Energy Return on Energy Invested

The Azimuth Project wiki has been up and running for exactly one month!

We’ve built up a nice bunch of articles sketching some of the biggest environmental problems we face today — and some ideas for dealing with them. I invite you to look these over and improve them! It’s very easy to do.

I also invite you to join us at the Azimuth Forum, where we are deciding the fate of humanity (or something like that). We need your help!

In the weeks to come I want to tell you what we’ve learned so far. I especially want to talk about various plans of action that people have formulated to tackle global warming. Even sitting here in the comfort of this cozy blog, you can help us compare and criticize these plans.

But I also want to tell you about some interesting concepts. And the first is EROEI, or “Energy Return On Energy Invested”. The Azimuth Project entry on this concept was largely written by David Tweed. Three cheers for David Tweed!

It also had help from Eric Forgy, Graham Jones and David Pollard, and a major contribution from Anonymous Coward. I’ll shorten it and amp it up for the purposes of this blog. I know you’re here to be entertained.

The Idea

You’ve probably heard the saying “it takes money to make money”. Similarly, it takes energy to make energy. More precisely, it takes useful energy to make useful energy.

Energy Returned On Energy Invested or EROEI captures this idea: it’s simply the ratio of “useful energy acquired” to “useful energy expended”. Note that money does not enter into this concept. The difficult and often heated debate arises when we try to decide which inputs and outputs count as “useful”.

There are other names for this concept and closely related concepts. “Energy profit ratio”, “surplus energy”, “energy gain”, and “EROI”, and EROEI all describe virtually the same idea: how much energy we receive per energy put in. See:

• Nate Hagen, A Net Energy Parable: Why is ERoEI Important?, The Oil Drum, 2006.

The concept of “energy yield ratio” is also very similar, but tends to be used in slightly different ways. See the Azimuth Project article for more.

Details

The definition of EROEI for a process of “extracting energy”
is the useful acquired energy divided by the useful energy expended. The “useful” tag denotes energy which is usable by human beings now. For example: a supernova wastes a lot of energy in the process of making uranium and blasting it out into space. But that was done long before we came along, so it makes no sense to include it in the EROEI inputs.

In practice, people include inputs and outputs that aren’t strictly “energies”, but rather “substances from which energy can be extracted”. For example: one could look at the EROEI of growing trees for fuel, where the wood produced is counted as an output according to the energy extractable by burning.

In general, having a high EROEI value counts as “good”. Indeed, when the EROEI drops below 1 more energy is being used in the extraction process than is being output at the end! But because it only considers energy issues (and not resource scarcity, scalability, pollution, etc.), EROEI should only be one input into our process of deciding on technologies and actions.

When it comes to computing EROEI, the hard part is deciding which inputs and outputs should be included in the ratio — particularly since this involves considering which other competing processes are genuinely viable.

Another complication is that while various forms of energy can generally be converted to each other, this will incur losses due to conversion inefficiencies. So, you can’t look at two schemes with the same useful energy inputs that produce different kinds of energy — e.g., electricity and heat — and declare the one with the higher EROEI as more suitable.

Examples

To see some of the difficulties in calculating an EROEI, let’s imagine growing a crop of grass and then fermenting it to produce a liquid fuel. The most obvious inputs and outputs are:

“Energy” outputs:

1. The liquid fuel itself. This is unarguably useful output “energy”.

2. There may be excess heat produced by the fermentation process. Whether this is useful is debatable since the energy is of high entropy and produced at plants located away from energy consumers.

3. The remaining biomass may be suitable for burning. Again the usefulness is debatable, since the biomass may be better used for fertilising the fields used to grow the crop. Even if this isn’t the case, the biomass may require yet more energy to collect into a dry, burnable state.

“Energy” inputs:

1. Sunlight. Except for exceptional circumstances, there is no other use for sunlight falling on fields so this does not count as a useful input.

2. Artificial fertilizer. This requires energy to produce and could be used for growing food or other crops, so it definitely counts as a useful energy input.

3. Energy used by motorized vehicles, both during farming and transportation to the biomass plant. For the same reasons as fertilizer, this counts as a useful energy input.

4. Mechanical energy used to extract liquid fuel after fermentation and clear waste products from the apparatus. Again a useful energy input.

Thus one computation of EROEI would count outputs 1 and inputs 2, 3 and 4.

