Should EROEI be the most important criterion our society uses to decide how it meets its energy needs?

This is a guest post by Adam Dadeby (Adam1). Adam is currently studying towards an MSc in Renewable Energy and the Built Environment with the Centre for Alternative Technology in Wales, UK.

What is EROEI?

Energy returned on energy invested (EROEI or EROI) is a concept that mirrors the financial metric, return on investment (ROI). In order to make an energy gain or “profit”, energy or work must be consumed or exerted (Cleveland, C.J., 2001, p.11). The energy gain or profit often referred to as “net energy”. EROEI is usually expressed as a ratio, or occasionally as a percentage. EROEI can also be represented diagrammatically in simplified form (Fig. 1).

Figure 1: EROEI
(Charles Hall, Pradeep Tharakan, John Hallock, Wei Wu and Jae-Young Ko, Advances in Energy Studies Conference, Porto Venere, Italy, September 2002)2

The energy referred to in EROEI can be energy to run technology, such as liquid fuels for transport or electricity for lighting. It can however refer to energy in a form that can be taken in directly by living organisms: food.

How widely is EROEI-analysis currently used?

EROEI is understood by some of those campaigning on environmental issues, mostly those who focus on fossil fuel depletion issues. The concept of EROEI has been defined by Cleveland, Costanza, Hall & Kaufmann, (1984)3 and Odum (1996)4. However, within society’s key decision-making mainstream – financial markets, governments, parliamentarians and those advising them within the civil service and policy-making and lobbying bodies – there is little evidence that the concept and significance of EROEI is grasped or accepted. Instead they appraise different energy investment options applying financial, political and environmental criteria. Environmental criteria usually encompass climate change, local environmental effects and waste management. Where resource constraints are discussed, the financial ROI is implicitly seen as an adequate proxy for EROI: for example the remaining uranium reserve is usually described in remaining tonnes of uranium which can be economically extracted at a minimum uranium commodity price ($US per kg)5 using current technologies. Implicit in this is the idea that the financial cost and technology are the key determiners of availability, rather than any physical constraints. Nate Hagens, a former Wall Street hedge fund manager, has observed that the financial markets do not understand net energy6. Peter Davies, Special Economics Advisor at BP, has also stated that the net energy of an energy source is an irrelevant criterion7.

In addition, the decision-making mainstream has conducted energy policy on a predict-andprovide basis: “energy needs” must be met (BERR, White Paper, “Meeting the Energy Challenge”, May 2007)8. Energy efficiency has been encouraged since the oil crises of the 1970s and the industrialised economies now generate more wealth per unit of inputted energy now than in previous decades. However, total energy use has increased over time as the global economy has grown. Planned reduction in overall energy use, as a matter of public policy, is not yet accepted because of the impact this would have on future economic growth (Stern, 2003, p49)9. In the Department for Business Enterprise and Regulatory Reform’s (BERR’s) May 2007 White Paper, there are 15 references to need to sustain “economic growth”.

Measuring EROEI – system boundaries

While differences in philosophical outlook or ideological constraints may explain why EROEI has largely been ignored by mainstream decision-makers, use of EROEI as a metric to appraise energy investment options is also problematic for practical reasons.

Currently no established, globally agreed criteria exist to define the boundaries of an energy system. What inputs should be counted as “energy invested”? At what point is the “energy returned” considered to have been delivered as a useful output? The results of an EROEI analysis and the conclusions that can be drawn from them are influenced strongly by the boundaries used to define an energy system.

Energy returned
Where should the “energy returned” system boundary be drawn? How this question is answered depends on the scope of the energy investment option appraisal. If the EROEI analysis is limited to alternative methods of generating electricity for the national grid, the “energy returned” should be in the form of electricity delivered to the consumer. If the comparison is between methods of fuelling vehicles, the energy return should be in the form of mechanical energy delivered to turn the vehicle’s wheels.

Energy invested
Energy has to be invested at all stages in the life cycle of an energy system. As with financial accounting, some costs are directly associated with the activity. Others are overheads, which are allocated pro-rata. Some of the costs may have no connection to the energy system but have been incurred somewhere in wider society.

Example: a nuclear reactor (with examples of the energy costs that could be included)

Figure 2, click to enlarge

Even if a technologically simpler energy system were to be analysed, such as a series of wind farms that generated the same net energy as the nuclear reactor, identifying and quantifying the all of the most tenuous, indirect costs would soon become impractical.

It is clearly more feasible to identify and quantify direct energy expenditure: for example, the energy cost of forging steel for a wind turbine tower, or the energy needed to transport it from the factory to its operational location. When does an energy cost become an indirect overhead? Perhaps, a portion of the energy needed to build and run the foundry and its equipment; and maybe also a portion of the energy needed to train, feed, entertain and motivate the foundry workers? The calculation would rapidly become very time-consuming and prone to error. Ultimately, a slice of the entirety of the remainder of society’s activities could notionally be apportioned to each energy gathering activity, giving all energy sources an EROEI of 1:110. Clearly an EROEI which included all indirect costs, however tenuous their association to the energy system, would not be a helpful tool for assessing how best to meet society’s “energy needs”.

EROEI and the complexity of a society

So, if all the most tenuous, indirect energy costs of our global energy system were to be included in an EROEI analysis, the global energy system would have an EROEI of 1:1. Does this point to a more fundamental impact of EROEI on the nature of a society? Although EROEI had not been codified until recent decades, from its first beginnings all life has had to expend energy in order to capture energy from its environment: if a fox does not obtain more energy from eating rabbits that it consumes catching them, it will not survive long; similarly tulips, bacteria and humans. From the days of the earliest hunter-gatherers, the nature of human societies has been governed by their success in capturing energy (primarily food energy) at an energy profit11.

The question of which factors determine the fate of different societies throughout history has been addressed by Joseph Tainter and Jared Diamond. In The Collapse of Complex Societies (Tainter, 1988)12 and Collapse (Diamond, 2005)13 the authors examine the reasons why societies of all sizes, from small isolated settlements up to the Roman Empire, collapsed. Diamond identifies four reasons why societies collapse: resource depletion; climate change; hostile neighbours; friendly neighbours. Tainter focuses on “energy gain”. Societies that manage to achieve high energy gains from their energy systems develop complexity, which have been characterised by large population densities; high levels of occupational specialisation; steeper social hierarchies and increased inequality14 (Illich, 1974). As population densities and specialisation increase, the energy systems that sustain them have to deliver more net energy. In doing so, they allow the population to growth further and a still greater percentage of that growing population to become “non-productive” specialists.

