By Carey King
Moving toward a sustainable, or renewable energy-based economy, stresses the views of how people value their time and exertion. Our system of economics puts value on products and services that allow people to spend less time and/or exertion while performing a task. This value system is exactly why fossil fuels have been the driving factor for increases in accumulation of material goods and leisure time over the course of the industrial revolution.
Historically, fossil fuels have had such high energy density (and energy return on that invested to mine them) that we haven't worried too much about how to allocate the energy invested. When a barrel of oil is refined or a cubic foot of natural gas is burned, it has been obvious that we can produce more products and spend more time in leisure or progressive work. It is because of the concerns of fossil resource scarcity together with environmental effects (air pollution, greenhouse gases and climate change, etc.) that alternatives to fossil resources are sought.
By contrast, when it comes to renewable energy products, particularly biofuels, we've applied intense scrutiny to figuring out the energy return on total energy (or fossil energy) invested because the returns are not as easily determined as being sufficiently greater than one. Part of this scrutiny is because of the inherently lower energy density of carbohydrates (i.e. biomass) versus hydrocarbons (i.e. fossil fuels). Another part of the scrutiny derives from the knowledge that fossil fuels currently permeate the vast majority of the manufacturing and agricultural practices of the industrialized world, and understanding the optimal manner in which to deal with their reduced presence, and possible absence, is not obvious.
Allocation factors are an example of the struggle of society to understand the value of output of renewable energy systems and processes. The allocation factor is a term used to describe how much of the total energy input to a renewable energy system should be “allocated” to, or associated with, both the primary product output (e.g. ethanol, biodiesel, biocrude, etc.) as well as any process coproducts. These allocation factors are also used to assign greenhouse gas quantities to compare competing energy systems. Renewable energy systems that output electricity, such as photovoltaic solar panels and wind turbines, are fairly straightforward in giving an allocation factor of one. That is to say, all of the energy and material inputs that go into manufacturing, operation, and maintenance of the system are used to produce the only output: energy in the form of electricity. There is no product other than the electricity.
Assigning an allocation factor for biofuel production is more difficult. Biofuels originate from some form of biomass (e.g. corn, soybeans, cellulose, etc.) that can be used for multiple purposes (e.g. food and fuel) and the extracting them creates output products besides the fuel itself, termed coproducts. For example, in the typical processing of biodiesel from soybeans, the major outputs are the primary product of biodiesel plus the coproducts of soy meal and glycerin . Fossil fuels have similar product/coproduct distinctions (e.g. natural gas for fertilizers and petroleum for plastics), but because we know there is no long term sustainable use of them, there has been no need to scrutinize how we derive their various products.
So a question arises: for every unit of energy input from field to fuel, how much of that input should be responsible for each product? To answer this question, there are multiple proposed allocation concepts. The different allocation methods for coproducts are three non-energy methods and three energy-based methods  that are designated by whether the energy consumption of the processes is allocated according to:
• the 100% principle such that all energy consumed is allocated to the primary product (e.g. biofuel).
• the mass fraction of each of the products,
• the economic market value of each of the products,
• the energy content (calorific value) of each of the products,
• the energy displaced by each of the products with respect to an existing or customary way of producing the product, or
Allocating 100% of energy inputs to renewable energy systems is the most simplistic and uninformative. There are no decisions to be made, and it removes the capacity for society to learn how to use all available resources and technologies while reusing and recycling as much as possible. On the other hand, its simplicity easily allows policymakers and consumers to understand the impacts and benefits of renewable systems. Essentially, the 100% principle is the extreme case that assumes no useful coproducts are possible, or that coproducts are free in terms of monetary or energy input.
Allocating by mass fraction is very straightforward and easy to understand. Techniques that minimize coproducts should be viewed as positive since otherwise, they would not be coproducts but instead the primary product. We can likely assume the primary product is the most market viable, at least at the time the renewable energy project is begun.
Using market value to allocate coproducts is the method most akin to the free market principles. Brazil’s past and continued focus upon sugar cane as a cash crop theoretically enables their companies to decide how much sugar versus ethanol to produce from the same crop. If one price is up, they can focus on that product versus the other. Currently, the ethanol price is up as a group of Brazilian companies has arranged the first “practical application of verified sustainable ethanol” trade with Sweden . Thus, a market value of coproducts potentially allows a producer to tune his process according to the rather short time scales of commodity fluctuations. The main drawback of this method is that market prices change, and what could be a good energy balance one day could be a poor one a week later .