However, suppose that the grass crop is genuinely being grown for other reasons — e.g., as part of a crop rotation scheme — and the plant is sufficiently small that the excess heat can be used fully by the plant for staff heating. Then you could argue that the EROEI should count outputs 1 and 2 and count inputs 3 and 4. So, to determine the EROEI you need to decide which alternative uses are genuinely viable.

Note also that this EROEI calculation is purely about energy! It does not reflect issues such as whether the land usage is sustainable, possible soil depletion/erosion, scarcity of mineral inputs for artificial fertilizer, etc.

Comparison

Okay, but enough of these nuances and caveats. Important as they are, I know what you really want: a list of different forms of energy and their EROEI’s!

Natural gas: 10:1
Coal: 50:1
Oil (Ghawar supergiant field): 100:1
Oil (global average): 19:1
Tar sands: 5.2:1 to 5.8:1
Oil shale: 1.5:1 to 4:1

Wind: 18:1
Hydro: 11:1 to 267:1
Waves: 15:1
Tides: ~ 6:1
Geothermal power: 2:1 to 13:1
Solar photovoltaic power: 3.75:1 to 10:1
Solar thermal: 1.6:1

Nuclear power: 1.1:1 to 15:1

Biodiesel: 1.9:1 to 9:1
Ethanol: 0.5:1 to 8:1

This list comes from:

• Richard Heinberg, Searching for a Miracle: ‘Net Energy’ Limits & the Fate of Industrial Society.

You can read this report for more details on how he computed these numbers. If you’re like me, you’ll take a perverse interest in forms of energy production with the lowest EROEIs. For example, what idiot would make ethanol in a way that yields only half as much useful energy as it takes to make the stuff?

The US government, that’s who: the powerful corn lobby has been getting subsidies for some highly inefficient forms of biofuel! But things vary a lot from place to place: corn grows better in the heart of the corn belt (like Iowa) than near the edges (like Texas). So, the production of a bushel of corn in Iowa costs 43 megajoules of energy on average, while in Texas it costs 71 megajoules.

Similar, ethanol from sugar cane in Brazil has an EROEI of 8:1 to 10:1, but when made from Louisiana sugar cane in the United States, the EROEI is closer to 1:1.

“Solar thermal” also comes out looking bad in the table above, with an EROEI of just 1.6:1. But what’s “solar thermal”? Heinberg has a section on “active” or “concentrating” solar thermal power, where you focus sunlight to heat a liquid to drive a turbine. He also has one on “passive” solar, where you heat your house, or water, by sun falling on it. But he doesn’t give EROEI’s in either of these sections — unlike the sections on other forms of energy. So I can’t see where this figure of 1.6 is coming from.

Anyway, there’s a lot to think about here. Each one of the numbers listed above could serve as the starting-point for a fascinating discussion! Let’s start…

39 Responses to Energy Return on Energy Invested

  1. Graham Jones says:

    According to

    http://www.trec-uk.org.uk/csp.htm#note1

    the energy payback time for CSTP plants (solar thermal) is about 6 months. Since they last 20 or more years, that seems like an EROEI of around 40:1.

    • Me too thinks payback time is sometimes a more meaningful metric for long-lasting energy sources like wind, water, solar.

      Plus, given today’s imperative for a rapid transition to biosphere friendly energy sources, short payback time is a necessary condition to avoid Energy cannibalism. (For serious action, forget anything with a payback time of more than 5 years.)

      Problem is to determine wear-out time.

      E.g. 1) How long is the wear-out time of a hydropower plant? One can only guess here, I guess. (See here for guesses of EROEI of Hoover dam. Meanwhile climate change constrains its wear-out time by wearing out the Colorado river :-()

      E.g. 2) For photovoltaic payback time seems to be down to 2 years meanwhile [personal communication by industry representative]. Given a wear-out time of 25 years (efficiency down by 20% then), the EROEI would be at least 10:1.

    • John Baez says:

      Thanks, Graham.

      It would be nice to get some references from a source other than a website run by people who are trying to sell a 400-billion-euro solar power project. Not that I have any reason to think they’re wrong… indeed, I hope this project works as advertised and succeeds! But they have such obvious motives to make this form of power sound as good a possible.

      For comparison, it’s interesting to read websites run by people who advocate corn-based ethanol.

  2. John Beattie says:

    Would this analysis be helped or hindered by the concept of Opportunity Cost or something similar?

    There is an analogy between money and energy and opportunity cost is a way to decide between alternative actions, when the decisions are being measured in money.

