Towards Type One

Structural considerations on the quest for economic solutions to global sustainability

With assistance from Dr Louis Arnoux, founder of The Fourth Transition Initiative and Director of Fourth Transition Wealth Ltd.

Figure 1: Earth Life's cascading power (from Axel Kleidon)

"Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking." - Steve Jobs

The title of this blog is a tongue in cheek reference to the Kardashev scale, a hypothetical generalised descriptor checklist by which the level of advancement of a civilisation may be measured. One of the key metrics in the Kardashev scale is the degree to which an intelligent life form is able to harness energy for the advancement of a hypothetical civilisation. A “Type 1” civilisation is defined as one that has successfully developed technology capable of accessing all the available solar influx on their home planet from their primary star. This is clearly an absurdity as it is impossible from thermodynamics, systems dynamics and social sciences perspectives. However, given that the present industrial world development dynamics trend is in the direction of attempting total mastery over all life on Earth, this notion is used here to push this trend to its most absurd point in order to single out constraints and define a possible domain of sustainability.

Human civilisation presently sits somewhere around 0.7 on the Kardashev scale, based on state-of-the-art technologies as well as other non-technological measures such as social organisation, health care, political and ethical frameworks. As far as quantitative progress towards the energy objective is concerned, humankind still falls far short of the mark with only approximately 0.09% of solar influx power captured by industrialised infrastructure. We must contrast this with how life on Earth performs. We must talk of life in terms of Earth-Life, that is, a self-organised, self-regulating, and self-perpetuating thermodynamic system operating far from equilibrium and that encompasses some 100km deep of earth crust, the whole of water and atmosphere all the way to where low orbit satellites roam. This physical side of Earth-Life is to it like a shell is to a snail. It is produced by it and it cannot live without it. Earth-Life leverages the solar influx more than 4.4 times. It receives some 510TW of solar power and leverages this to some 2261TW.(1) Currently humankind leverages fossil fuels (about 19TW) to access biotic activity from the solar influx (photosynthesis, about 25TW) to muster in total some 44TW, i.e., some 0.019% of Earth-Life power. The point here is that in terms of a hypothetical Kardashev-type assessment, Earth-Life is already a “type 1” thermodynamic system and has been so for several billion years… It is the only one that is and can be. But it is not quite there yet on the other fronts besides thermodynamics. It is work in progress. Earth-Life is developing/evolving intelligent life through the genus Homo… Yet that intelligent part of Earth-Life is still a long way off from achieving anything sustainable that way.

It is important to note here, from a systems perspective and in the timeframe appropriate to a global, intelligent, sustainable civilisational development, that there exist only two primary sources of continuous energy flow into the Earth’s biosphere. The first is from nuclear fission in the planet’s core and the second is from nuclear fusion in the Sun. Other significant flows include gravity (aka potential energy, including tides generated by gravitational interaction between Earth and Moon), crystallisation, chemical energy, and all related kinetic movements (such as hydro, ocean currents, tectonics and wind).

Besides the two primary forms mentioned, every other form of energy on the planet that is accessible using existing technology, whether as an energy flow or in stored form, is an intermediate stage before final thermal dissipation back into the outer space ground-state and can be traced back to its origin as either solar fusion or subterranean fission power. Both these sources feed into and drive the dynamo of the biosphere and the intermediary stages of work before final thermal dissipation. It is important to note for the purposes of this analysis that both originating sources are mostly thermal in nature.

Much work in the pursuit of an understanding of the systemic thermodynamics of ‘Earth-Life’ was pioneered by researchers such as Alfred Lotka (1922) and Howard Odum (1955 onwards). This work drew heavily on mathematical treatments commonplace in systems-theoretical approaches as developed by Ross Ashby, Ludwig von Bertalanfy, Jay Forrester and numerous others; they have some analogue in electrical engineering. Although there exists considerable scope for expansion of their methods, principles and specific models, one of their key findings was that the standard principles of thermodynamics were not sufficient to adequately explain the existence of life as a negentropic process.

