Estimating your DollarShadow    J.L. Henshaw  
7/05/07 9/28/10 12/3 1/8/11  Research notes on How to Understand the True Scale of your Energy Use

The "big secret" is hidden environmental services all around the world are your largest environmental impact.   What you pay business for gets passed on to pay for widely distributed chains of services as part of what you purchased.   It makes you financially responsible, and moreover directly exposed to, the not so hidden dangers connected to the economic and environmental harms the earth now rapidly emerging, that no seems to realize they are paying for and so responsibility for.

When lacking specific information, a scientific accounting must treat hidden energy uses as "average", using the "null hypothesis" that allows the accounting system to "close".    

It turns out the world community has been making the opposite assumption, only recognizing energy impacts and financial responsibility for them that people have specific information on, a regular practice of ignoring what is hidden, and being directly paid for as we use money.  That's not sustainable!    The practice has been to use the wrong "null hypothesis" for lack of specific information, treating the hidden energy costs of using the economy as "zero".  This has caused all kinds of misunderstanding, treating "sustainability", as meaning "hiding your impacts".

 The world average energy use impact  for any average dollar spent
is the ratio of total purchased energy supply (TPES) to world total end user product (GDP) (7)(sci):

Energy production and use Impacts: ~8000 btu or ~7.6 jules or 2.4kWh  (/$GDP 2006)
CO2 impacts:  ~1lb or .46kg  (/$GDP 2006)
(both declining with regularly improving worls economic efficiency at ~ 1.24%/yr)

that's the "reality math" needed to account for the large hidden energy use behind every product and service,
and to make sustainability accounts "close" by reflecting true shares of the world total
in doing for your Scope 4 Whole Systems Energy Assessment

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Five True Energy Budget Stories: 
1) What AVG means 2) Scale of Hidden Energy  3) PV area  for AVG$ 4) Suburban Home 5) Consumer Products 6) Global PV Footprint 7 IEA Data & Trend

for example - Volume of CO2 per $ GDP :  0.46 kgCO2/$  *  2.1m3/kgCO2  => 0.97 m3CO2/$ of GDP 2006
so if you make $50,000 a year that's 50,000 cubic meters of CO2 produced for you as a world average, the volume of ~20 three story townhouses...
Pollution is often removed by hiding it, with outsourcing or reducing visible part, quieting the messenger so its silent, but still deadly.
 

1. What Average means: (& sci notes)

The world average energy use per dollar of GDP is the amount of purchased energy resourced from around the world to deliver an average $'s value of goods or services.   Because it's so much larger than the visible energy uses of commerce it is a much more accurate measure than even very carefully tracing visible energy uses (f).

To measure individual economic impacts on the earth $1 ≈ 1 average share of the world economy, its total energy use and all its impacts, since every $ needs the services of the whole economy (i) (ii)... Which turns out to be surprisingly accurate for energy use (f)

AVG = 8000btu/$ (or 2.4kWh/$) (IEA world TPES/GDP-PPP 2006 ) = the usual accumulative total energy demand of money   

i) Average values are true for individual cases "on average".. and most products require such highly divers energy uses to deliver them it's also rare for the energy required to deliver the $1 of value to be far from average (f).
ii) I finally found people interested and able to study  the sources and equations to confirm these figures from Table 1 below, in a discussion on Azimuth with John Baez.  There was one "small" error found, now corrected, made in revising the whole calculation for this update of the old work.

2.  The scales of visible and hidden energy use:

Each dollar of a family budget has an energy impact by requesting services from people who will consume energy in delivering the service, making the purchase of services an energy burden and source of impacts on the economy and environment.

iii) The SEA study of a wind farm showed that the direct energy for producing wind energy was only about 18% of the business energy demand for economic services.
iv) A modest income family in a 2000sf house for might pay $2500 for heat and electric and $1800/yr for gas  in the car for a short commute and running around.
v)  The same family, generating its own energy by Wind or PV might be able to generate their own heat & electric, a little less efficiently than commercial energy
vi) The same family, walking to work and store, generating their own energy and just using a taxi now and then.
 

Your $'s as an area of land, for collecting the energy

If the economy got its energy from The Sun, every dollar would... cast a shadow.  
comparing the energy used by the economy to the areas of land needed to collect the energy, per $ of GDP

3. Calculation of PV Area

- "average" solar radiation availability picked from radiation map below,  note: mismatch between population areas and solar radiation availability -

One reason to think of our impacts on the earth as proportion to the money we earn and spend is that every dollar is one equal share of the total product of the whole world economy.   All economic impacts are energy impacts, and all the things that cause economic impacts are purchased.  For energy use the "average energy per dollar" also turns out to be a fairly accurate estimate of the real total use of energy and production of CO2 pollution, seemingly +/-15% mostly.    What you can be sure of is it will be fairly close most of the time, and will be a far more truthful measure of the scale of impacts for  any purchase choice than zero.