The EROEI of fossil fuels, which represented more than 80% of our total primary energy use in 2004 (IEA, WEO 2006, p492)15, is declining16 (Cleveland, J., 2005, p.781) down to the lower levels typically achieved by current renewable energy technologies. If, as appears likely, we are moving to a lower EROEI or lower gain energy systems, the implications for our society will be most profound.

Other physical criteria for assessing the practicability of energy systems

As we have seen above, EROEI is a metric that can describe much more than the technical feasibility of an energy system. However, in a real world study or technical option appraisal, there are several physical factors that would need to be considered in addition to EROEI:

  1. Infrastructural requirements – the world is not a blank sheet in terms of energy systems. There is a lot of existing energy infrastructure. If a new energy system requires significant changes to the existing infrastructure, it means there will be a longer lead-in time, decades in some cases (Hirsch, R. et al, 2005)17, before the new technology starts to make significant contribution to the energy mix. For example, if the current energy system delivers liquid fuel to feed billions of internal combustion engines, a new energy system that delivers electricity for electric vehicles will only be able to replace the old system as quickly as existing liquid-fuel vehicles can be replaced or retro-fitted – a necessarily slow and costly process (financially and energetically). The energy costs of the infrastructural changes could be included as part of an EROEI analysis but the EROEI analysis would not be able to quantify the long lead-in times needed to adapt or replace energy infrastructure.

  2. Energy density – the ability to store energy where space and weight constraints apply. Most energy for transport, particularly air transport needs an on-board energy store. The new energy system needs to produce energy in a form that can be stored with existing technology. The storage technology will probably require conversion of the energy, with consequent losses. This criterion could be incorporated into an EROEI analysis, if the storage process is included within the system boundary.

  3. Location of resource (in relation to demand) – if the energy source is far from where it is needed, it may be impractical. This criterion could be incorporated in an EROEI analysis, if the transport process is included within the system boundary.

  4. Scalability & rate of extraction – the rate at which the resource (whether renewable or finite) can be harvested will determine the maximum flow rate of energy that the energy system can deliver. Similarly, the size of the resource, together with the maximum flow rate, together will determine how big a contribution the energy system can make and, if the source is non-renewable, for how long.

  5. Environmental impact – the extent to which an energy system impacts on the global and local environment has to be taken into account; this is seen most clearly in our use of fossil fuels and the effect it is having on the global climate. An EROEI analysis would not normally incorporate this factor, unless the energy costs of correcting the environmental impact was incorporated under energy invested but this would not be a very useful analytical approach.

  6. Complexity and resilience – as discussed above, there is a direct link between the EROEI of society’s energy systems and the complexity of the society that can be sustained by it. Homer-Dixon (2006)18 refers to Tainter’s work and links it with the work of Crawford S. Holling on ecological systems. All systems, including those that make up a human society, go through “adaptive cycles” of growth, collapse and regeneration (Homer-Dixon, 2006, p.226). As a system grows, it not only becomes more complex, it also develops greater connectedness, as each part becomes dependent on the part before it. As the human actors in the system seek the ever greater EROEI needed to support their by now very complex society, they use their ingenuity to improve the efficiency of each part of the system. Doing so makes the relationship between the parts more tightly coupled. That efficiency gain is at the expense of system resilience. As the system loses resilience, it develops “brittleness” and it becomes less able to cope with interruptions in inputs to the system. One example of this is our modern global economic system, with the development of justin- time logistics, facilitated by IT and the internet.

    In making choices about what energy systems to build, if a complex and brittle one is chosen over a less complex and more resilient one, if and when they fail, they will be less likely to cause a much more widespread failure in the other systems that society relies on. Also, a more complex and brittle energy system requires that high levels of complexity in the wider society are maintained. This could be seen as a risk in an era when the extraction rates of society’s main sources of energy, fossil fuels, are finite and are expected to go into decline during the next two or three decades and where the timing of some of the declines, particularly coal (Energy Watch Group, 2007, p4)19, is not known with great certainty.

  7. Managing supply & demand (storage issues) – energy provision could be compared with performing a theatre play: one that never ends! The show has to go on: day after day, night after night, following demand. This issue needs to be examined carefully when appraising options for electricity generation systems from renewable sources, such as wind, tides or solar.

Conclusions and limitations of this essay

EROEI is, or should be, the most important physical criterion used to assess the practicability of a proposed energy system for two reasons:
First, if the EROEI of an energy system is 1:1 or lower, it is no longer an energy source. As the EROEI drops below 1:1, it becomes an energy sink. This is important now, because society currently benefits from such high EROEI from fossil fuels that the low EROEI of alternatives may not be as obvious as it would otherwise be. The growth in use of corn-based ethanol as a substitute for fossil fuel in the US vehicle fleet is an example where it is uncertain that the biofuel-based energy system delivers any net energy (Cleveland et al, 2006)20.

Second, the energy choices made now, if they are not made with a grasp of the wider implications of a reduction in our energy systems’ overall EROEI, will cause a profound, painful and largely unexpected and apparently inexplicable reduction in the complexity of society: in other words, an unmanaged and protracted collapse.

Despite the centrality of EROEI, the other physical criteria referred to above must also be taken into account in an appraisal of energy system options; although energy density, location of resource and (to a certain extent) infrastructural requirements could all be incorporated into an EROEI analysis.

In examining EROEI, this essay has assumed that the analyses would be of different energy supply alternatives. An EROEI analysis could equally usefully be applied to different conservation and demand reduction alternatives. In this case, the other physical criteria may be different. Appraising the effect of psychological factors and behaviour change may require a different analytical approach.

This essay has not discussed the non-physical factors that also influence an energy system option appraisal: financing constraints, psychological and behavioural factors, political and security issues, macro economic implications. These remain important but, if an appraisal is to be meaningful, the physical criteria, particularly EROEI, must be fulfilled, or the extent to which they act as constraints must be understood, before the non-physical factors are considered. Most important to avoid is to see non-physical factors as key whilst ignoring or seeing as peripheral the physical criteria. Richard Heinberg21 has said we must make our energy choices “carefully, intelligently and co-operatively”. In providing an overview of the physical criteria which determine how useful an energy system can be, this essay has illustrated why EROEI is the most important but not the sole criterion in deciding how to meet society’s energy needs.


