Money Won’t Solve the Energy Problem

The refrains “If we need more energy we’ll just spend more money on it.” And “If we had a bigger economy we could afford to spend more on energy.” are commonly heard when biophysicists and environmentalists bring up the issue of resource depletion.

But money can’t be used to buy our way out of ever increasing energy costs and shortages. Why?

Money is a tool used to make exchange of goods and services as efficient as possible. It replaced the system of barter where 15 logs might have been exchanged for 5 pigs. Obviously this was very limiting and imprecise. Money made trade much more efficient and able to take place over vast distances by being a common, highly portable representation of value.

But money is not real goods; it is a claim on real goods. It can be used to allocate resources but it is not the resources itself. It is printed paper or keystrokes on a keyboard.

When we use money to get more energy, what we are really doing is allocating more resources to getting harvesting that energy. Every resource we use in our lives and in the commercial economy was created using energy. Every toothbrush, every sprig of parsley, every drill bit and oil rig was planted, harvested, designed, produced or delivered using energy. In using more money, we are using more energy.

It takes some energy to get more energy. When we mistake printed promises, the commercial worlds proxy for all goods and services, for real goods and services, we are effectively creating the illusion of goods which do not exist. Energy is the real base currency for all activity.

When one maintains we can simply spend more money to get all the energy we need, they are, very directly, claiming that we can self-levitate by pulling up on our shoelaces. This delusion can persist in the money fog of commercial economics but not in the real world of biophysical economics. We cannot print our way out of resource depletion or any other real problem.

The biophysical economics ratio of Energy Returned on Energy Invested (EROI) was created to clarity this critical issue. It measures how much energy is produced relative to the amount of energy used to produce it.

As we move past the era of rich and abundant resources, EROIs will continue to decline. The mistaken belief that we can maintain our current practices by simply spending more money on energy will prevent up from grasping reality and taking effective measures to avoid very nasty surprises we could have seen coming if we’d used biophysical, rather than money, optics.

See the short EROI video here:

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