Originally posted by seer
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This gives us the first law of thermodynamics which is really a system-specific phrasing of the conservation of energy. The second law introduces entropy (S) and basically mandates that some part of internal energy change is heat loss (for irreversible systems).
A very simplified system equation ends up being akin to this: Input=Waste+Output. Waste here is entropy. It's still a change in internal energy, but it exists as heat instead of work.
The short answer to your question then is this:
You have energy transfer through work, and you have energy transfer through entropy. The loss of work just means you have less energy transfer done by the work process.
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