1 Cleveland, C.J. (2001), “Net energy from the extraction of oil and gas in the United States”, Energy 30, Elsevier, .pdf available

2 From

3 Cleveland, C.J., Costanza, R., Hall, C.A.S., & Kaufmann, R., (1984), “Energy and the US economy: A biophysical perspective”, Science 225

4 Odum, H.T., (1996), “Environmental Accounting, Emergy and Decision Making”, John Wiley.

5 From

6 In a radio interview with Jason Bradford on KZYX on 5 June 2006 – audio archive Global Public Media - 8mins35secs into file.

7 Presentation by Peter Davies, BP Special Economic Advisor to the All Party Parliamentary Group on Peak Oil and Gas, Wednesday,16 January 2008 Meeting information (.pdf available)

8 Secretary of State for Trade & Industry, (May 2007), “Meeting the Energy Challenge”, Government White Paper on Energy, Department for Business Enterprise and Regulatory Reform (BERR), formerly the Department for Trade and Industry (DTI), The Stationery Office/HMSO, CM7124/ID5539714, .pdf available

9 Stern, D. I. (2003), “Energy & Economic Growth”, Rensselaer Polytechnic Institute, Troy N.Y., USA, .pdf available

10 Vail, J., “EROEI Short #2: Lenin & Lohan”, 28 August 2007, The Oil Drum,

11 Heinberg, R. speaking at the Annual Conference of the Soil Association in Cardiff, 26 January 2007 Soil Association

12 Tainter, J. A., (1988), “The Collapse of Complex Societies”, paperback edition 1990, Cambridge: Cambridge University Press

13 Diamond, J., (2005), “Collapse, How Societies Choose to Fail or Survive”, London: Penguin

14 Illich, I., (1974), “Energy and Equity”, Calder and Boyars, London

15 International Energy Agency (2006), World Energy Outlook 2006, OECD/IEA, Paris, p.492 (p.493 of the PDF file .pdf available)

16 Cleveland J. Cutler, 2005, Net Energy from the Extraction of oil and gas in the United States, Energy 30 (2005) 769-782, /

17 Hirsch, R. L. et al, (February 2005), “Peaking of World Oil Production: impacts, mitigation, & risk management”, US Department of Energy, .pdf available

18 Homer-Dixon, T. F., (2006), “The Upside of Down, Catastrophe, Creativity, and the Renewal of Civilisation”, Washington, Island Press,

19 Zittel, Werner & Schindler, Jörg, (March 2007, updated version dated 10 July 2007), “Coal: Resources and Future Production”, Energy Watch Group, EWG-Paper No. 1/07 .pdf available

20 Cleveland, C. J. et al, “Energy returns on ethanol production”, Science 23 June 2006: pp1746-1748,

21 Heinberg, R, “Peak Oil: Local Solutions to a Global Challenge”, talk delivered 22 November 2006, Totnes Civic Hall Transition Town Totnes

The second word of paragraph six -- "no" -- should be left in; the rest is surplus.

--- G.R.L. Cowan, H2 energy fan 'til ~1996

That would be paragraph 5, oh erudite one.

thx for a good post, vernon. One area of EROEI that has me scratching my head is when to include the energy in the fuel used up in the production of fuel. e.g. if oil is used to generate liquid fuel (e.g. bioethanol) then clearly it needs to be an input wheras a renewable such as wind or solar presumably wouldn't. But what about nat gas used to produce oil from tar sands? Or if the ng were substituted for nuclear? Is there a factor that can be used sensibly to allow for the degree of renewableness of the inputted energy or is it better to consider ALL nonrenewable inputs on the debit side of the energy invested balance sheet?


"e.g. if oil is used to generate liquid fuel (e.g. bioethanol) then clearly it needs to be an input wheras a renewable such as wind or solar presumably wouldn't"

As you count the FF used to generate bioethanol, one should also count the FF used to produce solar panels or windturbines. Why wouldn't you??

And indeed ALL nonrenewable inputs need to end on de debit side.

It seems that he means the Sunlight and Wind Energy ITSELF does not get counted as a debited input, which in some of these arguments people have insisted should it be. Clearly, one would only debit energy sources that are coming from our own inventory, so to speak.

So if for example you have electrical energy coming FROM a solar installation, and were using that power to create a fuel or another energy source, that would count as an energy cost against this other fuel being produced, but the sunlight that was a 'free' input for that providing PV or CSP installation is not a debit against that power plant, only the energies YOU had to provide or pay for to bring the plant online.

"e.g. if oil is used to generate liquid fuel (e.g. bioethanol) then clearly it needs to be an input wheras a renewable such as wind or solar presumably wouldn't."

These renewable inputs to liquid fuel production should count, in my view, if for no other reason than they are unavailable for other uses, like consumer use at home.

I don't get that logic at all. What you have to count is what it costs YOU to bring that fuel or power source on line. If you have a rig that grabs the Sunlight, say to cook your refined product, then the only input you have had to supply is the energy to build that collector.

Interesting post. Of course many of the system boundaries issues are also discussed in Life Cycle Analysis methods and remain problematic. In the original ROI theoretically the same issue arises (which investments to count and which not); as far as I know, generally the indirect investments are left out (unless they comprise a large portion of the investment).

Point 3: location should certainly be included in the EROEI assessment, as the geography of energy often determines which sources are used; e.g. hauling brown coal is not worth the energy

Also, as far as I see, your second conclusion does not follow from the text.

Adam –

You wrote under item “5/. Environmental Impact, “
“An EROEI analysis would not normally incorporate this factor,
unless the energy costs of correcting the environmental impact was incorporated under energy invested
but this would not be a very useful analytical approach.”

I’d have to differ over the utility of such an analysis (IF it could be provided) –
since in accounting for the directly counterproductive energy costs of a destabilized climate's impacts –
such as the growing worldwide disruption of Hydro-electric outputs,
or the intensifying disruption of normal food production
(with some African nations forecast by the IPCC to lose 50% of their yields by 2020),
the importance of such a usage-outcomes analysis for discriminating between energy supply options
would surely be supreme ?

Yet the fact is that such consequences cannot be traced in specific quantifiable linkages,
nor can a rational price differential be put on one nation’s casualties as compared to another’s.
Thus the analysis is not achievable in practice, regardless of its theoretical utility,
but the aggregated energy costs are still very real.
Thus to propose that what I'd call “production-EROEI” is the paramount criterion for energy options’ selection,
in the absence of usage-consequences’ evaluation, is plainly mistaken.

In this light the necessary sequence of supply-options’ criteria is surely more like:

1/. Those which entail the sequestration of carbon as a requisite part of the energy production
(e.g. sustainable reforestation for Multi-output Wood Refineries)

2/. Those which do not add to excess airborne greenhouse gasses apart from minor construction outputs
and which also offer both Global Replicability (low tech) and Local Legitimacy (social benefit) for accelerated uptake
(e.g. village-scale micro-hydro, wind-pumps, etc.)

