EROI and Net Energy Definition
Professor Charles Hall defines the Energy Return on Investment (EROI), also sometimes referred to as Energy Return on Energy Investment (EROEI), as “the ratio of energy returned from an energy-gathering activity compared to the energy invested in that process”:
EROI=Energy returned to society (Eg)
Energy required to get that energy (Er)
Net Energy (NE) is the energy available to society once the energy required to get it has been deducted from the gross amount gathered.
NE / Er=EROI -1
For example if 1 barrel of oil invested to get energy out of, say, shale oil returns 5 barrels, the EROI is 5:1 and the NE per unit of energy invested is 4.
Table 1. This table shows the net energy that results from the time oil is extracted to the time it is made available to the enduser.
EROIs can be defined at various levels along production chains. For example consider a typical conventional oil production chain. For each 100MJ of energy collected at the well, we must take into account approximately 10MJ expended during the extraction process, then 27MJ used during refining and producing oil products such as gasoline, diesel, etc., then some 5MJ used during transport to the point of use, and also some 37.5MJ used to create the required transport infrastructures in the first instance. [1]
So out of the initial 100MJ some 79.5MJ of Energy have been dissipated along the production chain and only some 20.5MJ of NE are available to end users.
In the above example the EROI at end-user level, EROIe=100/79.5=1.3 and the net energy at end-user level per unit of energy used to get it, NEe / Er=1.3 – 1=0.3 (in rounded figures), in other words, not much…
[1] Lambert, Jessica, Hall, Charles, Balogh, Steve, Poisson, Alex, and Gupta, Ajay, 2012, EROI of Global Energy Resources, Preliminary Status and Trends, DFID – 59717, State University of New York, USA.
Why is EROI a factor?
Prof. Hall highlights the importance of EROI to understand the dire present global energy situation in the following way:
“Think of a society dependent upon one resource: oil. If the EROI for this oil was 1.1:1 then one could pump the oil out of the ground and look at it...and that’s it. It would be an energy loss to do anything else with it. If it were 1.2:1 you could refine it into diesel fuel, and at 1.3:1 you could distribute it to where you want to use it. If you actually want to run a truck with it, you must have an EROI ratio of at least 3:1 (at the wellhead) to build and maintain the truck, as well as the necessary roads and bridges (including depreciation). If additionally you wanted to put something in the truck and deliver it, that would require an EROI of, say, 5:1.3 Now say you wanted to include depreciation on the oil field worker, the refinery worker, the truck driver, and the farmer; you would need an EROI of 7:1 or 8:1. If their children were to be educated you would need perhaps 9:1 or 10:1, to have health care 12:1, to have arts in their lives maybe 14:1, and so on.” [2]
Before 1950, EROI was at around 80:1... present EROI for Oil and gas combined is now below 10:1 globally.
If one continues the sequence to include the producers of houses, washing machines, fridges, TVs, computers, phones, banking, insurances, etc., then the required EROI moves above 20:1…
We can also consider energy exchanges involving international trade. For example, consider the energy cost of generating the US exports of goods that are required to pay for imported oil, in other words the EROI for imported oil. Before the 1970s this was around 25:1. It is now around 10:1 and declining…[3]
The above must be seen in regard of a global EROI in 1950 that stood at around 80:1 and the present EROI for oil and gas combined that is now below 10:1 globally, and also in respect of the EROIs for alternatives that are also mostly below 10:1 (photovoltaics, concentrated thermal solar, wind, biomass, new nuclear, shale oil and gas, etc.). In brief, EROI analysis shows that globally we are now well below the minimum levels required for the kind of prosperous society we are used to, and that presently there is no way out of this emergency short of the kind of radical paradigm shift that SynGeni intends to engineer.
Now, if we also want to consider in addition to the above the net energy required to bring more people into some kind of prosperous lifestyle, plus the energy required to address the ecological consequences of fossil and nuclear resource uses (such as climate change), plus the energy that has to be invested to develop and deploy alternatives to fossil fuels and nuclear, which has become a necessity since their EROIs are now below the minimum viable, then the required EROI is well above 30:1, i.e. what is still was in the 1990s at the peak power of the globalized industrial world.
[2] Hall, Charles, 2012, Energy Return on Investment, Post carbon Institute, California, USA.
[3] Hall, 2012, Op. Cit.
Why Low EROI is a bad thing?
Low EROI means smaller energy flows to support prosperity and industrialized lifestyle. Put in other words, along the present Business-as-Usual (BAU) trajectory the industrialized world can no longer generate each year energy flows large enough to:
(1) reinvest part of these flows into ensuring further ongoing energy supplies in subsequent years using existing infrastructures,
(2) sustain the levels of prosperity expected in industrialized countries,
(3) bring more people globally to these levels of prosperity,
(4) alleviate and mitigate the huge ecological consequences of fossil and nuclear fuels use, and
(5) develop and deploy alternatives to fossil fuels with high enough energy yields to ensure sustainability.
These five types of energy flows fit together like the five fingers of one’s hand. Not only the global financial and economic crisis that has been unfolding since 2007 is fundamentally energy driven but, even more to the point, since around the mid-1990s the industrialized world has begun to relentlessly lose its “fingers” knuckle by knuckle, like a kind of insidious, still largely unseen, leprosy.
In the face of this rather somber global emergency, let’s look up and consider the solar energy influx falling on Earth yearly. This is more than 15 times the once-off total fossil and nuclear energy reserves that are left but that we can no longer use given the low EROIs and ecological challenges they present, and over 1,400 times present, total, global energy use per year. There is no longer any energy scarcity if we can harvest even a fraction of this huge energy abundance.