Thermoeconomics

"Rien ne se perd, rien ne se crée, tout se transforme" "Nothing is lost, nothing is created, everything is transformed." -Antoine Lavoisier, one of the fathers of chemistryThermoeconomists maintain that human economic systems can be modeled as thermodynamic systems. Thermoeconomists argue that economic systems always involve matter, energy, entropy, and information. Then, based on this premise, theoretical economic analogs of the first and second laws of thermodynamics are developed. The global economy is viewed as an open system. Moreover, many economic activities result in the formation of structures. Thermoeconomics applies the statistical mechanics of non-equilibrium thermodynamics to model these activities. == Energy Return on Investment ==

EROI = \frac{\text{Energy returned to society}}{\text{Energy required to get that energy}} Thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood not through the second law of thermodynamics but in terms of such economic criteria as productivity, efficiency, and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work. == Peak oil ==

Political Implications "[T]he escalation of social protest and political instability around the world is causally related to the unstoppable thermodynamics of global hydrocarbon energy decline and its interconnected environmental and economic consequences." Energy Backed Credit Under this analysis, a reduction of GDP in advanced economies is now likely: • when we can no longer access consumption via adding credit, and • with a shift towards lower quality and more costly energy and resources. The 20th century experienced increasing energy quality and decreasing energy prices. The 21st century will be a story of decreasing energy quality and increasing energy cost. ==See also==