    • DavidTweed says:

      I don’t know — it would be interesting to look at possible connections. One of the points that’s important to keep in mind is that EROEI isn’t the only factor in decisions (eg, situations like considering a hydropower dam which will, in addition to energy implications, will displace people, have effects on wildlife, etc). How to represent and sensibly trade these factors off is not well understood (I think).

  3. My comment would be that you have some people following you who are interested in these topics, but lack the background of others who live, work, and/or study within this realm or domain. Sometimes it would be nice to see references to additional more basic readings as well as the technical ones … not a criticism, just a thought.

    Olympia, Washington
    Please keep up the good work(s).

  4. John Baez says:

    On an only mildly digressive note: pose your toughest energy questions here!The Guardian has a panel of experts who will try to answer them.

  5. Robert Smart says:

    The Discussion section at the bottom of the EROEI wiki entry mentions the two extremes: with wages included, and excluded. However different technologies have different worker requirements, so maybe the minimum under consideration should be including worker-required energy at subsistance levels. I notice that the recent energy conference in Spain has some EROEI discussion. See the Oil Drum report: http://www.theoildrum.com/node/7062.

    Completely off-topic, there is a push to convince us all that our warmer world will be drier. We’ve had a press release that Australia’s recently broken drought was unprecedented [Didn’t the Murray run dry in 1916? Don’t the lake sediment records show a 70 year drought in Eastern Australian 500 years ago?]. And there is a lot of maths in a recent paper reported by Stuart Staniford: http://earlywarn.blogspot.com/2010/10/extracting-signal-from-drought-noise.html (and earlier posts).

    If off-topic comments are frowned on, then how about having a regular Open Thread for people to contribute stuff that is not factual enough or long-lasting enough for the wiki. There are two ways this is done. Brave New Climate just starts a new thread every now and then. The Oil Drum has the more labour intensive technique of regularly posting a list of recent relevant links (TOD does it every day, but that seems excessive).

    • John Baez says:

      Hi –

      I notice that the recent energy conference in Spain has some EROEI discussion. See the Oil Drum report…

      Thanks! I’ve added a reference to this on the Azimuth Project page Energy return on energy invested.

      Completely off-topic, there is a push to convince us all that our warmer world will be drier.

      This topic seems to be a perennial favorite of yours. I guess that makes sense, living as you do in Australia! And I agree that it’s odd, overall, to link warming with drought — though I wouldn’t be surprised if in some places we get droughts.

      Would you like to write and mail me a little essay on this topic, preferably with some relevant references? I could use it as part of a blog entry, and that would become the place to discuss this issue.

      • Robert Smart says:

        I guess the key thing is that warm+dry is just one of many claims that float around, and there is little chance of finding out which serious researchers believe it. I gather the new Congress will be investigating this stuff from a negative position. Maybe there needs to be some discussion aimed at figuring out what is universally believed and able to be argued in a reasonably consistent way before lots of people start saying contradictory things in front of House investigations. Beyond that, consideration should be given to the best achievable result rather than the best result. The Right wants more Nuclear Power for various security reasons. The elections in America and Australia have been influenced by resistance to rising energy costs. It is a fantasy to think we can slug voters with reduced and expensive energy while Peak Oil is killing the economy. The people who claim to be extremely worried about AGW need to give up their opposition to Nuclear Power ASAP. However you evaluate the total cost, Nuclear Power has the lowest marginal cost after the plant has been built, and so if you cough up the money now (for whatever reason) then it will definitely displace burning fossil fuel after that.

      • John Baez says:

        Robert wrote:

        I guess the key thing is that warm+dry is just one of many claims that float around, and there is little chance of finding out which serious researchers believe it.

        That’s a very pessimistic attitude — one I don’t share at all! You could start here:

        * Aiguo Dai, Drought under global warming: a review, Wiley Interdisciplinary Reviews: Climate Change, 2010.

