recode how much exergy the process of producing an item consumed at each stage. How much in acquiring the raw materials? In transporting the parts? In producing the whole? and in disposing of the item?

LCA analysis begins with defining goals and boundaries for the study. It then goes on to perform an inventory analysis. During the inventory analysis the assessors collect data on the system for the items production as well as model the whole process.

After data collection, the assessors evaluate the impact of the process in various categories. We can then evaluate these impacts and determine the actual physical cost in terms of exergy for a given item.

Cost Benefit Analysis

Cost Benefit Analysis forms a technique for assessing the pros and cons of the production of a item. Normally, a CBA states the costs in monetary terms. For a socioeconomic system based on exergy the CBA would use exergy as the unit of cost. This gives a more objective assessment as exergy directly relates to the physical state of the system, whereas money does not [RahDev, Owen]. Also, the use of exergy enables the assessors to fully assess the costs of an item as all benefits and cost would utilise the same accountancy unit. So, for example, the environmental impact would have an exergy cost which would lead to a more realistic assessment of costs compared to a monetary based assessment where assessors can ignore much of the environmental cost if it doesn’t have any direct money value (such as if the polluter doesn’t have to pay).

Optimisation

Management of the system aims to minimise impact on the environment and maintain a sustainable system. To do that, the management process would need to optimise the production of goods so that production use the minimum amount of materials and energy for the maximum amount of life expectancy. [Fran]

The optimisation problem involves a set of functions to optimise and a set of boundary criteria. An exergy based socioeconomic system would have the optimisation functions:

maximise life expectancy (L)

minimise material and energy (exergy cost)

Where and represent the optimisation functions.

Subject to the follow constants:

within the limits of the available energy and material supply as well as environmental impact (I).

For example, an item car, requires a certain amount of material of a given type; steel, aluminium or plastic. Each possibility for construction has a certain cost for production in terms of exergy; exergy using in extraction of the raw material, referencing and production of the base material as well as transportation. Each material will also have an associated life expectance. So, the optimisation problems comes down to maximising the life expectance for the minimum exergy cost such as a plastic construction might have a lower exergy cost but shorter life expectance than steel and aluminium might last longer than steel but have a higher exergy cost. At some point we would have the optimal material for a given cost.

Engineers have a variety of optimisation methods available, which include the following:

1. Calculus (max and min)
2. Pinch method
3. Convex optimisation

Calculus (max and min)

Calculus forms the basic method for optimising functions through first and second derivatives to find the maximum or minimum point of the function. Engineers could use calculus to find the point of maximum life expectancy and the points of minimum material and exergy usage as well as minimum environmental impact.

Pinch method

The pinch method forms an example of a widely used optimisation method, specially adapted for heat energy systems and engineers use the method of optimising large scale industrial processes [Pinch]. Two phases compose the pinch method; an analysis phase and a synthesis phase.

The analysis phase involves the collection of data form measurements of the actual system and simulations. The analysis phase also uses site expertise to validate the data. From the data, engineers develop models of proposed changes. They then assess the impact of the proposed changes. The analysis phase involves iteration around a loop.

The synthesis phase aims to effect actual improvements in the system.

Convex Optimisation

The term convex optimisation refers to a set of techniques which includes least square fit and liner optimisation. Once defined as a convex problem, engineers can often find the solutions for optimising a certain criteria within given limits using well known methods such as solving simultaneous equations.

Summary

Our current socioeconomic system does not have the property of sustainability and, therefore, will collapse. If we wish to maintain a good standard of living then we will need to find an alternative to our current system. This paper presents one such alternative.

A socioeconomic system represents a form or resource allocation where we allocate raw materials to the production of goods. Such a system forms an example of a physical system. We can control such a system through measuring the physical variables of the system. Exergy forms a common accountancy unit for such control as exergy measures not only the usable energy of a system but we can also measure the materials in the system as well as information with exergy. The system would then need management to maintain the system in a state of dynamic equilibrium within the limits nature imposes to keep the system sustainable.

Items produced would have an associated exergy cost to produce that item. We can use LCA and CBE (in exergy terms) to evaluate an item and determine its exergy cost. Energy Credits (ECs) represent the production capacity in terms of exergy. Citizens could then allocate ECs to production to acquire items they want.

Managers and engineers would use various optimisation methods to assess the optimal production method for required items. They would aim to minimise environmental impact through minimised material and exergy utilisation as well as maximising life expectancy. For optimisation, we can use exergy as a common accountancy unit for assessing both the benefits and costs of production in more realistic terms than a money based approach.