3/. Those with minimal GHG output and the highest production EROEI. (e.g. Geothermal Heat & Power).

I would of course agree that “production-EROEI” should be a deciding factor
between two otherwise equal options within any of these 3 proposed criteria,
but I hope that you may agree that a prime part of why we are in this global mess
is that energy policy has slavishly followed quantifiable profit,
at the expense of consideration of the diverse options’ qualitative benefits.

To elevate quantifiable “production-EROEI” to the same status as being “the most important criteria”
would IMHO be a repeat of this fundamental error, and one which we cannot afford.



Although, for the purposes of answering the question in the title of this piece, I may have appeared to place the different criteria in competition against one another. I have never seen climate change responses and peak energy responses as implacable enemies. Most (but importantly not all) of the responses to one are valid responses to the other. Some of our responses to climate change lay outside the energy issue. For example, we should be taking action to preserve and augment all our carbon sinks, where ever this can practicably be done.

I still think that EROEI is the most important criteria, simply because, it is the only way for us to tell whether an apparent energy source will actually deliver significant useful work. If we have no compass for this, in our desperation we will end up making fatally flawed choices. Given that often the energy we invest in our energy production is itself CO2 emitting, EROEI marginal energy choices such as the Albertan tar sands also turn out to be poor climate change ones.

Very useful set of thoughts.
Policy makers need to do much better.
Financial criteria have hitherto trumped EROEI as in biofuels debacle.

A useful worked example on wind turbines is at
Embodied fossil fuel energy in wind turbines compared with energy return over a lifetime is relatively very low, but there can be an 8 fold difference between the same turbine made in Germany (dominated by coal-based electricity ) and then located in less favourable wind sites, and the version of the same turbine made in Brazil (dominantly hydro electricity, with re-cycled steel) and located in better wind sites.
EROEI ratios urgently need much serious attention. Lifetimes are a factor. I rather like Dave Rutledge's suggestion that desert solar should be treated as infrastructure, like bridges, with lifetimes of a century or more. However, I am not sure whether UK's Victorian housing segment (or sewers) should be regarded as assets or liability. It seems technically feasible to retrofit our housing to, on average, become 50% more heat efficient at very low energy cost, so maybe we should make best of a bad job?

This holistic view has an analogy in transportation:
Someone has calculated that often driving a car is much slower than cycling or even walking. This turns out if you do not only compare the vehicle's maximum speed or travelling time but if you also include the time needed to make the money to buy the vehicle, gasoline etc. It may take a few minutes less to drive, but it may have taken months of work to buy the car.

It depends heavily on the driving conditions. At the US averages it's more or less break even. For instance ~600 hours/year are needed to pay off a car costing $90,000 over it's ~12 year life span. With a average vehicle speed of ~12mph assuming no additional costs for the bicycle/food a cyclist would spend ~1000 hours/year traveling and the driver at ~36mph would spend ~335 hours/year driving and ~600hours/year working in order to drive.

If we compare driving to cycling in urban areas it probably results in favorable time costs for the cyclist and if we compared driving to cycling in extra-urban areas the time cost is likely greater for the cyclist. Of course there is much more variation for the driver since if they're frugal and only spend ~$20,000 over ~12 years the time cost is likely even or in most cases favors the driver which is something that a cyclist w/ free equipment/food cannot change, but as a rule of thumb in terms of time it seems that cycling is favorable in cities and driving is favorable outside of cities on average

Where I live the equation comes out in favour of cycling at every term.

I have a four mile urban commute. This town (100,000 people) has relatively good cycling facilities for the UK, and driving is actively discouraged by limited parking space, traffic priorities etc. On a busy day, it is measurably quicker for me to cycle than drive. I save the full cost of owning a car by sharing one with my wife. We very rarely clash over access to the vehicle. I am a lot fitter and healthier for the exercise I get from cycling, and if I didn't cycle I would need to spend time getting enough exercise to keep fit. The extra calories I burn mean I don't have to actively diet to keep my weight under control.

The downsides are a slight increase in clothing costs due to wear and tear, getting wet in the famously reliable UK weather, and a slight risk of being squashed flat. My load carrying capacity is limited on an ordinary cycle.

Heres a thought experiment (i.e. I would do a full blown analysis if I had data, but I don't)

Suppose that the modus operandi currently and of the previous decades is to maximize profits as quickly as possible (a fair assumption)

Society uses energy to do economic work. High energy gain sources, multiplied by their scale, provide the dry powder for increased global economic activity. Less energy gain (as we have read here over the years) means someone has to do with less - and unless this lower energy gain is offset by efficiency or conservation, the economy shrinks.

Suppose that the marginal barrel to deliver to the market in 1999 (when oil was $10), had an EROEI of 20:1. Suppose that due to: deeper, harder to refine (more sulfur, lower API), more infrastructure, more security needed, more energy intensive technology, etc. that the EROEI declined to 3:1 in 2007. (Note, there probably exist some 200:1+ fields out there right now - but here I am discussing the average of the world aggregate)

In 2000, there were 28.3 billion barrels of oil produced (77.7 mbpd). In 2007 there were 30.8 billion barrels produced (84.5 mbpd). Moderate growth -economists delight!.... But under the above assumptions in 2000 then there was 28.3 bbl at 20:1 required 28.3/20=1.4 energy input, for a net 26.9 billion barrels of energy gain . In 2007, even though there were more barrels produced, the total energy gain to society was much less (30.8 at 3:1 required 30.8/3=10.26 input for a net gain of 20.5). The difference - 6.4 billion barrels of BTU 'gain' lost. The 20.5 billion gain is still a thermodynamic fortune, but a much smaller one than in years past. Said differently, a scenario like this will potentially be an order of magnitude worse than squabbling over 1-2mbpd new highs or debating a bumpy plateau

Once aggregate energy gain started to decline (and to be complete we would have to add coal, nat gas, wind, etc. on top of this), there was a smaller 'energy multiplier' in the world economy. Much of this drop of 420 billion barrels of energy gain would have been masked - e.g. national oil companies were selling off oil reserves that cost them pennies, receiving high notional dollar payment and continuing to replace reserves (slower) but at significantly higher costs. In this scenario, the world economy would see 2 things: 1)oil producing countries making huge sums of money selling their previously discovered assets (and putting these profits back into financial markets) and 2)the 1000%+ increase in oil prices, effectively re-allocating oil away from marginal activities (i.e. third world countries, poor people, bad business models, frivolous vacations, etc). The drop in energy gain would have made seemingly slam dunk investment ideas (of every sort) suddenly seem more difficult. Wall streeters - the most aggressive, creative and hungry of our kind, would have invented ways of replicating this energy gain in order to grow the aggregate profit pie(of course without knowing why they had to do this), by increasing leverage on various products until worldwide derivatives (credit) topped $650 trillion.