        Abstract:
        This article reviews recent literature on drought of the last millennium, followed by an update on global aridity changes from 1950 to 2008. Projected future aridity is presented based on recent studies and our analysis of model simulations. Dry periods lasting for years to decades have occurred many times during the last millennium over, for example, North America, West Africa, and East Asia. These droughts were likely triggered by anomalous tropical sea surface temperatures (SSTs), with La Niña-like SST anomalies leading to drought in North America, and El-Niño-like SSTs causing drought in East China. Over Africa, the southward shift of the warmest SSTs in the Atlantic and warming in the Indian Ocean are responsible for the recent Sahel droughts. Local feedbacks may enhance and prolong drought. Global aridity has increased substantially since the 1970s due to recent drying over Africa, southern Europe, East and South Asia, and eastern Australia. Although El Niño-Southern Oscillation (ENSO), tropical Atlantic SSTs, and Asian monsoons have played a large role in the recent drying, recent warming has increased atmospheric moisture demand and likely altered atmospheric circulation patterns, both contributing to the drying. Climate models project increased aridity in the 21st century over most of Africa, southern Europe and the Middle East, most of the Americas, Australia, and Southeast Asia. Regions like the United States have avoided prolonged droughts during the last 50 years due to natural climate variations, but might see persistent droughts in the next 20–50 years. Future efforts to predict drought will depend on models’ ability to predict tropical SSTs.

        Read some of the references. Build up a picture of what scientists think about these issues. Then write a blog article about it, telling us what you’ve found, and raising any questions you think need to be raised. I’ll post it here. Then people will drift along and give you more information.

        Lather, rinse and repeat — this is my favorite way of learning stuff: “learning by explaining”.

        I really urge you to do this!

  6. John Baez says:

    Here is a table from that study on ethanol I mentioned above:

    • Hosein Shapouri, James A. Duffield and Michael Wang, The energy balance of corn ethanol: an update, Agricultural Economic Report Number 813, United States Department of Agriculture, Office of the Chief Economist, Office of Energy Policy and New Uses.

    I would love it if some energetic high school student or lawyer or mathematician or carpenter out there converted this data from obscure American units into metric units:

    1 bushel (bu) = 35.24 liters

    1 British thermal unit (Btu) = 1.055 kilojoules

    1 pound (lb) = .4536 kilograms

    1 US gallon (gal) = 3.785 liters

    1 acre = 0.4047 hectares

    If you do, give me the data and I’ll put it on the Azimuth Project page for you!

    You’ll see why Pimentel is attacked by everyone who wants to turn corn into ethanol for fuel (as opposed to, say, whiskey). Where does the truth lie?

    • Roger Segelken, Ethanol fuel from corn faulted as ‘unsustainable subsidized food burning’.

    says:

    Neither increases in government subsidies to corn-based ethanol fuel nor hikes in the price of petroleum can overcome what Cornell University agricultural scientist, David Pimentel, calls a fundamental input-yield problem: It takes more energy to make ethanol from grain than the combustion of ethanol produces.

    On the other hand:

    • Michael Wang and Dan Santini, Corn-based ethanol does indeed achieve energy benefits, Center for Transportation Research Argonne National Laboratory, February 15, 2000.

    A quote:

    Problems with Prof. Pimentel’s assessment are found in three key areas: energy use of corn farming, energy use of ethanol production, and failure to credit co-products from ethanol plants. With respect to the first two areas, Prof. Pimentel in his 1998 assessment used data from his 1991 and 1992 publications, despite the fact that a 1995 thorough study on the topic by the U.S. Department of Agriculture (USDA) was readily available. Further, since that time we have conducted our own study of the subject, and the USDA is currently updating its estimates. We anticipate that these studies will support our prior assumptions that progress continues to be made. The farming sector is not technologically mature, as Prof. Pimentel contends. In fact, we found that best practices in corn farming and ethanol production provide reason to believe that the improvements in energy efficiency that we identified are likely to continue.

    We conducted a series of detailed analyses on energy and emission impacts of corn ethanol from 1997 through 1999. During our analyses, we researched improvements in energy intensity of corn farming and ethanol production by studying publicly available data and by contacting USDA, experts in the Midwestern farming and meat production communities, and ethanol plant designers and operators. Our research showed that corn productivity (defined as corn yield per unit of chemical input) increased by 30% between the early 1970s and mid-1990s. We also found that energy intensity of ethanol production (defined as energy use in ethanol plants per unit of ethanol produced) decreased by about 40% between the mid-1980s and late 1990s. The table below presents our results, together with Prof. Pimentel’s values.

    But then:

    • David Pimentel, Corn can’t save us, The St. Louis Post-Dispatch, 18 March 2008.

    Quote:

    Third, ethanol production is energy intensive: Cornell University’s up-to-date analysis of the 14 energy inputs that go into corn production, plus the nine energy inputs invested in ethanol fermentation and distillation, confirms that more than 40 percent of the energy contained in one gallon of corn ethanol is expended to produce it. The energy expended to make ethanol comes mostly from oil and natural gas.