References

[Ekins] Paul Ekins, (2006), THE FUTURE OF SUSTAINABLE DEVELOPMENT, in Dimensions of Sustainable Development, [Eds. Reinmar Seidler, and Kamaljit S. Bawa], in Encyclopedia of Life Support Systems (EOLSS), Developed under the Auspices of the UNESCO, Eolss Publishers, Oxford ,UK, [http://www.eolss.net] [Retrieved March 12, 2010]

[GowWal] John M. Gowdy, Marsha Walton ,(2008),SUSTAINABILITY CONCEPTS IN ECOLOGICAL ECONOMICS, in Economics Interactions With Other Disciplines, [Ed. John M.Gowdy], in Encyclopedia of Life Support Systems (EOLSS), Developed under the Auspices of the UNESCO, Eolss Publishers, Oxford ,UK, [http://www.eolss.net] [Retrieved March 12, 2010]

[Wall] Göran Wall. Exergetics.

[ RahDev]SM Osman Rahman, Stephen Devadoss, (2005), ECONOMIC ASPECTS OF MONITORING ENVIRONMENTAL FACTORS : A COST-BENEFIT APPROACH, in Environmetrics, [Eds. Abdel H. El-Shaarawi, and Jana Jureckova], in Encyclopedia of Life Support Systems (EOLSS), Developed under the Auspices of the UNESCO, Eolss Publishers, Oxford ,UK, [http://www.eolss.net] [Retrieved 5 February, 2010]

[Owen] Anthony D. Owen, (2004), ENERGY POLICY, in Energy Policy, [Ed. Anthony David Owen], in Encyclopedia of Life Support Systems (EOLSS), Developed under the Auspices of the UNESCO, Eolss Publishers, Oxford ,UK, [http://www.eolss.net] [Retrieved 5 February, 2010]

[Fran] C. A. Frangopoulos, (2004/Rev.2008), OPTIMIZATION METHODS FOR ENERGY SYSTEMS, in Exergy, Energy System Analysis, and Optimization,[Ed.Christos A. Frangopoulos],in Encyclopedia of Life Support Systems(EOLSS), Developed under the Auspices of the UNESCO, Eolss Publishers, Oxford ,UK, [http://www.eolss.net] [Retrieved 12 March, 2010]

[Pinch] Pinch Analysis: For the Efficient Use of Energy, Water and Hydrogen. ISBN: 0-662-34964-4

Energy Accounting For Beginners

Written by enrique.lescure on 2025-10-01. Posted in Economy, Energy, Sustainability. No Comments on Energy Accounting For Beginners

Energy Accounting for beginners

INTRODUCTION

The goal of the Earth Organisation for Sustainability follows from our understanding of the world’s problems today at the start of the third millennium. We argue that the human civilization currently is 1) utilizing resources and surface in a manner which disturbs climate, soils, freshwater reservoirs and ecosystems, 2) that this disturbance will cause a “loss of social complexity” and threaten the welfare of billions of human beings and 3) that the process which is causing these life-threatening environmental problems are caused by the current socio-economic system.

From this follows that any type of long-term solution to the current conundrum would have to entail the phasing out of our current global socio-economic system and its replacement with a new global socio-economic system.

The E.O.S has developed a blue-print for this new sustainable socio-economic system, and our goal remains to test it.

The purpose of this introductory article is to outline the broad characteristics of our socio-economic model, Energy Accounting, and why we primarily want to run field tests.

THE THREE CRITERIA

The E.O.S has defined three criteria for sustainability which a new socio-economic system must conform to.

The system must utilize equal or less resources than the Earth can renew.
The system must utilize as much of the available energy and utility of the resources used as sustainably possible.
The system must ensure a dignified level of life where access to food, housing, heating/cooling, clothes, education and healthcare is ensured for every human being on Earth.

These are the three poles within which a socio-economic system must find itself for it to be deemed sufficiently sustainable, according to us.

Main article on the Three Criteria.

ENERGY ACCOUNTING – A BRIEF DESCRIPTION

Energy Accounting as envisioned by the thinkers and engineers associated with the E.O.S is built on the idea that money as a means of exchange should be replaced by Energy Credits, which would represent units of production capacity. The system is resting on three pillars, the Energy Survey, the Technate and the aforementioned Energy Credits.

The Energy Survey

The first step of the economic calculation process under Energy Accounting would be the initiation of a global Energy Survey, where resources and ecosystems are continuously monitored by several thousands of institutions, communities and millions of individuals, and the data input would determine the global ecological budget of the planetary civilization.

The Technate

The Technate is envisioned as a supranational institution responsible for validating the Energy Survey and the creation and distribution of the Energy Credits. It would play a role reminiscent of a central bank under a monetary market economy.

The Energy Credits

The global ecological budget is divided into a specific number of Energy Credits, which are issued by the technate and distributed out to the users, which will be both holons (institutions/organisations/networks) and citizens, with which we mean individual human beings.

