There would literally be no energy available for anything else.
EROI must be greater than one, but how much greater? What is the minimum EROI required for civilization? Three types of energy use can be defined: energy used to harvest energy (this is Ein from Ilustration 1), energy used to build and maintain the infrastructure to use the energy, and energy used for everything else that makes us civilized.
Charles Hall’s research group address the first two in their paper titled “What is the Minimum EROI That a Sustainable Society Must Have?”3 They conclude that for oil and corn-based ethanol, the minimum EROI is 3:1 at the wellhead or farm gate. Below that 3:1 figure, oil and corn-based ethanol cease to be a viable energy source because the energy output would not cover the first two types of energy use listed above: the energy used for extraction or growing and harvesting and for the construction of the roads and vehicles in which the fuel is to be used. There would be no energy left over for all the other activities of society. Civilization therefore requires energy sources to have an average EROI significantly higher than 3:1. Hall estimates that the overall EROI of the US energy system in 2005 was between 40 and 60 to one. Coal is extracted at high EROI and oil (domestic and imported) lower than this average.6 Europe achieves similar complexity of society on approximately half the energy per capita, suggesting that significantly lower EROI can support complex society.
Peak Oil
Fossil-fuel resources are finite and, on human timescales, nonrenewable. It follows that their extraction rate starts at zero and returns to zero once the resource is exhausted. The simplistic representation of this is a bell-shaped curve with extraction rate plotted against time, and the area under the curve being equal to the extractable resource. Graphs showing the output from many oil-bearing provinces have had this bell-shaped form and their extraction rates have steadily declined after a well-defined peak. However, whilst the extraction rate may be approximately symmetrical about the peak, the first half of a province’s life can be characterized by a small number of large, fast flowing fields. The EROI is high. In contrast, the second half of the province’s extraction is made up of many more smaller and more complex fields, requiring secondary or tertiary recovery techniques. The EROI is low. This is only natural since the best first principle leads to the lowest-cost resources being exploited first.
Illustration 4 projects a possible global oil-extraction scenario. It is made up of a peak extraction rate in 2010 followed by a 2% per year decline rate. In the year 2000, the EROI for global oil is taken to be 30:1, which leaves 97% of the energy available to society as surplus. The blue and red curves illustrate how the surplus energy available from oil declines as EROI declines at 2% and 5% per year respectively.
By 2000, 30 years past its peak, US oil extraction had an EROI of 11 to 18:1, down from approximately 100:1 in the 1930s. This represents a rate of decline of a little over 2% per year. Under a 2% decline scenario, the global oil EROI falls to 11:1 by 2050 with 92% of the energy still available to society. However, if EROI declines at the steeper rate of 5% it passes the minimum threshold of 3:1 in 2045.
Energy From Global Oil
FIGURE 4. The continuous black curve projects the annual energy contained in the global oil supply assuming a decline rate in extraction of 2% per year from 2010. The dashed and dotted curves illustrate the net energy available to society. In 2000, the EROI is taken to be 30:1 (97% surplus). The dashed curve assumes EROI declines at 2% per year, dropping to 11:1 by 2050, the dotted curve declines at 5% reaching 2.3:1 by 2050, below the minimum to be considered an energy source.
In other words, although there might be enough oil for global oil-extraction rates to be approximately half today’s level by 2050, how much usable energy humanity will get from it depends on the rate at which EROI declines. If the EROI declines faster than it did in the US during the 20th century, it is possible that the average EROI will be so low that, by then, oil will cease to be the significant net energy source.
Conclusion
Our unique relationship with the energy system has defined our species. Our current reliance is on previously sequestered stocks of energy, which must suffer depletion and, with it, declining energy return on the energy invested in its extraction, processing and distribution. The pre-fossil fuel existence of our ancestors was reliant on the Earth’s energy flows and suffered no such systemic decline. It is imperative that we find a way to move society away from its current reliance on declining, finite energy stocks and back to an energy system based on flows.
Endnotes
1. BP Press Release, BP Announces Giant Oil Discovery in the Gulf of Mexico, September 2, 2009, bp.com/genericarticle.do?categoryId=2012968&contentId=7055818, accessed 14/09/09.
2. A. R. Brandt, A. E. Farell, “Scraping the Bottom of the Barrel: Greenhouse Emission Consequences of a Transition to Low-Quality and Synthetic Petroleum Resources,” Climatic Change, no. 84 (Springer Science, 2007).
3. C. A. S. Hall, S. Balogh, D. J. R. Murphy, “What is the Minimum EROI That a Sustainable Society Must Have?” Energies 2 (2009), 25–47.
4. C. A. S. Hall, Unconventional Oil: Tar Sands and Shale Oil — EROI on the Web, Part 3 of 6, theoildrum.com/node/3839, accessed 14/09/09.
5. Canada’s Oil Sands — Opportunities and Challenges to 2015: An Update, National Energy Board, June 2006, pp. 38, neb.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/lsnd/lsnd-eng.html, accessed 14/09/09.
6. C. A. S. Hall, J. G. L. Lambert, “The Balloon Diagram and Your Future, esf.edu/EFB/hall/images/Slide1.jpg, accessed 14/09/09.
Calculating the Energy Internal Rate of Return
TOM KONRAD
With a constant technology mix, EROI is the most important number because you will always be making new energy investments as old investments outlive their useful lives and are decommissioned. However, in a period of transition such as the one we are entering, we need a quick return on our energy investments in order to maintain our society. We have to have energy to invest; we can’t simply charge it to our energy credit card and repay it later. That means that if we’re going to keep the non-energy economy going while we make the transition, we can’t put too much energy today into the long-lived energy investments we’ll use tomorrow.
To give a clearer picture of how timing of energy flows interacts with EROI, I will borrow the Internal Rate of Return (IRR) concept from finance. IRRs compare different investments with radically different cash-flow timings by assigning each a rate of return that could produce those cash flows if the money invested were compounded continuously. Except in special circumstances involving complex or radically different sized cash flows, an investor will prefer an investment with a higher IRR.
To convert an EROI into an Energy Internal Rate of Return, EIRR, we need to know the lifetime of the installation and what percentage of the energy cost is fuel, compared to the percentage of the energy embodied in the plant. The chart below shows my preliminary calculations for EIRR, along with the plant lifetimes I used, and the EROI shows as the size of each bubble.
The most valuable energy resources are those with large bubbles (High EROI) at the top of the chart (High EIRR). Because of the low EIRR of photovoltaic, nuclear and hydropower, emphasizing these technologies in the early stage of the transition away from fossil fuels is likely to lead to a scenario in which we don’t have enough surplus energy, to make the transition without massive disruption to the rest of the economy. Jeff Vail, the author of The Theory of Power (see jeffvail.net) refers to this front-loading of energy investment for renewable energy