    Some investigators conveniently omit several of these energy inputs required in corn production and processing, such as energy for farm labor, farm machinery, energy production of hybrid corn-seed, irrigation and processing equipment. Omitting energy inputs wrongly suggests that a corn-ethanol production system offers a more positive energy return. In reality, corn is an inefficient choice from an energy-cost and transport standpoint.

    Cellulosic ethanol also is touted loudly as a replacement for corn ethanol. Unfortunately, cellulose biomass production requires major energy inputs to release minimal amounts of tightly bound starches and sugars needed to make fuel. About 70 percent more energy – coming, again, from precious oil and gas – is required to produce ethanol from cellulosic biomass than the energy contained in the ethanol produced. That makes cellulosic ethanol an even poorer performer than corn ethanol.

    Also, the production of corn ethanol is highly subsidized: State and federal governments pay out more than $6 billion per year in subsidies, according to a 2006 report from the International Institute for Sustainable Development in Geneva, Switzerland. Calculated on a per-gallon basis, these subsidies are more than 60 times those for gasoline.

    Note that The energy balance of corn ethanol: an update, where I got the table above, has Michael Wang as a coauthor again. Here’s the abstract:

    Abstract: Studies conducted since the late 1970s have estimated the net energy value (NEV) of corn ethanol. However, variations in data and assumptions used among the studies have resulted in a wide range of estimates. This study identifies the factors causing this wide variation and develops a more consistent estimate. We conclude that the NEV of corn ethanol has been rising over time due to technological advances in ethanol conversion and increased efficiency in farm production. We show that corn ethanol is energy efficient as indicated by an energy output:input ratio of 1.34.

    Note that 1.34 is still pretty darn low compared to most other forms of energy — at least according to the table in my blog post above! I think corn-based ethanol is a popular idea thanks to the corn lobby’s tremendous power, not its intrinsic virtues.

    • Tim van Beek says:

      I would love it if some energetic high school student or lawyer or mathematician or carpenter out there converted this data from obscure American units into metric units…

      This can be done online, of course, like here, although it is a classical task for a spreadsheet software – BTW: do you use some kind of office software that includes a spreadsheet? Like OpenOffice?

      • John Baez says:

        Yes, my wife and I use OpenOffice spreadsheets to keep track of our household budget!

        (Of course I’m trying to find easy jobs for other people to do as part of the Azimuth Project. I have an essentially infinite amount of work to do on this project.)

        • Tim van Beek says:

          I was thinking about creating a spreadsheet myself or get someone else to do it (not you!) – but in a format that most other people here can use :-)

          So OpenOffice would be a good choice.
          (I live in a MS world where spreadsheet is synonymous with Excel-sheet. A distant memory told me that this is not so in academia.)

  7. Thomas Fischbacher says:

    Actually, whenever a source says it took its data from Pimentel, I try to get an independent verification from some other source that did not. I am not sure to what extent Pimentel’s work might actually be biased (perhaps unintentionally so) more strongly than it should, given how often it is cited.

    I’m sure he’s right about a number of things he claims. But I still advise to generally be very cautious when there is just one very dominant source for data on some particular important issue.

    • John Baez says:

      Hi, Thomas! Luckily Pimentel’s estimate of the EROEI for corn-based ethanol was so upsetting to so many people that there are now many other estimates, as shown in the table here. Sifting through these, maybe the truth is somewhere to be found.

  8. tussock says:

    I think it’s the fertiliser that kills the EREOI on crop fuels, it only boosts production by about 30%, but accounts for 25% or more of the energy investment before the remaining costs (that are all proportional to crop size).

    So removing fertiliser from the equation leaves you with 70% of the ethanol at 52.5% of the energy investment. 1.79:1 kJ/kJ. Uses 40%+ more land per unit of fuel, but likely no more water or other scarce resources, and there’s less wear on transport networks and such.

    You can also look at it that the fertiliser applied to the crop from there has a 0.73:1 kJ/kJ, it’s just a way of improving the $/hectare side of the equation, which drives land prices and thus land use.

    And I sure do hope solar concentrator is better than 1.6:1, because it’s the only potential source of electricity that can meet the world’s needs if we wish to give up on coal before it drowns us all (and it’s $/$ good to boot).

  9. jingxiaoyi says:

    The plant also emits CO2 during the night.
    Does forest make contribution to the global warming?

    • Nathan Urban says:

      Short answer: natural forests haven’t added much to the industrial increase in atmospheric CO2. Humans burning forests and cutting trees down have added some CO2, but it’s still much smaller than the amount of CO2 added by fossil fuel burning.