When used, the Energy Credits cease to exist, and are transformed into information that the user has allocated a share of their Energy Credits to a process of labour with the purpose of realising an item, a service or a process. In short, the Energy Credits represents how much physical energy is utilized in a production process, from the extraction of raw materials through the assembly towards the users and finishing with the energy cost for environmental compensation. This in order to ensure that the economy does not use more energy and resources than the global ecological budget ceiling allows.

New Energy Credits are created and distributed at regular intervals. When that is happening, all existent Energy Credits from the prior period are deleted.

The Holonic Social Model

Due to the development of information technologies such as the Cloud, hierarchical and rigid institutional systems will gradually be phased out and replaced with horizontal and fluid holons. A holon (meaning part-whole, a part which can be considered a whole in its own right) will be an autonomous, horizontal project group centred on fulfilling a function – often defined by its members. Given that capital as we know it has been abolished, factories, production centres and idle machinery may be utilized by numerous holons on a running schedule locally determined. The holons form their own networks to fulfil specific social, environmental and individual needs, and are empowered to conduct production from the allocations determined by the users.

Thus, we are talking about a radically de-centralized future, directed towards resilience and autonomy. People would in general experience a higher degree of freedom in terms of how they want to utilize their time, but also in terms of democratic participation.

Benefits – for the environment

It will not be possible to utilize more resources than the planet can renew.
Production processes which demand more efficient use of energy will become more affordable than processes with a high environmental footprint, incentivizing green technologies.
Things will only be produced when the users are actively asking for them, reducing overall production.
Users will know the environmental footprint in the prices of goods and services and will consciously strive to reduce their footprint.

Benefits – for society

Abolition of debt.
Abolition of the boom-bust cycle.
Abolition of life-threatening poverty.
Abolition of inflation and deflation.
Reduction of artificial scarcity-based bottlenecks.
We will no longer be forced to destroy the environment by the need for exponential growth.
Reduced inequality between the Global North and Global South.
Increased transparency.

Benefits – for the individual

A guaranteed minimum income.
Guaranteed housing.
Guaranteed education.
Guaranteed healthcare.
Shorter work hours due to reduced need for production.
More time to develop family life and personal interests.
Higher resiliency and personal/communal autonomy.
A higher degree of personal freedom.

OUR GOAL: TO TEST (ASPECTS OF) ENERGY ACCOUNTING

Here comes the aspect of the E.O.S which people often find the hardest to wrap their minds around. Our goal is not to – in a political or revolutionary manner – replace Capitalism with Energy Accounting. Our goal is to test aspects of Energy Accounting to learn how it would operate in the real world.

Specifically, we want to learn the following things:

Are there any aspects of Energy Accounting which do not work?
Are there any aspects of Energy Accounting which can be improved?
How will the introduction of Energy Accounting alter human behaviour?

And, most important of all:

Is Energy Accounting capable of fulfilling the Three Criteria.

That is the only thing we are asking for – the opportunity to run field tests on an alternative system. If the current socio-economic system employed by a majority of the regions on Earth may be unsustainable, then it would be a positive to have alternatives available. There is a possibility that we are wrong, and that the current system actually is possible to combine with sustainability (which we believe it isn’t). But there also is a possibility that we are right.

Even if you disagree with our hypothesis, it is wise and prudent to keep the door open for alternatives.

WHY THE EOS AND NOT ANY LARGER GREEN PRO-SUSTAINABILITY ORGANISATION?

Most green organisations are operating under the assumption that the main problem is the symptoms. They are doing a laudable work and if you feel they better correspond to your interpretation of the current situation, then they are better served by your help.

The E.O.S wants to find a realistic and achievable model which can replace the current socio-economic system and fulfil the Three Criteria. This is our primary focus. We are not primarily an activist group or a political party.

HOW YOU CAN HELP

The E.O.S is a small organization and in need of manpower and resources to fulfil its operational goals. In short, we are in need of financial support to conduct our projects, like the ERCS developed by E.O.S Cascadia.

We are gratefully and duly accepting grants and donations from institutions and members of the public, and it is our responsibility to ensure that the budget is utilized in a transparent manner and in accordance with the designated projects it’s earmarked for.

We love to have new members and volunteers. From September 2020, membership fees will go to the local E.O.S associations.

As an E.O.S member, you have the power to propose projects and amendments to our internal decrees, as well as to petition to form holons.

Do you have a project you care about and which you believe can be of aid in assisting us towards achieving the Three Criteria? Please talk with us, and we will see if we can find ways to assist you.

We are interested in learning of and connecting with projects aiming to fulfil the Three Criteria, and which operate on local, regional or global levels.

This planet is your planet, and right now our current socio-economic system has caused a series of unintended, emergent phenomena which may cause a new dark age for humanity. We have never before as a species faced a situation like this, and we urgently need to develop alternative ways of resource management if we are going to achieve a sustainable transition.

If you want to join us, please go here: https://eosprojects.com/join-us