Why it's fairly accurate most of the time is because energy is the universal resource, and traded around the world at a world price, as discussed a bit further below.   The best present research on this method of analysis is a draft paper Defining a standard measure of energy use for businesses, using a wind farm and its energy return on investment (EROI) as an example.   By switching from adding up the receipts businesses collect from purchasing energy, to treating the prices of things as a receipt for average energy use in all the work that went into what was purchased, four times the energy uses being employed are found.   The main reason is  ... *because we pay for them* ... and the price we pay is an accumulation of all the prices reflecting the work of all the people and machines along the way that brought the product or service to us.   That's the key.   It will change how energy accounting is done entirely when it is appreciated that economic footprints are far easier and more accurately measured with money than trying to follow almost untraceable threads connecting diverse causes and effects, as well as the significance of finding a 500%+/- typical error in our primary measure of sustainability....   9/28/10

4. Suburban Home Example:

iii) Using Charcoal to Fix the price of carbon emissions http://sspp.proquest.com/archives/vol5iss2/editorial.gray.html assumes no continuing land use cost to protect the buried carbon
iv) "truly grid neutral" and "truly carbon neutral" are a quick way to say that the family provides as much energy and carbon sequestration for the economy as the family takes from the economy as a whole, "on average".  "Normal" economic growth of 3.1% per year would increase the PV area and cost of CO2 sequestration ~1.8% per year, slower than the growth rate due to normal efficiency improvement.
 

5. Consumer product Example:

Money spent on a soda or glass of wine, like a receipt for a share of world energy and carbon costs. As a measure of energy use it's quite accurate, on average, and makes spending or earning a dollar responsible for one equal share of all the impacts of energy use too. You can appreciate the meaning of "average share" using it to measure how much CO2 (your carbon footprint) is created with normal expenses. Try to compare the benefits and the costs with these two examples. (b Table 1)

So... a 16oz soda for $1.50 would put ~24oz of CO2 into the atmosphere, as average spending  from conventional energy sources, and use  the equivalent of 10 oz of oil.   To use solar energy it would take the use of a 100sf of a solar farm for a day to generate the same energy with PV.  

And... a 6oz glass of wine costing $6 would produce ~96oz (6lb) of CO2, 16 times the weight of the drink as average spending for conventional energy sources, using the energy of 39 oz of oil,  or... require the use of a 384sf of a solar farm for the day to get the same energy from PV

6. Global footprint Example:

The global "dollar shadow" for using PV to supply the present world energy demand, estimated in %'s of the World Agricultural Land Area

I  did the estimate using the PV values from Table 1. and agricultural land area figures from Nationmaster.com (c), and IEA economic statistics (b) as shown in the table above.     That gives 1$ of economic product needing 5.9 sq meters of sunshine for a day, or .016 sq meters per yr, to deliver the world average amount of energy per $.    It's rough, because the solar radiation varies so widely from place to place, so to be accurate it would need to be averaged over all the land area where people might use PV.    I then use the historic energy use "growth constant" (b) of the past 40 years,1.89%/yr  which results in a 37 year doubling period for energy use.    World GDP $46.9 trillion in 2000(b) that would have cast a dollar shadow of 15,490,000 sq km,  with world agricultural land area 48,033,854 sq km as 40% of the total land mass of 120,000,000 sq km.

7. Global Trend Data and Relationships:

 IEA World economic data - Key indicators GDP Energy & CO2
partial 2008 data for Table 3. and Figure 1.,  for 2010 IEA source data see reference (b)

                              Figure B (f, h)

8. The scientific basis for measuring impacts with money:

It sounds crazy at first, and so most people then never ask "What about the averages".   That's the secret, being cautious about your snap judgments, when the whole problem seems to be "How would anyone know?".    Here's the answer to how anyone can know.   

In paying for the economy to deliver goods and services, nearly all our uses of money are passed on to such a wide variety of people, who all spend the money they receive on such a wide variety of different kinds of consumption, the sum total of the hidden energy uses involved ends up being similar to paying for anything else, i.e. "about average'.   It's not that further studies aren't needed, of course.  It's that based on that distribution, and your initial lack of better information:

1. "average" is probably a reasonable estimate for scale, and certainly far more truthful and accurate than 'zero', and

2. for those studies to find where it varies, "average" is the only scientifically legitimate place to start, necessary to "close the accounts" by having the totals of impacts equal the total of responsibilities assigned for them.

