The laws of thermodynamics: what role in the energy transition?

The laws of thermodynamics are often framed in such arcane terms that they are overlooked. This note outlines these three fundamental laws of physics and why they matter for energy transition. Renewables are so good that they practically break the second law of thermodynamics. Hydrogen is so poor that it halves the pace of energy transition. Industrial efficiency technologies are crucial across the board.


The First Law of Thermodynamics: Never Created or Destroyed.

The first law of thermodynamics is the law of conservation of energy. It states that energy cannot be created or destroyed. It can only transformed from one form into another.

The simple example is combusting a fuel, converting the chemical energy in the fuel into thermal energy. If we take natural gas as an example, 1mcf contains 304kWh of chemical energy. This can be transferred into 274kWh of useful heat energy in a 90% efficient boiler. The chemical energy released equals the enthalpies of new bonds formed during combustion minus the enthalpies of bonds in the fuels (chart below).

The best debating point around the first law of thermodynamics is the nuclear energy industry, which creates energy from the controlled decay of Uranium-235. To all intents and purposes, nuclear energy is “creating energy”. But the first law of thermodynamics is upheld by claiming that all matter is really just condensed energy (via the law of special relativity, E = mc2).

Another debatable example is natural gas flaring, which ran at 122bcm in 2019. To all intents and purposes the useful energy in the gas is being destroyed, as the gas is simply wasted. Again, the first law of thermodynamics would claim that flaring is not actually destroying the energy in natural gas, but converting it into heat, which then leaks into the atmosphere, and then from the atmosphere into outer space.

Where the first law of thermodynamics is most useful is to dismiss tall tales about perpetual motion machines or powering the world off of biomass. For example, you may have spent time on an exercise bike during lockdown and wondered how much power you are generating. If a person eats 2,500 calories per day, this is equivalent to around 3kWh of chemical energy. Even if your body was 100% efficient at absorbing this energy, then converting it into electricity on a stationary exercise bike, you would not be able to do more than 3kWh of useful work, by the first law of thermodynamics. To put this in perspective, 1 gallon of gasoline contains 35kWh. And for video confirmation of this disappointing thermodynamic equivalency, please see below.

The Second Law of Thermodynamics: Efficiency Losses.

The second law of thermodynamics states that entropy invariably increases in a closed system. Entropy, in turn, is defined as a state of “disorder, randomness or uncertainty”. This definition is itself somewhat disorderly, random and uncertain. But bear with me.

Mathematically, entropy is more rigorously defined in the context of a Carnot cycle heat engine, which does useful work by transferring heat from a heat source into a cooler reservoir. Entropy is the ratio of heat energy flux to absolute temperature. When the heat energy leaving the heat source divided by the absolute temperature of that heat source matches the heat energy arriving at the cooler reservoir divided by the temperature of that cooler reservoir, then entropy has been preserved. When the heat energy leaving the heat source divided by the absolute temperature of that heat source exceeds the energy arriving at the cooler reservoir divided by the temperature of that cooler reservoir, then entropy has increased.

Re-stated in human English, the second law of thermodynamics effectively says that an energy consuming process will be less than 100% efficient. And in aggregate the universe invariably progresses from a state of concentrated and useful energy towards diffuse and useless energy. Billions of years from now, the entire universe will thus devolve into an entropic soup devoid of any life.

Again the second law of thermodynamics sometimes seems debatable. Effectively a solar panel or a wind turbine is capturing diffuse and useless wind or solar energy, and converting it into concentrated, useful electrical energy. To all intents and purposes, useful energy is being created out of thin air (or sunny or windy air as the case may be).  However, strictly, the second law of thermodynamics is not being violated, from a total systems perspective, which considers the electromagnetic energy that was present in the sunshine or the kinetic energy that was present in the wind. Solar panels are only 15-25% efficient at converting incoming solar energy into electricity, with the best test-cells recently hitting 50% (chart below). No one is arguing that wind or solar efficiency will ever exceed 100% capture rate of the energy that reaches them.

As another example, a heat pump will generally yield 2-8 units of useful energy per unit of energy that is supplied in the form of electricity. The heat pump uses diffuse energy to evaporate a refrigerant (absorbing the heat) and then compresses that refrigerant onto a surface where it condenses (releasing the heat). Thus it can move diffuse heat from a low-grade and useless source to a concentrated and useful sink. However, again, from a total systems perspective, which considers the size of the heat reservoir in the air/ground, the system is not strictly violating the second laws of thermodynamics.

Where the second law of thermodynamics is useful, if properly understood, is in encouraging efficient energy use, with as few unnecessary conversion steps as possible. By the second law of thermodynamics, more conversion steps and processes will amplify efficiency losses. This is why it takes 160,000TWH of energy supplies to meet 70,000TWH of useful energy demand each year globally, per our energy market models (below).

The second law of thermodynamics means that energy efficiency is a crucial focus in our research into decarbonization, to avoid wasting energy (see below).

Green hydrogen is likely most challenged by this thermodynamic argument, out of any technology in the energy transition. Converting renewable energy into hydrogen energy in an electrolyzer will likely be 60-70% efficient, with an inevitable over-voltage at the anode. Turning that hydrogen back into useful kWh of energy in a fuel cell will likely be 60-80% efficient. There is also an energy cost of transporting and storing the hydrogen. So at best, the round-trip on green hydrogen will waste c50% of all of the renewable energy that is generated. This is one factor that hurts our hydrogen economics below, and it has nothing to do with the costs of electrolysers or fuel cells, but basic laws of physics.

Conversely the best thermodynamic way to use renewable energy to drive decarbonization is to find ways of using that renewable energy directly, including through demand shifting. If renewable energy can be integrated directly into industrial processes, each generated kWh will achieve around 2x more decarbonization than if it is converted into hydrogen, with all of the associated energy penalties. Likewise, shifting power demand to when renewables are generating is always going to be more efficient than storing renewable energy and re-releasing it later (note below). On the other hand, if your goal is simply to maximize the amount of renewable assets you can develop, then hydrogen pathways help you – you will get to develop 2x more renewables for the same amount of decarbonization. Welcome to the cobra effect.

The Third Law of Thermodynamics

The third law of thermodynamics states that a system’s entropy approaches zero as the temperature approaches absolute zero (-273°C). In turn, this means that it is not possible to lower the temperature of an object to absolute zero. And by the second law of thermodynamics, more entropy will be created outside of the cooled substance than is removed from that cooled substance (i.e., cooling cannot be 100% efficient).

The third law of thermodynamics is more removed from everyday energy use. Although the energy requirements of liquefying natural gas to -160C does emit 15-25kg of CO2 per boe of energy in the gas, equivalent to around 5-7% of the energy in the natural gas in the first place (chart below). Much worse, we estimate that cryogenically liquefying hydrogen at -253C, then transporting the hydrogen, would absorb around half of the energy content in the hydrogen in the first place. Transportation is the other key challenge for hydrogen, in our assessment.

Conclusions: thermodynamics matter

There is a strange and growing sentiment that thermodynamics, physics, or economics do not matter in the energy transition. Or at least they do not matter as much as ever-larger subsidies. Our own assessment is that policymakers set the laws within their borders, but not the laws of economics or thermodynamics. Focusing on these factors may help you find opportunities and avoid growing bubbles in the energy transition.