Net Energy Analysis - what are we using?

A “no regrets” strategy would be to assume that cost is a sufficiently close measure of energy use to use money as an “energy proxy”. What, then, are the consequences for future actions?

First, we have to ensure that the market price of goods and services not only reflects the value chain costs to the point of consumption, but also accurately reflects the costs for the whole life cycle. This means that all R&D, production, maintenance and decommissioning costs are taken into account. This does not mean that certain goods and services should not be subsidised - it means that any subsidies should be transparent.

Second, we must realise that as most of the energy that is presently used is carbon-based - in Australia about 95 per cent - a corresponding proportion of all goods and services is carbon-based. Therefore, it is nonsense to talk about nuclear and solar as “green and clean”, simply because there is no smoke going up a chimney. The carbon is burnt at earlier and later parts of the life cycle and off-site in maintenance and fuel production (in the case of nuclear energy). The total energy consumption is, or should be, reflected in the cost per unit of electricity.

Present data indicate that wind and nuclear cost about the same and coal and gas turbines cost a little less and photovoltaics about two to three times as much. So unless the actual cost of renewables and nuclear can be significantly reduced, they are no better at saving carbon burning than the direct carbon burners - gas and coal.

Third, energy conservation measures are only sensible if they save money. For example, although a Prius has half the fuel consumption of a comparable Corolla, its five-year costing (capital depreciation, maintenance, insurance, registration, fuel and so on) is one-third more than the Corolla. The major energy expenditure has been transferred to an earlier stage in the value chain- and offshore. A similar situation pertains for buildings - both domestic and commercial - that have passive solar features but are more expensive to buy. As the average building costs several hundred times the annual heating and cooling bill, the same analysis needs to be applied to buildings as cars.

Fourth, the “food miles” debate should be seen as a distraction. Transport is only one part of the value chain. If the food costs more, then more energy was spent in getting it on the shelf, irrespective of the distance from “gate to plate”.

Finally, we must realise that if GNP increases, then so will carbon burning unless it is offset by increased productivity. As productivity has increased at about 2 per cent per year over the past 100 years, that is about the limit of GNP increase. If population continues to increase, productivity has to also increase correspondingly.

There are many more implications to Net Energy Analysis. Unless we allocate some significant resources to updating the 1970s analyses, it is likely that many wrong decisions will be made. In the meantime, the AEI approach provides an interim “no regrets” strategy.