The Importance of Energy Return on Investment

Not all energy sources are created equal in terms of energy return on investment — the amount of energy they produce for the amount spent to produce them.
By John Gulland
December 2010/January 2011

The energy return on investment for firewood includes what you spend cutting and splitting it. However, after some rest and a good meal it's 100 percent renewable!
PHOTO: ISTOCKPHOTO
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The future of our finite supply of fossil fuels is uncertain at best, and development of new energy options continues to gain speed. It’s likely we’ll use a combination of renewable energies and fossil fuels for the foreseeable future.

If you listen to some representatives of the alternative energy industry, you’d think every renewable fuel source out there is the No. 1 candidate to meet the world’s future energy needs — the most qualified to replace oil, coal, and natural gas. So, which type of renewable energy will provide us with the highest net gain in energy?

Energy return on energy invested is more commonly stated as energy return on investment (EROI). The term was coined by Charles Hall, professor of environmental science and forestry at the State University of New York (SUNY), and is presented as a ratio of energy produced to the energy consumed during production. An energy source that yields positive net energy has an EROI ratio of more than 1:1. Anything less than that constitutes an energy sink, or net loss. 

Focusing on the Future

It takes energy to find, extract, refine and transport energy commodities. The energy cost of energy wasn’t a topic worthy of study throughout most of the era of fossil fuels because coal, oil, and natural gas were so accessible and easy to deliver that their EROI ratios were very high.

However, no longer can an oil company drill a hole on easily accessible, vacant land and get a gusher. Although new discoveries are announced regularly, most are small and many are difficult and increasingly expensive to extract. Consider the deep water oil wells in the Gulf of Mexico, the frozen shorelines of the Arctic Ocean, the tar sands in Alberta, Canada, or the shale oil deposits in Wyoming as examples. Oil’s EROI remains high compared with most renewables, but it’s continually declining. And, because the production and consumption of energy always has environmental impacts, the more energy that must be invested to produce usable energy, the greater the environmental cost of that source.

A cautionary example is the recent situation with corn ethanol. According to research from Hall and SUNY graduate student David Murphy, corn ethanol’s EROI is just barely positive on average at 1.1:1. This is the root of much of the controversy surrounding ethanol: Critics rightly wonder if it’s worthwhile to put so many resources into an energy source that yields such a small rate of return. The SUNY researchers indicate that a fuel should obtain a ratio of more than 5:1 to be worth pursuing. In contrast, Hall and John Day, ecologist and professor emeritus of oceanography at Louisiana State University, estimate hydropower’s potential return at roughly 40:1. 

Why EROI?

The study of EROI ratios and the conclusions drawn from it are sometimes controversial because the outcome depends so much on the underlying assumptions. Hall adds that net energy numbers are hard to pinpoint because nearly all data on energy use in the U.S. economy is usually recorded in terms of dollars, not energy.

Still, Hall says, “EROI can be used to help evaluate which alternative fuels are likely to be the most viable economically in the future, especially if appropriate improvements are made in the quality of the inputs and outputs. There is consistency in the different analyses when the same boundaries are used.” He warns that we must be prepared for the possibility of a future with far less net energy, because most, if not all, our current alternative energy options have low EROI compared with that of fossil fuels.

The concept of EROI is one of the best tools to help us understand why the price of energy is relentlessly rising. Energy is no longer cheap, and likely never will be again.

Anyone who has cut, split, and stacked a cord of wood knows there is an energy cost of producing a fuel. In the case of firewood, it’s mostly human energy — a truly renewable resource. But the next time you hear about an energy source that will solve all our energy needs, think about the input required to bring it to the masses. Let’s focus our development efforts on the renewable fuels that will pack the most (net) punch. You can learn more about EROI at The Oil Drum website.


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Post a comment below.

 

STUART SMITH
12/7/2012 6:45:27 PM
So if the the chart was adjusted for climate damage all fossil fuels would be far less than 1:1 correct?

Donna Marquart
12/7/2012 5:56:01 PM
Is the corn that is being planted GMO? We already know that affects other plants and animals. ( The Institute of Responsible Technology & a recent 2 yr study from France showing the harm of GMO's as food ) If the corn (and soybeans) being planted to make ethanol is GMO - and sold by the Agri/Chemical/Bio/Pharma which are more interested in selling their chemicals to get rid of "weeds" and insects and NOT concerned about whether or not it is healthy for the soil, and other living creatures, how ridiculous is that. You smart folks may have figured a way to create energy out of plants on a subsidized and large scale way, but the "economics" of it does not look at the whole picture. When the bees are all gone, who is going to pollinate the crops?