In sum, this scenario would suggest that prior cheap reserves masked a decline in total aggregate energy gain despite recent new highs in gross production. Soon after the energy decline occured, there was a simultaneous credit explosion (heretofore ALL power pursuit on the planet could be influenced by dollars, and all commodities could be transformed into dollars). Now the credit expansion is over, and we are heading for a credit contraction. If we also have declining net energy (which I believe to be the case), we are in dire straits indeed.

The scariest thing about this scenario is that we need a high energy gain from gas and oil AS A PREREQUISITE for scaling out renewable infrastructure (e.g. wind, solar, tidal) to levels consistent with social democracies...i.e. once this is all recognized there will be HIGHER demand for liquids, not lower....

This hypothesis would be supported if we had evidence of:

a)internal nat gas usage within oil exporters growing faster than oil production, and at an accelerated rate

b)an exponential increase in the price of oil, as the last of the legacy oil reserves would be pumped and sold and new oil would cost producers more and more - meaning E&P companies producing low EROEI oil would be on faster and faster treadmills.

c)oil prices going up more than oil stocks

d)dramatic increases in finding and developing costs since 2000, not only for publicly traded companies, but for a statistically significant share of global production (i.e. probably including Russia and KSA...we can't even get reserves data how are we going to get costs????)

e)employment in 'marginal' sectors will decline as less energy gain primarily flows towards industries involved in basic necessities (unless there are huge D/E returns (dopamine/energy)

I realize that we don't use a great deal of crude oil to procure crude oil - nat gas is well over half of the energy input into petroleum extraction. And I also realize my numbers of 20:1 and 3:1 may be off. The only hard analysis we have is that US EROI declined from 100:1, to 30:1, to 10-17:1 from 1930 to 2000. (100:1 was Cleveland 2005, 30:1 Cleveland et al. 1984 and 10-17:1 was Cleveland 2005 - concept developed in Hall Cleveland & Kauffman 1986) But I wonder how far from reality this example is when Goldman (and others) say the global marginal barrel costs over $100 with oil at $115.....This is how we could sleepwalk over a declining net energy cliff - the mingling of old oil and new masks the sharp decline in energy profit.

The special sauce here is that most financial observers will acknowledge the same trend that I do. But they will indicate 'inflation in energy costs...etc.' and fall back on various econometric models, not understanding that energy cannot be printed, and entropy not stopped but only slowed by technology. E.g. a steep EROEI cliff is likely terminal to finance as we know it.

Please point out where this hypothetical scenario could be wrong, or send me suggestions on how to quantify it - I will try and put more flesh on this and create an analysis/post out of it, though I'm still finishing my Maximum Power post which would be an important part of this puzzle.

Suppose that the marginal barrel to deliver to the market in 1999 ... had an EROEI of 20:1. Suppose that ... the EROEI declined to 5:1 in 2007. ...

In 2000, there were 28.3 billion barrels of oil produced (77.7 mbpd). In 2007 there were 30.8 billion barrels produced (84.5 mbpd). Under the above assumptions in 2000 then there was 19*28.3 =540 billion barrels of energy gain . In 2007, even though there were more barrels produced, the total energy gain to society was much less (30.8*4=123 billion of energy gain).

Uh, Nate, isn't it more like this: in 2000 the "production" of 28.3 bbl at 20:1 required 28.3/20=1.4 energy input, for a net gain of 26.9, while in 2007 the 30.8 at 5:1 required 30.8/5=6.2 input for a net gain of 24.6 - a somewhat smaller net, 2.3 bbl less, a difference worth about 250 billion USD at this point, but a lot smaller than your numbers?

Yup - changed, thanks.

It would be a great (in both senses: "large" and "really good") exercise to quantify this. It would certainly make our case even more convincing to a sceptical but open-minded audience. Whether much of our key corporate and governmental decision-making body fits into the category "sceptical but open-minded" is another question.

One of the problems with doing a more quantified technical analysis is that lots of people will start arguing about the validity of figure X or estimation Y and, in all the noise, the recognition of the urgency of our fundamental situation would risk being lost - it could provide another opportunity to procrastinate and to feed people's denial.

Great piece of analysis though Nate. The net energy peak and subsequent decline rate has always been the more important one, even if it is harder to plot.

Nate see my long post below but lets assume that the military industrial complex takes a fixed albeit growing amount of energy out of the system and effectively produces no useful work.

If energy is available at 20:1 then if they take 20% out we have a net of loss of 4 units to government.
However at 10:1 assuming lets say the government and military did not grow we still have a net loss of 4 units out of ten so the percentage has grown to 40% or doubled. At 4:1 the party is over and all energy is now absorbed by the combination of energy, government and military and the system fails.

Given that the combination of the energy industry, government and military represent a large percentage of employment esp if you include support industries its pretty obvious that the system can fail at simple EROEI levels of slightly less than 10:1.

Good point.

I am concerned that:
a)my example above may be conservative and
b)we really won't have the data to prove or disprove it until too late

a)my example above may be conservative

Well first off EROEI is an accounting problem for example let's say some animal burned all of its energy hunting for food i.e it was 1:1 at that point its extinct because it no longer has excess energy to procreate. Slightly higher then this say at 1.1:1 maybe some can have offspring but the overall population declines eventually you still end in extinction. As EROEI varies above this then you get various population levels outcomes.

However youre conservative because youre not considering that the animal may suffer from pests such as ticks ( government) and predators ( military ). The problem is that this predator population does not care if the host is dropping below its EROEI sustainability level. They continue to feed. This is just an accounting problem - predators don't contribute to the overall "growth". So you simply partition the system on the outputs.

You have to account for this since its a big effect on the overall system. In the case of predator prey relationship population collapse is the normal outcome.

b)we really won't have the data to prove or disprove it until too late

We don't have to prove anything just identify the system type. If its reasonable using even basic concepts to see that they system may be unstable and prone to collapse and this is trivial to determine simply by analysis of our financial structure then collapse is a highly probable outcome.

You really don't have to prove anything its not a proof issue its and identification issue. Even with excess energy for decades our society has been unstable suffering fairly wild swings.