To account for this gap in understanding, Odum proposed a “fourth principle” of thermodynamics, known as the Maximum Power Principle. This has some connection in electrical systems theory with the Maximum Power Transfer Theorem. The Maximum Power Principle states that all natural systems (living and non-living) will tend to self-organise into structures that maximise their use per unit of time of the energy flows that they can access. It is precisely this effect that gives rise to the negentropic conditions required to initiate, sustain and expand life. This is also related to the work of Nobel Prize winner, Ilya Prigogine, on thermodynamic systems operating far from equilibrium. At all levels of dissipation within the biosphere, under selection pressure, natural systems will self-organise to capture and manipulate matter and energy in order to construct complex systems that maximise power. Energy is cascaded through multiple steps and at each stage some of that energy is stored in negentropic structures. Those mechanisms leverage primary energy, e.g., from the solar influx, to access and use much more energy transiently stored in their environment, e.g., biomass molecules in soils, snow packs atop mountains melting and flowing down rivers under gravity, etc., resulting in over unity overall energy performance. It is through such over unity dynamics that life on Earth thrives and perpetuates itself. This is manifested as biodiversity, carbon capture from the atmosphere and carbon cycling. It is the mechanism responsible for stabilising and maintaining life-sustaining conditions on the planet.

Observing the premise that energy is always conserved (1st principle of thermodynamics), and that Earth-Life ("EL") is already a "Type 1” thermodynamic system, the Maximum Power Principle therefore implies that any intelligent part of EL can harvest and make use of only a small fraction of the EL energy surplus that is stored in a variety of ways (biological, kinetic, gravitational, etc.) and add to EL’s existing direct harvesting of the solar influx, but only in such a fashion as not to disrupt the overall EL thermodynamics. To assume any other pathway for captured energy fluxes is to deny the formation of human structures embodied in Earth-Life, which are the essential objective for sustainability. In fact, it is precisely such a cascaded leveraging of energy flows that allows natural systems to exceed the energy efficiency of current human-made energy supply chains by several orders of magnitude.

In terms of achieving sustainability, the present industrial world and its energy supply chain infrastructure must be treated as integral to Earth-Life. The efficiency of Earth-Life and of industrial energy supply and use systems can be readily measured in terms of Energy Return on Investment (EROI). EROI data enable direct assessments of the amount of energy that can be accessed by a given system versus the amount of energy required to create, maintain and expand the system and that, for a given set of conditions, will be maximised by some form of natural phenomenon that fills that specific environmental niche. Many naturally occurring systems of this kind exhibit fractal features, which is very important to maximise power and build high-negentropic structures efficiently.

nGeni Australia proposes an investigation into developing a rigorous theoretical framework for assessing new energy technology against sustainability criteria using thermodynamic systems metrics as the basis of proof. In terms of overall civilisational EROI, humankind’s energy efficiency has dropped by at least two orders of magnitude since the first hunter-gatherer societies formed prior to the emergence of agriculture and pastoralism. In broad overall terms, the societal transitions from energy supply chains that are more closely tied to active Earth-Life (i.e., human activity fuelled with energy flows from biomass) to those that are derived from longer term energy stores derived from Earth-Life activities (i.e., fossil fuels), have permitted accessing increasingly larger amounts of energy to develop and support increasingly complex civilisations. However, except for a few transient periods, they have done so at ever decreasing EROIs. The initial use of fossil fuels was one such period when EROIs rose back to over 100:1, much above EROIs achieved in pre-industrial agriculture. However, due to rapid resource depletion under low efficiency of the technologies used, those high EROIs could not be but transient and of short duration (a century at most). The overall EROI for the present, global energy supply and use system is below 10:1, i.e., well below the minimal viable level for any sustainable civilisation.