      Longer answer:

      Plants emit CO2 during the day and night (autotrophic respiration). During the day they also absorb CO2 during photosynthesis, so they are net carbon sinks. At night, there is no photosynthesis, and so they are net carbon sources.

      Growing plants absorb far more CO2 during photosynthesis than they respire. This is what makes them grow. (Most of the carbon in a tree trunk, for example, comes from the air, not from the soil.)

      Over the long term (decades to centuries), forests are mostly carbon neutral, if you follow them through their whole life cycle into death: when they die and decay, they emit carbon back to the atmosphere. (Over shorter periods, forests can alter atmospheric CO2 depending on whether they’re mostly growing, dying, being burnt in fires, etc.)

      • Tim van Beek says:

        I would like to add a page to the Azimuth project starting with this answer, simple question about the title of that page: What would be the technical term? CO2 sources and sinks?

  10. I don’t really see why EROEI is a useful metric. As you see, coal fares quite well on an EROEI scale, but is “bad” for completely independent reasons: it releases long-sequestered carbon back into the atmosphere, contributing to global warming.

    I can see where you might compare things which are substantially similar in other respects, but differ in their EROEI (say, corn-based ethanol vs sugarcane-based ethanol). But, since ethanol is a fungible commodity, we can equally easily (actually, much more easily) compare them on price: sugarcane-based ethanol is economically viable on its own; corn-based ethanol is only viable with massive government subsidies.

    But, anyway, the real objection to corn-based ethanol is not its EROEI, per se, rather that a major input is fossil-fuel-derived fertilizer (there goes that sequestered carbon, again).

    And EROEI becomes even less useful (if such were possible), when evaluating the truly unique.

    Back in my youth, there was a proposal, by the Québec Government, to use some of the vast amounts of electricity, generated by the James Bay hydroelectric development, to enrich Uranium. This was (IMHO, and, thankfully, the powers-that-be agreed) a hare-brained scheme, for reasons completely independent of EROEI. (Google “CANDU” for one reason.)

    I don’t think EROEI would have contributed to that debate, and I don’t think it contributes much to the debate over any of the above technologies.

    For many considerations, “price” is a much better metric. For others (particular the ones you’re actually interested in), “kilograms of sequestered carbon (in the form of fossil fuels) released, per kilowatt-hour of useful energy produced” would be a better measure.

    • John Baez says:

      To me, the neat thing about EROEI is that it attempts to be a ‘purely physical’ way of thinking about power production, like carbon emitted, and unlike price. It doesn’t quite get there, since its definition depends on so many subtle decisions (as explained above). But still, this feature makes it an interestingly different way to look at things. I don’t think that people, companies or governments will or should make decisions based mainly on EROEI. But it may help us track the overall flow of energy through the economy, which is a good thing. And when you have a form of power production whose EROEI dips below 1, you’ve gotta wonder if it’s worth bothering with.

      Anyone who likes (or dislikes) the concept of EROEI may also like (or dislike) thermoeconomics and biophysical economics. I bet there are people working on these subjects who’d make a much more spirited defense of the importance of EROEI than I’d care to.

    • Tim van Beek says:

      For many considerations, “price” is a much better metric.

      I tend to agree with Jacques that EROEI is much less useful than a true price of a free market with all costs included – which does not exist, because we have not figured out yet how to include massive environmental impacts, risks and missing sustainability.

      For example, I’m not sure if our economic system will anticipate a massive increase of the price of oil soon enough to make people work on alternatives on time (ignoring for the moment global warming, I’m talking about heating, transportation etc. without oil), although several car companies e.g. are investing a lot of money in the development of electric cars, despite the fact that there isn’t a market for those (yet). IMHO this is an encouriging example of long term thinking. But, again IMHO, this seems to be a laudible exception.

      And AFAIK no one claimed that the BP oil spill in the Mexican gulf was not a problem because BP was able to pay for the damage with the revenues of a single business year (or two, or three, I don’t know the numbers).

      • John Baez says:

        Tim wrote:

        I tend to agree with Jacques that EROEI is much less useful than a true price of a free market with all costs included – which does not exist, because we have not figured out yet how to include massive environmental impacts, risks and missing sustainability.

        Of course a true price including all externalities is very hard to compute. However, you might enjoy the article I just wrote, which says that Singapore includes a “shadow price” for carbon in making some of its economic decisions. I don’t know any details, but it’s interesting.

