Capturing Tradeoffs Using Embodied Energy

Decision making is often about tradeoffs.

Sometimes you must choose between two alternatives. You can’t have your cake and eat it, too, as the saying goes.

At a systems level, the view required to analyze a complex environment like the global energy transition, tradeoffs can result in moving a cost from one part of the system to another. When that happens, how do you measure progress?

For instance, automobile manufacturers get credit for using materials like aluminum to make vehicles lighter, thereby increasing fuel efficiency. Specifically, EV manufacturers need to use lighter materials than steel to compensate for the weight of the battery packs. This seems like a good thing, right?

When you take a systems view, however, you must consider the fact that a lot more energy goes into making aluminum than steel. The energy that goes into making a product is known as “embodied energy,” and it is often left out of simple, non-systems-based analyses of the benefits of technology innovations.

With China as the largest aluminum manufacturer by a wide margin and coal being the primary source of the intense thermal energy required for the two-step process – first, to produce alumina from bauxite and then to smelt alumina to produce aluminum – does the innovation that goes into vehicle manufacturing actually contribute to a reduction of fossil fuel use?

But wait, it’s even worse than the 2-step process. There are, actually, four basic steps in the aluminum value chain: mining of bauxite, refining (to produce alumina), smelting (to produce aluminum), and casting (to produce the end product). At each step of the value chain there are prodigious CO2 emissions and other toxic wastes.

Or is greater fuel economy just window dressing of a problem that has merely been delegated rather than solved? And is it fair to praise one segment of the value chain like auto manufacturers while chastising others in the aluminum value chain like the refiners and smelters (primarily China) and ignoring the miners (primarily Australia)?

What if, rather than simply presenting fuel economy numbers on a new car sticker, embodied energy values were also presented to consumers?

What if all product manufacturers had to present this sort of systems-level view of the energy consumed not just in the operation of their product but in its creation?

And what if those numbers also included data about the percentage of that embodied energy that came from carbon and non-carbon sources?

How would that change the way we look at – and reward with praise and dollars spent – the contribution that the products we use make to the clean energy transition?

Enterprises that fail to take a systems view of the impact of their decisions may be simply rearranging pieces on the board rather than making real progress.

At Tilt Global, we help clients analyze context and make decisions with a systems-level view.