Broadly speaking, it is arguable that the long-term decline in civilisational EROI associated with the transition from hunter-gatherer to agrarian and now industrialised societies is directly tied to the length and complexity of energy supply chains, combined with the increasing overall inefficiency of energy accessing and use. In many (if not most) recorded civilisational collapses, faltering EROIs of primary energy supply chains can be identified as key drivers of rapid decline and eventual collapse.

It is established in both empirical and theoretical research that the globalised industrial world is grounded in thermodynamics, not finance and that the petrodollar-backed financial/banking system is merely a transient superstructure layer atop the underlying physics. As such, the industrial world and its energy supply and use system is integral to solar powered Earth-Life. Presently that industrial sub-system is destructive of the Earth-Life system it depends on, most particularly through massive emissions of greenhouse gases that are a side effect of massive energy wastage. In this respect, the Black-Scholes equation, hailed by some as a tool of choice for pricing the future but equally as descriptive in accounting for the energy costs of carry of stored energy, can be seen as accounting approximately and partly for the viability of biological life processes in EROI terms. Wassily Leontief’s work on input-output matrices is also relevant to the study of EROI data, as is the work of economist Piero Sraffa (Piero Sraffa, 1960 Production of Commodities by Means of Commodities, Prelude to a Critique of Economic Theory. Cambridge University Press). However, the author suggests that input-output research would be more soundly grounded in thermodynamics, rather than expressed in financial terms. Some of that kind of work has been already pioneered in part in New Zealand during the 1980s (Murray Patterson, 1984, Applications Of Linear Modelling In Energy Analysis, PhD thesis, Massey University, NZ).

Since the beginning of the industrial revolution, it has been the high EROI of fossil fuel-based energy supply and use systems that has formed the backbone of all industrial developments, including photosynthesis-based energy supply chains (i.e., agriculture, fisheries and forestry). This happened firstly using coal and later crude oil (petroleum) with its higher EROI and greater portability (hence lower transport costs in energy terms).

At this point the defining feature of the problem becomes apparent – it takes oil to get oil. Put another way, the core component of the global energy supply chain is (or was, until recently) self-powered. This is the distinguishing characteristic of our most critical energy supply chain dependency and is the crux of the problem. The EROI of oil itself has been declining since at least the early 1970s and is rapidly diminishing further towards zero as reserves become increasingly more energy intensive to access. For as long as petroleum fuel sustains the core of the global energy supply chain (i.e., until “something else” with higher EROI replaces it), declining EROIs from oil also imply geometrically increasing carbon emissions, even if total net energy consumption were held constant, due to the increased amounts of oil required just to extract and transport it.

It is intuitively obvious that were an energy technology to be invented that enabled a whole energy supply and use system with EROIs higher than that of oil-based EROIs prior to the 1970s (i.e. above 100:1) it would immediately displace oil as it would be much more profitable, given that oil-based EROIs are now well below 10:1. To date, that has not been the case for any of the systems based on so-called “renewables”, i.e. wind, photovoltaics, ocean wave, tidal, hydro, nor with nuclear. Yet, the capability to achieve an EROI above the original oil-based EROIs is the acid test for any sustainability proposal claiming to be able to replace liquid petroleum fuels and all other fossil fuels in the global energy supply chain.

In the absence of such a higher EROI solution, any new energy technology can be and must be viewed in an overall systems analysis as merely an extension of the existing petroleum backbone, unable to outperform it and therefore unable to replace it. In other words, a longer supply chain with yet lower overall energy efficiency, delivering less net energy per total primary energy unit expended, which will only increase the rate of petroleum depletion and accelerate the Climate Emergency.