What your interested in is not proving collapse but trying to figure out the timeline before the fact. I'd argue we don't have the math to pick out the right outcome amongst all possible outcomes. But its fairly easy to bound the collapse window if you will in time.

For example 30 years from now with the data we have we will not be a oil based society like today. Only two basic outcomes are possible thirty years out. We have substituted something else electric rail for example or we have not and the percentage of the population living a lifestyle like todays is far smaller.

Then you can move the bounds in to say 20 years out and we still see that whatever is going to happen has almost certainly already happened in the sense that the we would be obviously on one of the two above paths.

Take everything we know and move into 10 years into the future and its obvious that we probably have to have either made a decision are are making one by this point in time. So path selection seems to have obviously happened within ten years of today.

This is all just using information we have today about oil other resource financial issues etc and projecting them into the future using reasonably isolated assumptions and various trends based on the central limit theorem and simple EROEI concepts etc. We do these projections implicitly on the oil drum on a regular basis.

Now we can consider the next halving to 5 years. Are we going to "make it" five more years this is where things get interesting because the above simple analysis does not look good five years out but now if we include more complex EROEI issues suddenly five years from now is looking decidedly poor. Throw in geopolitical feedback loops and a high probability for a gulf hurricane that impacts oil supply in the next five years and things are looking as bad in five years as the simple projections would predict in ten years.

Thats all now we have "proved" that with a more detailed analysis the systems instability can halve the time we have vs simpler approaches. And we did not have to add a lot of factors just traditional above ground issues etc. Obviously what we are showing is that when our system is forced it has some pretty nasty failure modes.
This is well known and we don't even need to invoke Black Swan events just reasonably known forcings that have historical precedent.

Now the problem or rather its solution is fairly clear since it takes decades for our society to build a consensus to change. Look at environmental issues, racism, global warming, birth control etc etc. We know for a fact that it takes basically a generation once and issue is clearly in the public view before action is taken.
We simply cannot act over a ten year time frame much less a five year time frame. Therefore the initial solution will be that the number of people that live "good lives" will be reduced and reduced fairly quickly.

I don't see that the outcome is in doubt we are going to go through a contraction period simply because collectively humanity can't make a decision fast enough to even choose another outcome.

Now even if this contraction begins we can still belatedly change and limit the scope and duration but its going to happen with practically 99% certainty. Certainly from the global population a few people are going to make it relatively unscathed but I don't think thats the issue. Thats just counting lifeboats and realizing you only have a fraction of the ones needed. Some will escape but not enough to prevent collapse using any reasonable scenario.

We don't need to prove or disprove simply determine its too late to alter the outcome by looking at the time intervals. The only place to argue is do we have fives years left or ten in my opinion and the EROEI arguments are only needed to show its much closer to five years or even less then ten.

I'll freely admit I have extreme academic interest and certainly personal interest in the timing of collapse I hope we have more than five years but its just a hope. The feedback loops just grow to rapidly I can't see us making it much past 2010 to be honest 2011-2012 seems to be the point that things really start falling apart.
However give that its 2008 2012 is four years from now so more pessimistic analysis surprisingly only reduce the time for potential collapse from 5 years to 3-4 years. So more refined "proof" if you will is not making a huge difference in the final outcome. It certainly impact my future plans as and individual but even slightly higher then that its not making a huge difference. Obviously high oil prices have already had a profound effect on the world and for many the collapse is already real and here today. The variation in the worlds income levels is moving the timing of collapse to today for some. And its obvious with this concept that the people that make it really just have a collapse time either beyond the time frame in consideration or after and alternative society forms. The point is that we can see that collapse is not a point event but occurs over a time period equal to the time that we feel we have left to prove collapse.

Thus simply by examining the recent past its obvious that the proof is in front of us and collapse has already begun the collapse we are trying to prove or disprove is when a certain portion of society finally feels the symptoms of collapse. The infection if you will has already started.

So end the end we actually prove that the system will collapse with certainty since it enters collapse mode when the marginal members fail from the symptoms of collapse and it spreads like a disease. Back to my original starvation example of 1:1 what happens is a real complex system is that the least fit members suffer from starvation and its a collapse condition when it spreads to more "fit" members. Thus systems prone to collapse simply need conditions to allow what is considered a normal loss to grow. This is fairly obvious well before the entire population collapses.

Ergo collapse is proven.

This whole situation is so sad. I agree with most everything you said.

Now the problem or rather its solution is fairly clear since it takes decades for our society to build a consensus to change. Look at environmental issues, racism, global warming, birth control etc etc. We know for a fact that it takes basically a generation once and issue is clearly in the public view before action is taken.
We simply cannot act over a ten year time frame much less a five year time frame.

THIS is why we need proof, or more proof than the stealth EROEI decline we suspect. This is why TOD exists - to accelerate recognition that leads to at least enough 'proof' to activate the precautionary principle for enough regions/localities. Because without it, the numbers in the lifeboats will be too small to overcome our baser instincts.

*(Remind me to never read your posts just before bedtime...)


Right but eventually enough proof will exist to convince those who can still change to change. But at that point are already in enclave mode. We can't prevent the formation of enclaves and as they form they will be convinced of the need to change since the problems are what caused the formation of enclaves in the first place.

The future of the high tech enclaves if you will is uncertain at best but its pretty clear that our future will be one where regions with favorable climates, soils, resources, population etc will fair dramatically better then more marginal regions.

Given that these smaller regions can adopt electric rail all they really need is food, water and a decent source of electricity. Biofuels can probably meet the limited need for liquid fuels plus oil and NG are not going away even with fairly widespread collapse oil rich regions that retain political stability will still export.

And these enclaves are not necessarily physically small large regions of the US such as the pacific north west and central Mississippi/Ohio/Missouri valley region have enough natural wealth to sustain a fairly technical civilization. This is larger than many countries today. Same for most of Brazil. The only thing that seems to happen is that these enclaves won't be the size of say the entire US so your not going to "save" the entire US population at best probably half but thats still 150 million people.

This sort of enclave formation possibility analysis can be done around the globe. Parts of china for example are viable with some upheaval same for Europe, Africa etc etc. The initial total enclave population of close to 1 billion people seems quite reasonable and may even be low.

I'd argue that a reasonably complete high tech civilization is possible with as few as 30 million people simply because the State of California could continue to carry on a high tech civilization with this amount of people. Certainly 100 million is a reasonable number.

Thats the minimum sort of enclave level one would need to ensure the successful continuation of high tech societies.

But like I said these people won't need convincing the will be living the truth. The people that don't make it into these enclaves won't need convincing either and they will be facing other much simpler problems.

