The Global Exergy Report: Where Humanity Destroys Useful Energy and What We Can Do About It

Context: The Measurement Gap and the One-Tenth Planet

Humanity maintains meticulous records of how much energy it consumes and the volume of emissions resulting from that consumption. However, a critical "third question" remains unanswered in public discourse: how much of the energy harvested from nature actually arrives as a useful service? The Global Exergy Report addresses this measurement gap by applying the second law of thermodynamics to the global energy system, revealing the discrepancy between exergy inputs and the services civilization requires, such as motion, comfort, light, and computation.

The report establishes a central thermodynamic argument based on the concept of exergy—energy graded by its capacity to do work. Currently, humanity harvests approximately 600 exajoules (EJ) of exergy annually. By applying a strict service convention and engineering coefficients to global energy balances, the report concludes that only about 60 EJ are delivered as actual service. The remaining nine-tenths of harvested exergy is destroyed within the global machine through various irreversibilities, ranging from combustion in thermal power plants to inefficient low-temperature heating.

Founding a Permanent Franchise

This inaugural document is not intended as a one-time academic monograph but as the founding edition of a permanent annual franchise. Starting in 2027 and continuing indefinitely, Exerginity will publish this account to track the evolution of global exergy destruction. The purpose of this series is to provide a consistent, frozen method of accounting—similar to the authoritative energy statistical reviews of the past half-century—so that any movement in the resulting data reflects changes in the physical world rather than shifts in arithmetic.

The Global Second-Law Efficiency

The report provides a high-level view of the current state of human energy intelligence through the lens of efficiency. Based on fifty years of societal exergy accounting and official quantities, the global second-law efficiency is currently estimated as a band between 8 and 12 percent, with a central estimate of roughly 10 percent. This "one-tenth planet" finding is characterized not as a final fate, but as a technical backlog that can be managed through known levers. By measuring this efficiency annually in public, the report aims to turn the destruction of useful energy into a managed metric, following the principle that what humanity measures, it eventually manages.

Establishing this baseline is essential for the transition, as exergy destruction has specific "addresses" where it occurs. While carbon accounts set targets for the planet, exergy accounts rank the routes to efficiency by identifying exactly where useful energy dies.

Methodological Framework: The Data Spine and Rules

The technical foundation of this annual account rests upon a robust, three-tier data spine designed to ensure auditability and transparency. By synthesizing official energy quantities with established thermodynamic literature and engineering data, the report establishes a methodology that can be replicated and scrutinized by practitioners across the field.

The Three-Tier Data Structure

The framework utilizes a hierarchical approach to data collection to ensure the global account is both accurate in scale and rigorous in its application of the second law of thermodynamics:

• Tier One (The Balances): International energy balances provided by the IEA and national statistical offices supply the raw quantities. These include primary supply, transformation, and final consumption across various sectors and carriers, totaling approximately 600 exajoules of exergy harvested annually.
• Tier Two (The Literature): Fifty years of published societal exergy accounting provide the structural framework. This tier draws on the seminal work of researchers such as Reistad, Wall, Hammond, Ayres, and Warr, as well as the comprehensive global exergy maps produced by Cullen and Allwood. These sources provide the historical and structural context necessary to divide final consumption into specific duties.
• Tier Three (The Coefficients): Engineering coefficients at the device level supply the grading for second-law efficiency. These include standard values for boilers, internal combustion engines, electric motors, and heat pumps, allowing the conversion of final consumption data into a precise account of useful service delivered.

Frozen Conversion Rules

To ensure that shifts in reported data reflect changes in the real world rather than changes in arithmetic, the report adopts five frozen conversion rules. Central to these is the strict service convention, which dictates that the useful exergy of heating is defined by the exergy of the duty—such as maintaining a room at 21 °C against the ambient temperature—rather than the output of the boiler. This convention results in honest, single-digit efficiency ratings for low-temperature heat, placing the report's figures significantly below traditional first-law energy intuition.

