While businesses and journalists readily understand (and often misunderstand) the idea of return on investment (“there is no magic money tree”) they seldom make the intellectual leap to apply the concept to the far more important area of energy. Currency, after all, really can be printed out of thin air whenever a sovereign state or commercial bank chooses to do so. So it is all too easy to imagine that it is the same with energy.
Energy, though, cannot be printed into existence. Nor can it be borrowed from future generations. While states can borrow money today and leave future taxpayers to pick up the tab, the very opposite is true of energy – we must invest real resources and real energy today so that future generations (and ourselves 10 years from now) will have the energy they need for their societies to function. For this reason, it is essential that we only invest resources and energy on those projects and technologies that can provide us with significantly greater energy than we invest in them.
This is a particular problem for developed countries as we face a growing climate crisis just as fossil fuel extraction is getting expensive. It used to be that nineteenth century US oil companies could get 100 barrels of oil back for the energy equivalent of a single barrel. That is, the early industry had a net energy, or “energy return on investment (EROI)” of 100:1. As the twentieth century progressed and the easiest oil deposits were exhausted, EROI began to fall. Drilling in remote regions added the energy required for infrastructure and transport into the equation. Going offshore and drilling hostile sea beds added even more energy to the mix. By the time Britain got around to drilling in the North Sea and the US opened up its last conventional deposits in Alaska, the EROI of oil had fallen as low as 20:1 (still a very worthwhile investment). Today most of the world’s conventional oil deposits are in decline. Producers have to pump high-pressure gas and water into the fields in order to extract the remaining oil; then use more energy to separate the water and gas from the oil before it can be sent to the refinery. This lowers the EROI of oil still further… and this opens the way for unconventional oil like hydro-fractured shale oil, ultra-deep water and tar sands to compete. These unconventional sources of oil require even more energy inputs – for example to fracture shale deposits or to separate oil from sand – which lowers the EROI below 10:1. Indeed, some estimates for fracking put the EROI at less than 5:1, while tar sands may be as low as 2.5:1 – one reason, perhaps, why they are currently going out of business.
The concept of EROI can also be readily applied to coal and gas, since, like oil they are fuels. However, it is harder to calculate the EROI of renewables, since they are technologies. Nevertheless, it is possible to calculate the energy needed to produce the various inputs – steel, concrete, human labour, transportation, etc. – used in the construction of a solar or wind farm and evaluate this against the energy generated over the lifetime of the array. This allows something equivalent to an EROI calculation.
Unfortunately, when such calculations are made, it turns out that the best renewables available to us today have a far lower EROI than was initially believed. Solar farms in optimal desert conditions, for example, were supposed to have an EROI of 10:1 or more. But research by Pedro A Prieto and Charles A S Hall found that the EROI of solar in the Spanish desert was just 2.5:1, putting it on an EROI par with Canadian tar sands.
This bodes ill for anyone foolish enough to believe that we can treat the energy systems that power modern complex societies like USB devices; where we simply unplug the fossil fuels and plug in sufficient quantities of solar, wind and tidal energy and then carry on with business as usual. As Jonathan Ford in the Financial Times points out, we could have an entirely renewable society:
“Such economies have previously existed, and not so very long ago. Go back to 17th century Europe, and pretty much all energy production centred on the cultivation of fields, management of woodland and animal husbandry. It meant that a great deal of physical land was needed to support a population a fraction of today’s global billions.
“The question is not so much whether you could recreate that sort of society. It is really whether you would want to, and that comes down to the issue of acceptable cost.”
Unfortunately, having understood the concept of EROI as it relates to renewable technologies, Ford totally overlooks it in relation to fuels. He correctly highlights the energy inefficiency of investing resources in technologies that have to be deployed across wide areas:
“Compare, for instance, steel consumption sunk into gas-powered generation with that for wind turbines. A kilogramme of steel turned into a gas turbine has the capacity to generate 2 kilowatts; the same metal in a wind turbine nacelle produces just 2 watts…
“On that basis you would need to cover half the land mass of the UK with turbines to generate the necessary power. The scaling costs alone, such as land rents, would make the whole enterprise a non-starter.”
Ford also points to recent announcements by Volvo – to only produce electric and hybrid vehicles in future – and president Macron – to phase out fossil fuel transport – as part of a wider trend toward electrifying the economy that will inevitably place even more demand on already stretched electricity grids:
“Meeting this challenge with thermal or nuclear power would be hard enough. With renewables, the maths at anything like today’s productivity levels look highly improbable. And that is before you consider the further investments that would be needed in battery technology (which itself adds new layers of inefficiency).”
The flaw in Ford’s thinking is that he fails to acknowledge that the EROI of the fossil fuels that currently provide us with four-fifths of our energy has been falling like a rock in recent decades. A wind turbine might have an EROI of just 12:1, but that is still a damned sight better than the 5:1 (at best) return on shale gas. It matters not one jot how efficient a technology (e.g. a gas-fired power station) is at using a fuel if the EROI of the fuel is low to begin with – with conventional gas at 50:1 (at the power station) you could waste half of the fuel and still end up with 25:1 net energy – five times better than shale gas even if the technology was so efficient that not a single BTU was wasted in electricity generation.
The fact that Ford brings the concept of EROI into a respected mainstream newspaper is to be welcomed. That he fails to understand the steep declines in the EROI of fossil fuels in recent decades is a problem. He is undoubtedly correct to conclude that:
“While talk of a fully, or largely, renewable society may not be empty, it cannot with the tools at our disposal come without impact on our lives. The variables are to have fewer people, or to reduce the scope of our activities. Otherwise we must redouble our search for other technologies that can do the job at lower cost.”
The real crisis facing us is that we are already running out of power. The energy and resources that we need if we are to secure a high-energy economy for the future are already costing us more than we can afford in energy terms. This is playing out across developed economies like Australia, the USA and the UK, where millions of households and businesses are experiencing fuel poverty – essentially having to cut discretionary spending elsewhere in order to pay for the essential energy they require. This is how collapsing EROI plays out in the economy – over time we have to divert more and more of our spending (and hence our energy, resources, capital and labour) to the production of energy leaving an ever declining pot to spend on other economic activities. This may not look like a problem when it is a matter of walking instead of driving or cutting back on fast food, alcohol and TV subscriptions. But eventually, highly energetic services like the modern healthcare system will be forced to operate at declining levels of sophistication – we will still be able to do simple medicine and surgery, but gene therapy, stem cell transplants and expensive cancer drugs will not longer be available.
Charles AS Hall – who conducted the research into the EROI of a Spanish solar farm – argues that modern healthcare requires a societal EROI of 12:1. State broadcasting services like those of the BBC need 14:1. Modern education systems require 9:1 and modern agriculture needs 5:1. With this in mind, we should carefully consider what kind of society we can look forward to when we are already falling back onto shale oil and gas (5:1) tar sands (2.5:1) and looking to expand wind (12:1 and solar (2.5:1) to run our economy.
There is, perhaps, still time for a coordinated international (although probably not with Trump in the White House) “War on Climate Change” in which we mobilise entire populations to meet the twin challenge of providing high-EROI/non-polluting energy to power the society of the future. But this will involve a great deal less stridency from both sides of the energy debate. Simply wishing for a green energy future without putting in the hard work to develop high-EROI energy sources and efficient technologies is simply not going to cut it. Nor, however, is the infantile claim that we can continue extracting high-EROI fossil carbon fuels to fund our high-energy lifestyles. Neither future will work; and the sooner we admit it, the sooner we can start to figure out what our realistic options are.