        • Tim van Beek says:

          …you might enjoy the article I just wrote…

          I did :-)

          Singapore includes a “shadow price” for carbon in making some of its economic decisions.

          In Germany there is both a tax on oil (includes gasoline), now called “energy tax”, and an “ecology tax” on energy carries – also sometimes called “entropy tax”, because it has to be paid by people who increase the overall entropy by converting chemical energy to heat energy. (Yes, that’s funny, but it is not a joke :-).

          The problem with this kind of taxes is that you need to have many exceptions, unless you want to kick whole industries out of the market – like airlines or energy intensive industries (think of manufacturing aluminium). So, paradoxically, those people who consume the most pay the least.

    • Thomas Fischbacher says:

      The way I see it, there are three interesting aspects to EROEI.

      First, it serves as a very crude metric to get an idea about how much of that part of the economy for which energy is a key input (that certainly does not include writing novels, say, but it does include the chemical industry and the transportation sector) has to be related to energy harvesting.

      Bluntly, if you work at an EROEI of 1.5, then 2/3 of your energy intensive industry must be energy harvesting.

      Chris Martenson (former vice president of Pfitzer) nicely addresses this in part 17b of his “Crash Course”:

      Second, there is this “Olduvai Theory” issue, which occasionally (often?) is presented as “The decline after Peak Energy will take us back to the stone age” scare-mongering – so, EROEI is used as a scientifically-looking backing to prop up scare-mongering. The big problem I have with this is that many people seem to not realize how easy it is to live a high-quality life on an absurdly small energy budget. By and large, we seem to have forgotten that there was a pre-electric age which was not the stone age. If you want so – there are many people on this planet who neither have access to the power grid, nor live a stone age hunter-gatherer life.

      Third, and slightly related to the above, the issue with EROEI is that it gives a markedly different perspective on “progress”. We generally like to believe that we (i.e. western societies) by and large are on the right track – getting ever more prosperous than previous generations. However, a very valid question is where this prosperity comes from. As it stands, a lot of it seems to be derived from drawing on our capital of one-off natural resources (not all natural resources are like that though), and we keep on having to exploit ever more dirty/difficult resources to keep the show running. So, a steep uphill slope in terms of increased prosperity actually looks like a steep downhill slope in terms of resource availability.

      The important concept here is “cost of oppurtunity” – but applied to resources. The oil you burned up 10 years ago when you went to a conference isn’t available any more for any other purpose that may actually have created much bigger value. I leave it as an exercise to the reader to find examples where a liter of oil produces much more economic value than in a plane.

      Personally, I wouldn’t invest in the aerospace industry, given that their value-per-expended-kilowatt-hour-of-fuel ratio is fairly low. If high quality fuel gets more expensive than it is today (I’m expecting that), they will be among the first to be in serious trouble. Maybe for the better – if they decided to stick to funny beliefs that are incompatible with reality, that maybe would be the natural outcome.

      • John Baez says:

        Thomas wrote:

        I leave it as an exercise to the reader to find examples where a liter of oil produces much more economic value than in a plane.

        Thanks! Your remark helped me turn down an offer to fly across the world and give an hour-long lecture.

    • DavidTweed says:

      Jacques,

      I think part of the problem is that you (and a lot of other people) are thinking like a physicist/mathematician where you almost always have situations where you have only one metric that applies to whatever you’re doing. You’re quite right that if you’re forced to use only one metric in your decision process, then using EROEI would have lots of imperfections.

      But the idea is that it’s one of several measurements/considerations that needs to be traded-off when making decisions. The classic example of this is creating biofuels in some way. Most of the techniques seem to have EROEI close to or below 1:1. Now you could argue that having a high density fuel enabling mobility is very useful for other reasons, and that this is worth using your available energy inputs into a low EROEI process. That’s reasonable, but having to look at EROEI you know that you’ve made a trade-off (compared to, for example, using that input energy to build wind-turbines) of total energy for energy in a particularly useful form. Unfortunately, environmentalism is a complex subject that’s often a lot more like doing tax accounting for a mega-corporation than mathematics :-( .

      [Lurking in the background is the possibility that, given a decline in fossil fuel use due to both possible peak oil and coal and deliberate non-use for carbon dioxide reduction, there may in the short-to-medium-term be a total energy crunch. For example, look at the energy diagram here and imagine that the fossil fuels block shrank by 10 per cent every year for a decade. Until enough sustainable energy capacity is built up — which takes time and energy (see here for example) — the total energy inputs will be severely constrained, so we’d want to “get as much consumer energy out of it as possible”.