Additionally, the framework implements a no-netting rule for renewable energy inputs. Exergy is graded at the busbar or point of harvest rather than the resource base. By grading renewable inputs like sunlight or wind at the point they enter the human machine, the methodology ensures that the sheer abundance of renewable resources cannot mask or flatter downstream inefficiencies in delivery and end-use.

Uncertainty Management

Uncertainty is managed through the use of disclosed bands rather than false precision. The report identifies three primary sources of variance:

Because structural division remains the dominant source of variance, global second-law efficiency is published as a range (8–12 percent), ensuring that sector orderings and national rankings remain robust even as data quality is refined in subsequent editions.

The Global Exergy Waterfall and Destruction Addresses

Following the annual exergy flow from harvest to service reveals a dramatic "waterfall" of destruction. Out of approximately 600 exajoules (EJ) of exergy harvested globally each year—primarily from fossil fuels, biomass, and direct-capture renewables—only about 60 EJ, or one-tenth, is delivered as useful service. The remaining 540 EJ is destroyed within the machine of civilization. This destruction is not uniform; it occurs at specific stages of the energy chain, categorized into conversion, delivery, and end-use losses.

The Points of Destruction

The first major drop in the waterfall occurs during conversion, which accounts for approximately 180 EJ of destruction. This stage is dominated by the electricity sector’s thermal power fleet. The so-called "Carnot tax" on coal and gas plants ensures that combustion and steam-cycle irreversibilities destroy half to two-thirds of every unit of fuel exergy before it ever reaches the grid. While distribution and delivery account for a smaller loss of roughly 30 EJ, the largest volume of destruction occurs at the point of end-use, totaling ~330 EJ. This is largely due to a massive thermodynamic mismatch: high-grade fuels are frequently burned to serve low-grade heating duties, such as space heating and water heating, where the quality of the input far exceeds the requirements of the task.

Seven Great Addresses of Destruction

The report identifies seven primary "addresses" where nine-tenths of harvested exergy is lost. These addresses provide a roadmap for where technical and policy interventions are most urgently required:

• Thermal Power Generation: The leading source of destruction due to the combustion tax on fossil fuels.
• Low-Temperature Heating: Buildings and industrial heat requirements below 200 °C.
• Road Transport: A billion internal combustion cylinders paying a combustion tax that electric motors do not owe.
• Industrial Furnaces: High-temperature processes for steel, glass, and cement which, while relatively efficient against hard duties, still represent significant absolute destruction.
• Food Chains: Including fertilizer synthesis, cultivation, and the discarding of one-third of harvested exergy before it reaches the plate.
• Flaring and Upstream Self-Consumption: Exergy destroyed during the extraction and processing of fuels.
• Computing: Though currently small in total exajoules, it is the fastest-growing sector and operates further from its physical "Landauer floor" than any other human machine.

Among these, low-temperature heating (specifically duties below 100 °C) is identified as the planet's largest avoidable entry. In the pursuit of warm rooms and water, the buildings sector operates at a second-law efficiency of only 5–7 percent. This single address accounts for one-sixth of total global exergy destruction, representing a massive inefficiency that is a result of poor system design rather than fundamental physics.

Sectoral Performance: From Buildings to Computing

Analyzing individual sectors against their specific engineering ceilings reveals a stark dichotomy: humanity is generally most proficient at its hardest thermodynamic tasks and least disciplined in its easiest ones. By grading each sector against the second-law efficiency of its delivered service rather than simple first-law output, the report identifies seven great addresses of exergy destruction, each characterized by a distinct gap between current performance and physical limits.

Buildings and the Low-Temperature Floor

The buildings sector operates at a mere 5–7 percent second-law efficiency, representing one-sixth of total global exergy destruction. This profound inefficiency is not a failure of physics but of application. The primary duty of the sector is providing modest comfort—maintaining room temperatures at approximately 21 °C or water at 55 °C. To perform these low-grade tasks, civilisation typically employs high-grade flames or electrical resistance elements. Using a flame that exceeds the required duty temperature a hundredfold results in massive irreversibility. The report identifies this as the planet's largest avoidable entry, as transitioning to "LowEx" stacks—incorporating heat pumps and better envelopes—could lift the sector to a 40 percent engineering ceiling.