The more technical ways to reach the same conclusion involve modeling how money travels in the economy.    My way of doing it starts with setting proper bounds.  It's clear that you want to only count energy uses once, and for the total to equal the economy's total.   That is not assured using the method mentioned in the original paper "Systems Energy Assessment" of tracing a typical pattern of money being passed to multiple contributors to the service provided.   Like the reasoning in #1 above, finding that in three month's time parts of any dollar used would end up in the accounts of every person on earth, demonstrates a wide distribution, and "startling likelihood", but there is no "end point" for that distribution.   

A good way to define an end point is a new way of using the same device that economists use for measuring the total product of the economy, GDP, as the sum of the "end user" purchases in a given year.   That defines an end point if the chains of production of the economy.   The other "end" of the economy is the accumulation of services paid for to deliver the end products.    So you have a 1-1 mapping of the economy, from "end users" (as the people consuming the products) to the "end producers" (as the people paid for their services in producing it, who use what they are paid for their own end consumption)

So the economy can be mapped as an accountable exchange between end users and end producers.    Money that is paid for any end use is granted "free and clear" of obligations (except those paid for) to the service provider, and then at first largely "passed along", from one business to the next to the next, with some at each stage being paid to people also "free and clear" as "end producers", for them to use for their end uses.   So the money being paid for all the multiple branching services in the product and service chain that are needed to deliver any product, has no destination other than some person, mostly hidden from view way down the chain somewhere, being reimbursed for contributing their end services, free and clear.

What a mathematical model seems to show is that the hidden part of the distribution is much larger than the visible part.  The distribution has what is called a 'fat tail' in the sense that most of the end producer consumption is far down the line, and so also more likely to be "average".   Statistics won't help much, but network science could somewhat, if only to help further clarify how reliable the scale estimate of "average" is, and why it will be economically infeasible to use any other estimate except for large impacts for which information is readily available.  

If you assume that economic supply and service chains have a "normal" branching pattern, you can examine the shape of the distribution.   You might guess that spending on end products normally goes to a mix of smaller and larger businesses.   To study that you start with a simpler model, and see if it's possible to model more realistic assumptions.  What is fairly easy to explore is a rule that the largest part of the economy is made of businesses with 40 employees and 50 business service providers paying about 20% of their revenue in salaries.  That might vary widely in reality, of course.   The Wind Farm we modeled for SEA (see p 17) seemed it would have only about 2% of its revenue in salaries, while employing lots of business services from companies with a more normal ratio.

So taking the simpler case, you get a polynomial expansion, with each step

1. removing 20% from the money chain,

2. multiplying the number of employees by a factor of 40 and

3. multiplying the number of businesses by a factor of 50.  

We'll try to trace where the money goes for a single $100 purchase from a business, in turn paying 40 employees of all kinds and purchasing producer services from 50 businesses, which each also have 40 employees and buy services from 50 businesses.   After just 4 steps, one purchase is shown having paid for the services of a highly diverse group of over five million people running and operating over 120 thousand businesses, with only 50% of the end production services paid for.

Network analysis could be done on the data for international trade, such as is compiled and used for EF, Ecological Footprinting, for example.  That or similar studies might shed some light on what kinds of spending or what kinds of producers deliver lower than average impact products and services.   They won't erase the problem that most "end producers" will remain hidden from view, lost in the fat tail of the distribution, just because the information gathering task is too difficult.    As competing designs for lowering the economy's impacts are studied and tested, more exceptions may appear, but using this kind of complete accounting approach won't cause all the prior hidden impacts to re-disappear or things like that.  

jlh 2/20/14

References:

a -  National Renewable Energy Laboratory, http://www.nrel.gov/gis/solar.html  Historical average solar radiation at the ground: (picking a "typical" average mid latitude location) http://www.nrel.gov/gis/images/map_pv_national_lo-res.jpg
b -  IEA World Highlights: www.iea.org/co2highlights/co2highlights.pdf  & 2010 historical data: http://www.synapse9.com/design/IEA-worldindicators.xlsx 
c -  Agricultural land use figures: www.nationmaster.com
d -  Method for measuring whole system energy use and EROI: System Energy Assessment (SEA)
e - ThoughtForm pop. map http://www.visualizingeconomics.com/2008/09/07/us-population-density-1990-and-2000/
f -  see System Energy Assessment (SEA) for Whole Business Systems, Henshaw et all, 2011 extending a 2009 talk
h - Understanding why the economy behaves as a whole The curious use of Stimulus for Constraint, Henshaw 2011
i -  an archive copy of this page from 2009 with possibly useful early thinking on the issue