So I disagree we are not going to change this its going to happen except it.

However as long as we have high tech societies then we have the chance to produce new types of technology they potentially can allow a lot more people to live a comfortable life. It won't be the American Dream and it probably won't be high tech like we have now probably the best description is smart technology.

And example of smart technology is fish hooks and fishing line. Catching fish with modern fish hooks is ten times easier then "low tech" methods. Fish hooks can be classified as smart tech. Smart tech can also be high tech such as solar/wind powered communications systems.

Thus I suspect the high tech enclaves that survive will do so by exporting smart technology to their more unfortunate neighbors. This is not all that different from technology exports to third world countries today just it has a completely different economic and social model. The high tech enclaves that refuse to export face being overrun by impoverished outsiders so it a much more equitable sharing in a lot of ways.

Eventually of course as these new technologies are developed you get a slow melding of the groups and a real globalization based on equitable smart technology.

Of course its not all roses obviously a lot of people are still going to die but the key is to quickly focus these enclaves on the need to produce goods and services for their unfortunate neighbors and probably former fellow citizens. The battle that needs to be fought is smart technology arguments in the right places. Not trying to save our current institutions. We cannot escape paying a terrible price for our excesses but with work we can ensure our great great grandchildren and maybe even our great grandchildren live in a equal world with a high quality of life for all. Just recovering from our immense excess within a few generations would be and amazing achievement and hopefully atones to some extent for the destruction we have wrought.

Implicitly then, there are parts of the USA which will be viable, and others which will not be.

Traditionally this issue of unviable regions has been regulated by migration. In concrete terms, that means much higher population densities in those regions which are
* temperate (don't require exorbitant amounts of energy to survive in summer and winter)
* able to support adequate transport infrastructure.

The viability of post-oil agriculture will determine carrying capacity, I suppose.

I'm glad I'm in Europe.

Nate's previous post on the net energy cliff was a shot to the sternum and Nate does a fine job of reminding me of that (ouch).

Where I am even less "hopeful" than memmel is the notion that in a few generations we can work it out with enclaves of techno-society. This is because of my current views on climate change feedbacks and the timescales of tipping points, which appear to correspond to the ca. 2012 period.

Take a look at the Arctic Ocean. Without that ice sheet intact it is likely bye bye to Greenland and West Antarctica and the oceans swell over the land, massive methane hydrate release potential, etc....

Now looking more like the summer ice is GONE as early as 2013 or so.

There are potential options to geoengineer out of the loss of the ice sheet, and for sequestering carbon to reduce co2 back towards preindustrial levels, but I don't see how they are accomplished without a fully functioning high tech society. Perhaps a powerful enclave can be wise enough to save its own skin and the planet too by using a large portion of what it has in net energy to geoengineer for the rest of the world, but what do you think?

And around here the fight goes on to build more freeways. Most of the population appears to be sleepwalking to extinction while I prod them to wake up please.

We live in a "drill here - drill now" world. EROEI is a powerful concept but we are way over most people's heads. Bush beat Gore by keeping it (too) simple, as did Bush vs. Kerry and as did McCain vs. Obama last weekend.

EROEI means that you are getting ripped off when you by etoh. You are getting ripped off when you invest in a nuclear power plant and wait ten years for it to make a return. You are getting ripped off when you buy a Volt at maybe 45,000. America is getting ripped off when we send 700 billion overseas for energy instead of producing it domestically.

Or is a better framework for EROEI a "hidden tax" on energy? We hate getting ripped off and taxes.

Are we just talking to the converted?

Now where did I leave my glass of Hemlock.

Hmm, it looks like there might be an enclave or two that might be able to survive (for a while at least) by specializing in growing, packaging and exporting Hemlock to it's less fortunate neighbors...:-(

Sadly, we are so disconnected from nature that I suspect few of the people who will need it will be able to recognize hemlock in time, and that, indeed, those who get it may buy it as their last act as a consumer.

If only they had developed more self reliance and knew that hemlock can be found along creek banks and in ditches throughout the northern temperate zone. It might be wise to develop some basic foraging and plant id skills before it is too late.


(Note: above a form of dark comic levity)

Actually, poison Hemlock is not uncommon in our area of the woods. My herbally savvy spouse has had to warn people off on occasion when they found this odd plant growing in their yard or garden. Poison hemlock can be quite deadly even if touched and hand put to mouth etc. Flower looks similar to Queen Anne's Lace (wild carrot). Generally, however, we go for the nurturing herbs/fungi :)

We know for a fact that it takes basically a generation once and issue is clearly in the public view before action is taken.
We simply cannot act over a ten year time frame much less a five year time frame.

I agree. Human society develops slowly in terms of major paradigm shifts. When I read Clive Ponting's 'Green History of the World' (I think this is the title) I was struck by his description of Europe's development from the fall of the Roman Empire until the 'Renaissance', a time period of ~1500 years. It took this much time for people to figure out how to have a basically viable urban society with public systems like sewers and water delivery to avoid plagues and epidemics; and, in agriculture, how to avoid famines or at least ameliorate them.

People understandably have a short time-frame for their expectations. I am optimistic that in a 2000-3000 year time-frame human society may well figure out how to co-exist without war, religious strife, etc. etc.

We just gotta be patient, people:-)


I sadly agree. :(

(And I put full societal collapse between 2012-2020 even without all this.)

I beg to differ on how fast a society can change. As more people fall out of the middle class a certain political threshold will be crossed such as happened in the 1930-32 period. In the early 1930s the very idea of the purpose of government changed drastically in the minds of enough voters that the creation of such mainstays of society as Social Security and the minimum wage became possible. The development of the media of radio and movies in the 1920s was also a key factor in these changes. Thus we now have the new medium of the Internet having an impact on how society communicates. Blogs and e-mail trees are now a way of getting around the filters of corporate media and for good or bad have effected society. Something new might arise that would have been unacceptable just a few years earlier such as universal health care or the end of welfare for the rich. When enough people see that BAU isn't working for them anymore then big changes can happen very fast.

You make an excellent point. When it becomes obvious that the 'every nuclear family for itself, hang on to your personal wealth for as long as possible paradigm' is pushing a larger and larger fraction of the population into permanent poverty, the rats will start deserting the ship of BAU and start agitating for a new paradigm.

On the domestic natural gas front, your scenario is exactly right. Production is roughly flat. EROI has dropped from 20+ towards 10. So roughly a 5% decline in net energy. And governments are scrambling to gather billions to cover the increased cost of heating.