Transport and the Combustion Tax

Road transport stands at approximately 20 percent efficiency, largely due to a century of reliance on the internal combustion engine. This sector serves as the account’s cleanest example of a remedy in progress. The internal combustion fleet effectively pays a "combustion tax" characterized by irreversibility within a billion individual cylinders. Electric motors do not owe this tax; a battery-electric drivetrain delivers roughly 0.73 of each clean kilowatt-hour to the wheel, compared to the one-fifth delivered by fuel. As surface transport migrates from molecules to electrons, the delivered efficiency of these services triples.

Industry and Heavy Material Processing

The industrial sector performs best relative to its physics, operating at 25–30 percent efficiency. Heavy industries such as steel, glass, and aluminum smelting run nearest their physical limits because their duties are thermodynamically demanding, requiring high-temperature furnaces where engineers have spent decades refining irreversibilities. In contrast, "light" industrial duties like drying food, crushing rock, or generating low-grade steam exhibit much lower efficiencies. For instance, comminution in mining operates at single-digit efficiency, spending orders of magnitude more work than is required to create new surface energy in crushed rock.

Computing: The Growth Frontier

Computing represents the fastest-growing load in the global account. While currently small in total exajoules, it is unique because it operates further from its physical Landauer floor than any other machine civilisation runs. The thermodynamic limit for logical operations is so far below current practice that computing offers a frontier where efficiency gains can compound faster than in any other sector. Notably, the entire exergy input for computing exits as recoverable fence-line heat, making it a primary candidate for recovery economies.

The Country and Industry Leagues

Where credible data permit, the report ranks nations and industries to identify where exergy destruction is a matter of physical necessity and where it is a consequence of policy and backlog. These rankings are categorized into two primary leagues, each providing a distinct thermodynamic perspective on global energy intelligence.

The Country League

The Country League evaluates nations based on their second-law efficiency—defined as the useful service exergy delivered per unit of harvested exergy input. However, the standings prioritize trend over level. This distinction is critical because static efficiency levels often reflect geographic and structural realities, such as climate-driven heating needs or a specific industry mix, whereas trends reflect the efficacy of national policy and the deployment of efficient machinery.

Standing tiers in the inaugural league reveal a factor-of-three spread, proving that exergy performance is managed rather than fated. The standings include:

• Engineered Teens: Leaders such as Japan, Austria, and the Nordic nations, which achieve second-law efficiencies in the 12–17 percent range. These nations share common machinery: extensive district heating, electrified industrial processes, and minimal reliance on resistance heating.
• The American Tens: Service-heavy economies that benefit from their structure but are dragged down by profligate building and transport sectors.
• High Single Digits: Industrializing majors, including China, characterized by enormous furnace loads and rapidly growing building estates.

Despite these rankings, no nation currently stands near one-sixth of its own engineered ceiling, suggesting that even the leaders are only at the start line of thermodynamic discipline.

The Industry League

The Industry League inverts the "moral order" typically found in energy debates. While heavy industries are often blamed for high energy consumption, they are revealed to be the most thermodynamically disciplined. Sectors such as steel, aluminum, and glass run nearest to their physical limits because their engineers have spent a century addressing irreversibilities in hard thermodynamic tasks.

Conversely, "light" duties are often the most profligate. These include low-temperature tasks like water heating, space heating, and food drying, as well as crushed rock in mining comminution. These duties run furthest from their physical floors because they have historically been served by high-grade flames and elements that exceed the duty’s exergy requirements a hundredfold. Consequently, the industry league places electrochemistry at the top (60–80 percent efficiency) and low-temperature process heat and mining comminution at the bottom, identifying the latter as the sectors with the greatest avoidable destruction.

The Exerginity Global Exergy Index (EGEI)

To provide a clear, actionable metric for the intelligence of human energy use, the report compresses its findings into a single citable number: the Exerginity Global Exergy Index (EGEI). This composite score, ranging from 0 to 100, is designed to serve as an open-source, versioned tool that allows policy makers and market participants to benchmark progress. By quantifying the second law of thermodynamics in a public, annual format, the EGEI aims to become the standard reference the energy field requires to track civilisational efficiency.

