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.

  • energy return on investment - bar graph
    These bars represent the estimated maximum energy return on investment of both renewables and fossil fuels. Oil's ratio has declined over time with the increased difficulty of bringing it to consumers. Note its EROI value in 1930, 1970, 2000, and 2005.
  • energy return on investment - firewood
    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!

  • energy return on investment - bar graph
  • energy return on investment - firewood

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. 

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. Hopefully this becomes successful so that when it comes to biodiesel, the issue of food vs fuel will disappear.

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