Maxie Coale
3/8/2011 8:02:01 PM
The problem with ethanol is that it uses starch and sugar crops which divert our food supply. There is however a recent technology wherein an organism which requires only the sun, water and c02, secretes hydrocarbons to produce biodiesel. http://greenenergyinsiders.com/?p=1551 Hopefully this becomes successful so that when it comes to biodiesel, the issue of food vs fuel will disappear.

larry sellers
12/19/2010 6:09:19 PM
Looking at the EROI is fine so far as it goes, but there are energy costs downstream too. For example, let's assume a modern well built and well run combined-cycle gas turbine/steam turbine power plant. There are many such power stations running on natural gas in California, and they're fairly efficient - roughly 50% efficient. Given the EROI bar-graph (about 15:1) data it looks like the energy cost of NG is something like 8%. So from 100% we get perhaps 92%, then there are pumping/pipe losses, but ignoring those lets burn the gas. We then generate electric power equal to 1/2 of 92%, or about 46% of the energy in the gas and we throw away the other 46%. Power stations are located according to various criteria, but often they are in remote places - so there are losses due to transformers and transmission lines. Reasonably we may lose another 5% of our 46% so we have got about 41% left when the power arrives at the end-user. Most household use of electricity is resistive load - and that means it's converted back to heat, yielding an overall efficiency disquietingly close to zero. This bring us to a question - why build this system? I posit that the purpose of such a system, despite some marginal advantage to the buyer, is to collect money, not to distribute electric power. And I would ask whether or not this might also be substantially true of the other system-based energy schemes.

Troy Benjegerdes
11/19/2010 8:39:30 AM
First, thanks to Stephanie for stating her affiliation. As for me, I'm first and foremost and independent researcher, and eventually I hope to have an ownership stake in some Iowa farmland. I am also involved in a renewable energy start-up involving ammonia fertilizer.. ( freedomfertilizer.com ) And a large part of the reason came out of the research I did on trying to reproduce various studies which have claimed that corn ethanol has an EROI less than 1. What I found (in generalizations) was about 45% of the energy was natural gas in the ethanol plant, and another 45% was natural gas to make.. Ammonia fertilizer. The amounts of energy (in the form of diesel fuel, or sometimes propane for corn drying) used on the farm are frankly barely worth talking about in the EROI calculations, at least in rain-fed agriculture regions (such as the farm I hope to have an ownership interest in, and I had the good fortune of being able to directly observer for the last 35 years.). Energy wise, Ethanol is currently primarily a means to convert natural gas to a liquid fuel. Economically, it provides a market for the continual 3-4% direct farm yield increases every year, that are allowing the world's farmers to produce more biomass than human consumption alone demands. For converting natural gas to a liquid transportation fuel, even the most pessimistic EROI calculations are better than what can be obtained with gas to liquids, or even directly using liquified natural gas (or CNG).

Stephanie Dreyer
11/16/2010 4:31:35 PM
I work for Growth Energy, a coalition of ethanol supporters, and I wanted to point out that in fact, ethanol is more energy efficient to produce than stated by Professor Hall; for every one Btu put into creating ethanol, there is a 2.3 Btu return. That is a better energy-return ratio than gasoline and it is according to a scientific study conducted by the U.S. Department of Agriculture’s Office of Energy Policy and New Uses, which is available at http://www.growthenergy.org/images/reports/2008Ethanol_June_final.pdf. Over the last two decades, engineering and chemical breakthroughs have produced significant energy gains in ethanol production. Every day, America’s ethanol producers are developing technological improvements to increase efficiency, reduce water use, and boost the amount of energy derived from grain and from cellulosic biomass. Ethanol is not a someday fuel, It is the renewable, clean-burning alternative we have to gasoline today.

Stephanie Dreyer
11/16/2010 4:31:12 PM
I work for Growth Energy, a coalition of ethanol supporters, and I wanted to point out that in fact, ethanol is more energy efficient to produce than stated by Professor Hall; for every one Btu put into creating ethanol, there is a 2.3 Btu return. That is a better energy-return ratio than gasoline and it is according to a scientific study conducted by the U.S. Department of Agriculture’s Office of Energy Policy and New Uses, which is available at http://www.growthenergy.org/images/reports/2008Ethanol_June_final.pdf. Over the last two decades, engineering and chemical breakthroughs have produced significant energy gains in ethanol production. Every day, America’s ethanol producers are developing technological improvements to increase efficiency, reduce water use, and boost the amount of energy derived from grain and from cellulosic biomass. Ethanol is not a someday fuel, It is the renewable, clean-burning alternative we have to gasoline today.








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