Naive commentators might argue that once EROIs from oil drop below the next available alternative then oil use would be discontinued. However, in real life matters are more complex than assumed by neoclassical economics. First, there is presently a strong incentive to abandon fossil fuels due to the consequences of oil use, aka Climate Emergency, hence the drive to decarbonise with renewables, and second, the current status of the global energy system has been characterised as the Big MES (Mad Energy Scramble), whereby the oil industry, being no longer fully self-powered, draws additional energy from other energy chains (coal, gas, nuclear, hydro, wind and solar) that in turn depend on net energy from oil, aka transport fuels. So integral to the problem is the oil-powered infrastructure, that it places constraints on every part of the overall energy supply and use system and drags it back to oil EROIs as the limit of performance throughout. The low EROIs of all present alternatives will not permit the construction of suitable replacement infrastructure before resource exhaustion. Even though oil EROIs are already too low to sustain the industrial world, the Big MES will continue until the global energy supply system collapses, as has been witnessed throughout human history (2). There is a similar prospect for the decarbonising drive.

There is strong evidence that the breakdown of the global energy supply system is already well underway albeit masked by the Big MES dynamic and the massive and ever-increasing level of global debt, debt that can never be repaid and that eventually will no longer be able to be serviced (since the high EROIs that are necessary to possibly do so are no longer available). This Big MES mechanism underlies several of the seemingly disconnected existential crises facing humankind, including the present energy crisis, the Climate Emergency, the other ecological threats, the failing financial system, and rising civil/political tensions.

Furthermore, concerning the Climate Emergency, that is, the effects of greenhouse gases emissions on Earth’s dissipative capacity, they are demonstrably a direct consequence of low EROIs generally. Those low EROIs result in the conversion of some 88% of our captured energy from all sources into waste heat and in rigidly associated GHG emissions, including related to the build-up of most of the so-called “green” or “clean” technologies such wind, solar photovoltaic, ammonia and hydrogen.

Just as it “takes oil to get oil”, whatever is to replace oil must be able to produce more than it consumes to power itself. Renewables can’t become self-powered and nuclear cannot achieve this status either (both concerning fission and fusion). Their EROIs (when the energy cost-of-carry is accounted for) are simply not high enough. Framed in system-theoretical terms, the Maximum Power Principle predicts that for as long as oil-based EROIs for the whole global energy supply and use system seemingly exceed that of potential other energy supply system substitutes, because of the Big MES dynamic, the current agonising system will continue until it finally collapses. Nothing else can succeed unless the oil-based energy supply chain that everything else depends on, or at least parts of it, are able to be supplanted with infrastructure that exhibits substantially higher EROI. Furthermore, such a substitution can only succeed if it takes place within a timeframe that allows a progressive transition from one to the other before collapse occurs due to the combined effects of declining EROIs, resource depletion, Climate Emergency, other ecological dynamics, and related social and financial breakdowns.

It follows then that the focus of research efforts should not necessarily be in pursuing low-carbon emissions infrastructure en masse, but instead should be focused on maximising overall EROIs for the whole, global energy supply and use system by shortening and removing as many intermediary steps in the supply chains as possible, achieving maximum efficiency of each step along the chains all the way to and including final uses, leveraging accessible energy as Earth-life does and reducing the energy costs of creating replacement energy infrastructures.

Only when the EROIs of some alternatives can reasonably compete, in the above fashion, with the present system based on petroleum oil can we hope to transition off fossil fuels and become truly sustainable via a new self-powered energy world. If that can be achieved then the transition will happen by itself. The challenge is first and foremost thermodynamic and structural.

The question of how to effect the transition to a fossil fuel free economy then becomes one of social dynamics. That is to say, the challenge is find out how to structure business models that naturally drive the industrial world towards high overall EROIs and therefore drive the required system restructuring via the profit motive down to the end-user level. Regulation and carbon/green credit schemes cannot achieve this because they do nothing to drive a solution able to compete with the oil-based system profitably. They only succeed in moving accountability for the energy shortfall from one party to another. Somewhere in the supply chain however, net energy from oil must always make up the gap – this is baked into the formula.