Mechanics and Weighted Components

The EGEI is built from four transparent components, each weighted to reflect different aspects of thermodynamic discipline and data integrity. These components are designed so that the index can be rebuilt from the data provided in the report's appendices, ensuring total auditability.

• Level (40%): This measures the current second-law efficiency of a nation or the world against a 40-percent engineered-ceiling benchmark. This benchmark represents the potential efficiency of a system where the "toolkit" of best-available technologies is fully deployed.
• Trend (30%): Because absolute levels are often influenced by climate and industrial mix, the trend component rewards improvement. It measures the moving rate of change in exergy efficiency, as trends are the most direct reflection of effective policy.
• Allocation Quality (20%): This forward-looking metric assesses the share of new energy demand served by high-efficiency "multipliers"—such as heat pumps—and direct-capture renewables.
• Disclosure (10%): To encourage statistical honesty, this component grades the quality of data provided, rewarding nations that publish dedicated societal exergy accounts.

Allocation Quality and the Merit Order

The inclusion of Allocation Quality highlights the importance of how new demand enters the system. It specifically tracks the penetration of technologies at the upper ranks of the thermodynamic merit order. This includes the share of new heating duties met by heat pumps (compressors) rather than resistance elements, the share of vehicle additions that are electric, and the share of generation additions provided by direct-capture sources (wind, solar, and hydro). By focusing on these inputs, the EGEI identifies whether a system is building a future that minimizes exergy destruction at the point of entry.

The Inaugural Standings

The founding edition of the report places the inaugural world score in the low twenties. This relatively low figure is a reflection of the "one-tenth planet" reality: while humanity is highly proficient at difficult thermodynamic tasks like steel and glass production, it remains profligate in easier duties like low-temperature space heating. The index is versioned so that as methodologies are refined, the back series can be restated, ensuring that future movement in the score reflects genuine changes in global energy intelligence rather than changes in arithmetic.

The Agenda: Ten Levers for Planetary Reform

The Global Exergy Report converts its planetary account into a ranked to-do list of ten specific levers. These actions are ordered by "movable exajoules"—the quantity of exergy destruction each can realistically eliminate. According to the report's central arithmetic, the collective deployment of these levers, most of which utilize existing catalogue technology and are self-funding, is sufficient to move humanity’s global exergy efficiency from its current one-tenth toward one-quarter within a single generation.

Primary Technological Levers

The agenda identifies the retirement of thermal power generation through substitution as the single largest movable exergy dividend, capable of erasing approximately 60 EJ/yr of destruction. Because every terawatt-hour that migrates from combustion-based "flame" to direct-capture renewables erases roughly two terawatt-hours of destruction, this lever represents the most significant efficiency gain in the energy transition. Following this is the implementation of the "compressor rule" for low-temperature heating. This mandate requires the use of heat pumps and mechanical vapor recompression (MVR) for all thermal duties below 100 °C in both buildings and industrial sectors, addressing the planet's largest avoidable entry of approximately 45 EJ/yr.

Massive upgrades for both developed and developing economies are found in the electrification of surface transport and cooking. Electrification of the road fleet triples sector efficiency by replacing internal combustion engines with battery-electric drivetrains, while electrifying cooking represents the largest human-development entry in the account, particularly in economies where traditional biomass currently dominates energy use.

The Policy and Market Framework

To fund and facilitate these technological shifts, the agenda emphasizes a fundamental reform in energy economics. Pricing energy by hours and grades honestly is identified as the primary market instrument required to enable the other nine levers. By acknowledging the thermodynamic grade of energy in its price, markets can properly value high-exergy electricity and low-exergy heat, incentivizing the intelligence of use alongside the cleanliness of supply. Additional levers included in the reform agenda are summarized in the following table:

These levers move the Exerginity Global Exergy Index by targeting the "movable half" of global exergy destruction. By focusing on these specific addresses, the report moves beyond measurement into a management framework for the species.