Energy Content (calorific value) of Products
Focusing upon the energy content of the products seems like a fundamental method because the purpose of renewable energy systems is to produce a product with high energy content. The primary product should in fact contain more energy than the coproducts, otherwise the system may have to be reanalyzed in terms of thermodynamic efficiency. This suboptimal energy content ratio could possibly occur if there is pressure to tailor a biofuel to existing infrastructure (which would be a pressure from the market). The difficulty with this method is that it does not indicate the effort required to achieve the energy intensive fuel or product. For instance, lasers contain high power concentrated in a tight beam, but much power is required to get the energy in that form.
Process Energy Input
Allocation due to the energy input into the renewable system seems like a logical choice because we are, after all, trying to figure out how to allocate the energy consumed in the renewable energy process. However, this allocation method can be somewhat confusing when the primary product and one or more coproducts results from the same subprocess. For example, if there is an unavoidable coproduct that results from the feedstock processing steps, how much input energy went into that unavoidable byproduct? What if the coproduct has no use, meaning it is actually a waste? Nonetheless, this method can often be more straightforward as in the case with wet-milling corn ethanol since during pre-treatment the starch (used for ethanol) is separated from the grain (used for coproducts), and thus subsequent energy used for processing the grain can easily allocated to the coproducts.
Energy Displaced (energy for replacement coproduct)
Allocation due to the energy displaced is an inherently comparative methodology. It requires diligent astute knowledge of the field of the product in order to know the energy input into replacement products. Also, an equivalent replacement product must exist. Here, the energy required for producing the primary product is reduced by the amount of energy required for the replacement product. For instance, Shapouri assumes that animal feed products (e.g. DDG) produced from corn ethanol processing can directly replace soybean meal. A difficulty arises if soy meal, itself a possible coproduct from biodiesel production, might use corn-based animal feeds as a replacement product as well. They can’t both replace each other. So there can be multiple choices of replacement products that can provide a range of answers for the primary product.
Can these allocation factors reveal something about culture, society, and how we value our energy and time? Is there a correct or more ethical method?
Pradhan et al. suggest that the correct method depends upon the question being asked. If renewability is the question, they say the mass fraction should be used, but if economic sustainability is to be determined, then the market value allocation approach should be used . For philosophers who like to find the ultimate truth, this solution is rather non-satisfactory, and it avoids the question of whether the market should recognize that energy return on energy invested (EROI) is the major driver for economic growth or if economic growth potential is the driver for the choice of energy resources. The tail can’t wag the dog, but hopefully with enough flow of accurate information the EROI and economic return will continuously feedback to each other and arrive at the same solution.
 Pradhan, A.; Shrestha, D. S.; Van Gerpen, J.; and Duffield, J. 2008. The Energy Balance of Soybean Oil Biodiesel Production: A Review of Past Studies. Transactions of the American Society of Agricultural and Biological Engineers. 51 (1): 185-194.
 Larson, E. A review of life-cycle analysis studies on liquid biofuel systems for the transport sector. Energy for Sustainable Development. June 2006, Vol. X, No. 2: 109-126
 Guardian, UK. June 25, 2008. Brazil signs deal to export sustainable ethanol. http://www.guardian.co.uk/business/feedarticle/7609299.
Two additional points I'd like to add:
1. There is a need for a whole of systems approach to problems like these. There are already huge pressures on water and food, and the World Bank is now saying that a mass shift to ethanol is having consequences which weren't sufficiently thought through: http://ecology.com/ecology-today/2008/07/08/world-bank-slams-bio-fuels/
2. Dependency on any single energy source can be a very risky thing. Concious consumers who choose renewables are actually very important to critical infrastructure planning. I've written a brief thought piece on this subject as a result of a very significant energy disruption in Australia: http://www.resilientfutures.org/2008/06/what-can-we-learn-from-the-wa-gas-crisis/
I'm part of a think tank which is working on complex problems like this. Most of the information we put out on our website is open source to assist people with these type of challenges. Sorry for the blatant plug, but these are important problems and we need to get the information out to people to help them make informed choices.
Great article, and I look forward to reading more.