      I’m not saying that an energy crunch is definitely going to happen, but it looks like one possible future with non-negligible probability.]

    • Jean-Francois says:

      Ditto. I’d also add that though EROEI is still somewhat useful, that what’s most important are the myriad uses of oil beyond just fuel (ie chemicals, plastics, etc.)

      Btw I’m also Quebecois, and a long-time reader of TOD. I don’t mean to be too off topic, but I’m very interested in Quebec’s post peak oil future. Aside from government and HydroQ sources, do you know of any sources of info or research on Quebec’s energy future? I’m particularly interested in the role Quebec could play in Northeastern North America in the coming decades.

      • John Baez says:

        My wife’s brother, Philip Raphals, helps run a research group called the Helios Centre, based in Montreal, which is “dedicated to developing the knowledge base required to foster appropriate strategies, policies, regulatory decisions and market choices for a sustainable energy and climate future.” He’s done a lot of work related to Hydro Quebec. You might look at the Helios Centre website or get in touch with him.

    • Glenn Appleby says:

      While it was argued that the EROEI metric might not be useful because coal has a high EROEI, while it is actually a “bad” choice, I feel that, in fact, this is precisely why the EROEI might indeed be useful (along with other metrics in our decision making). The reason why coal will continue to be attractive to many despite the environmental problems its use causes is EXACTLY because, as the EROEI indicates, there is a high return on energy investment, as compared to many more environmentally attractive alternatives that have a smaller payoff (as measured by the EROEI). The *scale* of investment in replacing one form of energy with another is a difficult, but essential component in our decision making.

      • John Baez says:

        I agree with this, along with David Tweed’s remarks. “EROEI is important” or “EROEI is interesting” is a completely different claim than “high EROEI is good”.

  11. streamfortyseven says:

    People tend to forget that petroleum is a feedstock for plastics, pharmaceuticals, and the majority of the products made by the chemical industry, and is a source of industrial solvents, as well. It is not solely used as a fuel. If we get into a petroleum crunch, that means, that unless we can find suitable replacements for this feedstock, the prices on a lot of other goods will increase sharply too.

    It’s another reason to repeal the prohibition on hemp, since hemp oil can replace petroleum as a feedstock for plastics as can hemp fiber, amongst a whole galaxy of uses.

    • John Baez says:

      I’ll need to do a This Week’s Finds on “peak oil”. I’m slightly dreading it, because it’s a controversial issue, so it’s hard to find facts that everyone agrees on (except perhaps that there’s a finite amount of oil inside the Earth). But it’s also fascinating and important.

      Hemp, eh? I wish I could lure you into contributing some know-how to the Azimuth Project. We need it!

      On a somewhat different note, it seems the Californians have voted down the measure to legalize marijuana. But they also voted down a fiendish proposition that would have blocked implementation of a law requiring our state to reduce greenhouse gas emissions by roughly 20 percent by 2020, and more later. It’s been said this may be the first time a population has voted on the issue of climate change. I’m glad they voted smart, despite oil money pouring in from Texas companies.

  12. Robert Smart says:

    Economics is dynamic. All my ways of trying to understand it are static, like EROEI. So I often wonder whether I really understand. We get this in the EROEI discussion. So what happens to the money the company pays to the janitor (or the CEO). They spend it, and there is energy embodied in the stuff they receive. And the people receiving the money spend it and …

    This seems to have something to do with Liebig’s Law. The thing that is in short supply is what counts. For 200+ years that thing has been skilled labour. Now, maybe temporarily, it is oil. So that suggests that for our infinite regression on the janitor’s salary, each step has some embodied oil. And the sum of all those bits of embodied oil limits how much value you can get out of the dollar. Well this conveniently forgets that there is some time delay between receiving and spending money: the velocity of money.

    So let’s take a case relevant to saving the world: our carbon tax (whether it is done with a market or not). Proponents of this mostly say that it should be revenue neutral. All the money raised is returned to the public in some wonderfully fair way. Let’s assume we have a closed system: Not much point if we just move the carbon emissions to another country. So the public buy energy (directly or indirectly) and part of the price is carbon tax. Then they get that back and they buy more stuff with embodied energy. Then they get that tax back. Well its doubtful if you can buy anything that doesn’t have embodied energy, but only a proportion is carbon intensive. So how does this cycle play out? Are the infinities relevant or can we normalize or zenoize them?

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