Key findings

• The One-Tenth Reality — Only approximately 10 percent (60 EJ out of 600 EJ) of harvested exergy reaches final service, with 90 percent destroyed inside the system.
• Low-Temperature Heating Inefficiency — Heating buildings and low-grade industrial duties represents the largest avoidable destruction, running at only 5-7% second-law efficiency.
• Thermal Generation Tax — Every terawatt-hour migrated from flame-based generation to direct-capture renewables (wind/solar) erases roughly two units of exergy destruction.
• Intelligence vs. Decarbonisation — Global second-law efficiency improves by only ~0.1 percentage point annually, far slower than the rate of carbon intensity reduction.
• Inverse Performance Law — Humanity is thermodynamically most efficient at its hardest tasks (smelting) and least efficient at its easiest tasks (warming air).

Method and assumptions

The report utilizes 'Societal Exergy Accounting' (SEA) to grade global energy flows. The methodology is built on a three-tier data spine: Tier one provides quantities from international energy balances (IEA and national offices); Tier two provides the structural division of duties based on 50 years of published societal accounts (e.g., Reistad, Wall, Cullen and Allwood); and Tier three applies engineering coefficients (device-level second-law efficiencies) to calculate useful service. The report employs five frozen conversion rules: carrier-specific exergy factors (electricity at unity), the strict service convention for heating (duty exergy vs. output exergy), chemical exergy for biomass, separate tracking for non-energy feedstocks, and a 'no-netting' rule for renewable inputs to maintain downstream discipline. Results are expressed in bands (e.g., 8-12% for global efficiency) to reflect structural and statistical uncertainty.

Where it applies

• National Policy Benchmarking — Governments can use the EGEI to target specific scores and identify which levers (e.g., the compressor rule) will move their national efficiency index.
• Investment Screening — Investors can use the 'avoidable share' and 'fence-line' data to identify sectors where waste-heat recovery and electrification offer high returns.
• Corporate Auditing — Industrial executives can use the report's coefficients to audit their own process heat duties against engineered ceilings.

Terms used

• Exergy — The measure of energy quality, defined as the capacity of a flow to perform work relative to a reference environment.
• Second-law efficiency — The ratio of minimum exergy required for a task to the actual exergy consumed, highlighting destruction rather than just heat loss.
• Strict service convention — An accounting rule where useful output is defined by the service required (e.g., a 21 °C room) rather than the energy output of the appliance.
• Carnot tax — The inherent thermodynamic efficiency limit and resulting exergy destruction associated with converting heat into work through thermal cycles.
• Comminution — The process of crushing and grinding rock in mining, noted for extremely low second-law efficiency relative to new surface energy created.
• Landauer floor — The theoretical minimum energy required to erase one bit of information, serving as the ultimate physical limit for computing efficiency.

Questions and answers

Why is the global efficiency figure (10%) so much lower than typical energy efficiency stats?

Standard first-law statistics often ignore the quality of energy. The Global Exergy Report uses the 'strict service convention,' which compares the high-grade exergy of fuel to the very low exergy required for services like warm rooms, revealing a much larger gap between potential and practice.

What is the 'compressor rule' mentioned in the agenda?

It is a policy lever proposing that for any thermal duty below 100 °C, electricity should only be used to drive a compressor (heat pump/MVR) rather than being converted directly to heat via resistance elements. This ensures the high-grade exergy of electricity is used to multiply ambient heat rather than being destroyed.

How does the report treat renewable energy like wind and solar?

Following the 'no-netting' rule, renewables enter the account at the busbar. Their exergy is treated as high-quality electricity that avoids the conversion destruction (the Carnot tax) typical of fossil fuel plants, making every unit of renewable capture significantly more valuable to the global exergy ledger.

How can the EGEI be higher than the 10% global efficiency figure?

The Index (EGEI) is a 0-100 score that normalizes national second-law efficiency against a 40% engineered-ceiling benchmark rather than a theoretical 100%. It also includes points for improvement trends and allocation quality, rewarding movement and forward-looking policy.

How to cite

Bakker, W. A. (2026). The Global Exergy Report: Where Humanity Destroys Useful Energy and What We Can Do About It. Exerginity White Paper Series, No. 10 — Founding Edition. August 2026.