2.5 Energy fuels, and limits, the economy

2.5–2.7 Issues

The economy in the land of the Maasai has continued to evolve over the last century. On July 7, 2000, the East African nations of Kenya, Tanzania, Uganda, Rwanda, and Burundi established an organization called the East African Community (EAC) to further economic growth. Between 2005 and 2010, the total value of goods and services produced in the EAC increased by 70%. And while agriculture remains the dominant economic sector of the region, there has been substantial growth in manufacturing and energy production. For example, between 2001 and 2010, the number of people employed in manufacturing in Kenya, the largest country in the EAC, grew by 24%, and consumption of electricity in the country increased by nearly 40%. This is all good news, but environmentalists are also concerned that a shift from low-impact subsistence lifestyles to high-impact consumer economies will lead to unfettered degradation of some of the last wild places in Africa.

When such concerns are raised about the environmental impact of economic growth, we often hear that the choice is between a healthy environment and a healthy economy. The alternative, some might say, is to leave the people of Africa living in poverty. How did we develop this view? In the traditional societies around Earth, the relationship between a healthy productive ecosystem and economic health was clear. When the Maasai people first brought their cattle to East Africa, they altered the existing ecosystem and established an economic system atop it. Their cattle, like the native wildlife, depended on the primary production of grasslands, which meant that their early economy was intricately linked to the health of the environment. Such clear connections are not always so obvious today, where people buying beef in shrink-wrapped packages from a city supermarket have little knowledge of how drought and environmental degradation are impacting grazing lands. The relationship between economics and ecology receded into the background with the development of modern industrial economies and of early economic theory.

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Because economic systems are subject to the same physical laws governing ecosystems, they require inputs of energy and matter in order to keep functioning. The energy sources important to today’s economic systems include the fossil fuels and renewable energy sources used to generate electricity, run transportation networks, and heat and cool homes and businesses. Energy and matter also enter the economy as the food consumed by people, pets, and livestock. Economists have historically considered the supply side of a market economy to be determined by human industry, such as manufacturing or resource extraction, but we now recognize that our resources are not unlimited and that our activities can have a wide range of impacts on our lives.

Let’s take a look at how some of the physical laws we’ve explored impact the economy. As predicted by the second law of thermodynamics, the energy flowing through an economic system is reduced in quality with each transformation or with each bit of work done. Consider, for example, the path followed by the electrical energy powering a 60-watt incandescent light bulb in a desk lamp. An average electrical power station using coal as a fuel source has an efficiency of about 35%, which means that of the energy contained within 100 units of coal burned, 65% is lost as heat. As the 35 units of electrical energy are transmitted along power lines to the desk lamp, approximately 10% will be lost as heat and sound energy. At its final destination, about 2% of the energy delivered to the 60-watt incandescent light bulb will be converted to light energy, while the remaining 98% will be lost as heat. As a consequence of energy losses from the point of production to use, less than 1% of the energy burned in the coal-fired power station is used to light the desktop (Figure 2.17).

ENERGY LOSSES FROM PRIMARY ENERGY SOURCE TO END USE
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FIGURE 2.17 Energy losses from a coal-fired generating station to a 60-watt incandescent light bulb. (Data from Graus et al., 2007; Leff, 1990; Agrawal et al., 1996) Energy losses from an ethanol-producing biofuels plant, which uses corn kernels as the feedstock, to a car driven by an internal combustion engine running on ethanol. (Data from Huang et al., 2011)

Although less drastic, similar energy losses occur along the energy pyramid describing the flow of energy from the production of corn-based ethanol fuel to driving an internal combustion vehicle powered by that fuel. In this case, approximately 7% of the energy present in the corn kernels entering this flow path is used for driving the motor vehicle (Figure 2.17).

You can observe that the overall pattern of energy distribution along these flow paths takes the shape of a pyramid, much like that observed by ecologists in ecosystems. Human economies sit at the top of the energy pyramid and grow by tapping into natural ecosystems and Earth’s resources. Because of energy losses resulting from the second law of thermodynamics, both ecosystems and economic systems require continued inputs of energy to sustain their functions. This need to keep energy flowing through modern economies to keep them productive has been a source of environmental disruption and loss of human lives (Figure 2.18).

ENVIRONMENTAL RISK ASSOCIATED WITH FUELING ECONOMIC PRODUCTION
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FIGURE 2.18 Energy development associated with the energy-intensive modern economy comes with environmental impacts, including air, water, and soil pollution. The direct human costs can also be serious. On July 6, 2013, a train carrying crude oil from North Dakota derailed in Lac-Mégantic, Quebec, about 10 miles from Maine. The resulting explosions and fires killed 47 people.
(AP Photo/The Canadian Press, Paul Chiasson)

Think About It

  1. How is the flow of energy through natural ecosystems similar to energy flow through economic systems? How are they different?

  2. Why is the functioning of modern economies so intimately tied to the production and marketing of energy sources such as fossil fuels and electricity?