Ordinal maximization principle vs Pareto’s optimum conditions in policy decision making: the case of hydrogen technologies

The concept of Ordinality takes origin from the formalization process of Emergy Algebra under dynamic conditions and the subsequent mathematical formulation of the Maximum Em-Power Principle (2001). Such a new concept enabled us to reinterpret the traditional concept of Externality (in Economics) as an “excess” of Quality (Giannantoni 2007, Giannantoni & Zoli, 2008), that is an “extra” Benefit of superior Ordinality, never ever reducible to the sole action of one subject or the other of the transaction, or to their “sum”. Such a new concept can be thus referred to as Ordinal Externality. An appropriate evaluation method, termed as Four-Sector Diagram of Benefits, was developed to account for Ordinal Externalities generated by the interaction of the four main Sectors usually involved in any productive process: Firm, Society, the Environment as a Source and the Environment as a Sink. The advantages of a Decision Making Process based on Ordinal Benefits (with respect to traditional economic benefits) has already been shown, under steady state conditions, with reference to the evaluation of well-calibrated Incentives concerning both Hydrogen Fuel Cells and Hydrogen Fuel Cell Buses (ib.), for electricity supply and public transportation respectively. The same case studies will now be reconsidered in order to show that, on the basis of the Ordinal Maximization Principle, the optimum economic conditions (usually assumed as being corresponding to Pareto’s General Equilibrium) can directly be obtained as an adherent reflex of the maximum level of Ordinality achieved by the System. Consequently, the Ordinal Maximization Principle represents a valid reference guide for a Policy Maker precisely because, being preferentially based on the external Benefits to be “remunerated” rather than on possible damages to be internalized, it is always orientated toward the genesis of the Maximum Ordinality Excess.