A systems-oriented analysis of how Earth-Life achieves such high EROI provides all the clues needed to meet this requirement, as life has naturally evolved this way in response to the fourth principle of thermodynamics. It is declining EROI, not lack of energy, that is threatening our sustainability. Our present energy requirements are less than 0.1% of the total solar influx, which is available at all times, anywhere on the planet, regardless of the diurnal cycle (the temperature at the Earth's surface is approximately 300 deg.C above outer space background on average). In such a context, the business model is not separable from the physical implementation and is integral to the “technology”. Thus, we can speak to the requirements of both as follows:

Candidate substitute energy systems must be scalable in a manner that increases overall EROIs, in particular due to a networking effect. Centralised infrastructures and large distribution networks suffer decreased capacity and increased losses with increasing complexity and sizes. Decentralised, non-hierarchical networks based on finely distributed energy use and energy harvesting unit systems can exhibit the high EROIs required for sustainability. Furthermore, their EROIs can remain high and increase with increasing network size and interconnectedness. In other words, expressed mathematically, their architecture must be fractal by design and offer an inherent profit incentive for increased connectivity and expansion.

In the above perspective, energy accessing and use devices must be profitable at every scale layer – EROIs for user nodes must result in overall net positive energy outcomes within as short a time frame as possible and such EROIs must encompass all energy costs from mine-to-grave, including any intermediate recycling. As these costs include risk adjusted costs of carry, the supply chains to manufacture the equipment based on the new technology must be as simple and short as possible. In other words, the device(s) must use commonly available (preferably recycled) cheap materials, simple manufacturing methods and minimal energy requirements for their manufacture, deployment, maintenance and upgrades. The cost of expanding connectivity between nodes must be justified by the additional collective network capacity in order that the network grows organically to meet the criteria of increasing overall EROIs. This strategy allows a new distributed energy infrastructure to be built in a bottom-up fashion from equity thus avoiding the inefficiencies of government, burdensome transaction mechanisms, long-term financing and debt.

Energy systems must incentivise self-structuring that maximises EROI through energy leveraging and cascading from low to high entropy levels. Work is defined as energy transferred from source to sink and so the greater the number of times energy can be recycled through efficient leveraging of primary energy flows, the greater the EROI. For the purposes of economic analysis, work translates directly to revenue and EROI to profit.

Thus, interconnected systems that can cascade energy use as many times as possible will generate the most revenue and the most profit, as well as localising energy uses that reduce losses.

The calculation of EROIs achieved with suitable new technology must include the replacement energy cost of all redundant infrastructure. The most economical way to do this is to develop new liquid fuel technologies that permit old infrastructure to be progressively phased out at pace. Current efforts based on “renewables”, nuclear, and electric vehicles cannot achieve this within the required timeframe. Instead, the proposed strategy ensures that the energy cost of replacement is met by the emergent low-emissions sustainable system (profitably) rather than the old failing supply chain. The low carrying cost of the new low-emissions/high-EROI fuels drives the adoption of technological upgrade in a free-market mechanism. Clearly the earlier this process can be commenced the better.

nGeni technology can meet this challenge and is the first practical attempt to embrace the principles of Earth-life energy transformation in a complete energy supply chain system. It is this structural transformation that is actually the prerequisite objective of a sustainable societal evolution “towards Type One”.

1 Based on Axel Kleidon, Life, hierarchy, and the thermodynamic machinery of planet Earth, Physics of Life Reviews 7 (2010) 424–460, www.sciencedirect.com, doi:10.1016/j.plrev.2010.10.002.

2 Tainter, Joseph, 1988, The Collapse of Complex Societies, Cambridge University Press; Tainter, Joseph A., 1996, “Complexity, Problem Solving, and Sustainable Societies”, in Getting Down to Earth: Practical Applications of Ecological Economics, Island Press, and Tainter, Joseph A. and Crumley, Carole, “Climate, Complexity and Problem Solving in the Roman Empire” (p. 63), in Costanza, Robert, Graumlich, Lisa J., and Steffen, Will, editors, 2007, Sustainability or Collapse, an Integrated History and Future of People on Earth, The MIT Press, Cambridge, Massachusetts and London, U.K., in cooperation with Dahlem University Press.