And all oil field projects are increasing rapidly in price. This is partly real demand, but it is also dropping EROEI working through the system in a circular fashion. Gas EROEI drops. The price of gas goes up. That drives up the price of steel. The price of drill pipe goes up. Gas drilling gets more expensive (now, full circle, we have fully accounted for the EROEI drop in gas).

I was rereading The Last Oil Shock and Professor Andrew Oswald is quoted as saying it takes 18 months for increased oil prices to show up as lost jobs. I expect some time frame like that must also be true for EROEI drops.

There is also no doubt that old oil masks a sharp EROEI decline. Just look at this chart for how much the past influences the present:

The green underpins production for many, many years. And this is fast declining natural gas. The longer lived the typical producing reservoir the more it would be true. You would need to separate out each years drilling and the expected oil from that years drilling to see the EROEI decline.

I think your "d" entry would be easiest. You want the drilling and operating cost per barrel for "new" projects. I was surprised to see cost per mcf data in the Chesapeake quarterly filings. Perhaps similar data exists for the oil independents? Apache and the like?

Your comments about Wall Street jogged a memory. I heard this economist talking about virtual worlds, like Second Life and World of Warcraft. And he basically said that it was inevitable that such places would be constructed because there was no way the "real" economy could possibly meet the demand for wealth and power (Mansions, Castles etc) for all 6 billion people.

So lots of people could be super rich in these virtual worlds. And what he found interesting was how the "real" economy interacted with the "unreal" economy. I guess you could sell virtual stuff for quite high numbers of real dollars.

Long story, but that makes me think the exact same thing happened on Wall Street. No way to create enough real wealth, so they created "fictional" wealth. Now, the trick is, how do they get all that fictional wealth to turn into real Ferraris and private tropical islands?

Ever play 'musical chairs'?

Yes, but I remember a fair number of banged heads and toppled chairs.....

I think a easier way to think about the financial side of peak EROEI is to recognize that people can borrow in the future in the form of debt to cover what they consider to be temporary reductions in energy costs this coupled with the legacy bleed over effect where infrastructure developed with cheap energy remains available for decades after EROI declines allows you literally decades post peak EROEI to continue expansion. But the net result is that you borrow so far into the future that its impossible to ever repay the debt even without peak EROEI.

The problem is they by taking on heavy debt loads as energy is declining your not just betting that it will increase in the near future as the debt load gets higher the bet becomes that it will exponentially increase.

Of course being the smart people we are having made a bet on and exponential increase and seeing that its not happening we simply double down in the hopes that making a even larger bet will spur the needed increases.

Eventually of course as the energy does not show up and the infrastructure built with cheap oil degrades since we did not spend on maintenance we reach the point where we simply cannot make any more bets without clearing the old ones generally via default.

By looking at it this way we can see that borrowing money could easily be redefined is a bet that x barrels of oil will show up at x price at some point in the future to spur economic growth allowing me to repay my debt or new debt taken out to cover my defaults.

This concept can be implemented fairly trivially say assuming that me borrowing 100 dollars today means I believe that enough oil will show up a year from now to allow me to create 100 dollars worth of wealth.

Looking at the forward bets the world has made and its in the tens of trillions of dollars vs less than one trillion barrels of oil.

So basically and I'd have to look up the numbers every barrel of oil pumped in the future needs to generate like 1000 dollars of value or wealth to just break even.

And not only that because our bets have gone exponential we need the rate of increase to be exponential. Thus we have reached the impossible situation that we need a exponential increase in the oil supply and it needs to generate at least 1000 dollars of value per barrel. And finally the debt itself is growing exponentially so the amount of value each barrel needs to generate is not static but growing probably exponentially.

This is about third world debt.

Its about 1 trillion US debt is about 10 trillion world debt is I'm guessing on the order of 20-50 trillion vs
one trillion barrels. My thousand dollars per barrel may be high but its not that high. Say the range is 200-1000 with 500 per barrel a good guess at the moment. Note the 9 trillion is just public debt I personally don't think that 100 trillion for all outstanding debt is a bad estimate although getting the total seems hard.

Certainly a good bit of this will be paid of with energy from coal NG etc but the point stands as these resource are themselves unrenewable. Or short term debt overwhelms future production assuming a constant EROEI and 100 a dollar barrel oil. Once you consider declining EROEI declining production and increasing prices.


What in your opinion are levels consistent with social democracies?

IMO this is the next major issue on the horizon. Lower net energy (or peak oil or whatever you call it) means that someone is being priced out of what they could previously afford. Rich people can afford a tripling in electricity costs, or their own wind turbine and solar house. But the average person spends a majority of their income on necessities (or what they perceive to be necessities).

How far can the GINI coefficient (a measure of wealth inequality) rise in the face of lower total energy gain, (adjusted for societal quality), without the capitalist system breaking down (by capitalist system I mean the expectation of bettering ones prospects via specialization of labor in exchange for money in a free market economy).

If 10%-20% of people are 'priced out' due to lack of energy surplus, we could trudge through it - but what if 30% or 50% of people are left unable to afford either basic necessities (e.g. driving to their jobs and paying their bills) or the hope of rising up the pyramid? In effect, millions of disenfranchised people aren't going to idly stand by and watch while wind turbines and hybrid cars are scaled up all around them. We have to create solutions that bring the majority of society along, otherwise there is an inflection point where this no longer becomes the goal.

if 30% or 50% of people are left unable to afford basic necessities

Have you seen the Economist debate?

Global energy crisis
Aug 19th - Aug 29th 2008
Current round: opening

The proposition: "This house believes that we can solve our energy problems with existing technologies today, without the need for breakthrough innovations."

Query: Who is the "we" that the Economist talks of and what is the [final] solution?

I don't think we'll see that large of a jump in the Gini coefficient any time soon. In fact, I'd go so far as to speculate that excessive fossil fuel consumption only serves to amplify any differences in the coefficient but that's another rant for another time. ;)

I don't agree with you in the comparison of hybrids and renewable energy systems because for the most part people don't need HEVs to see similar mileage, and the majority of renewable capacity installed in the US is sold to the general public AFAIK. Out of all the states IIRC CA has the most installed private capacity at 100+mW of private solar, but even then the majority of it is grid tied. In terms of vehicle costs even with gas at $4/gallon smaller vehicles still cost ~$3-4k less over the average ~12 year lifespan compared to something like a Prius or Civic hybrid. It's not that there is going to be some who have alternatives and some who don't IMO. What we will probably see are more people in general scaling back and buying cheaper more efficient automobiles in order to reduce operating costs relative to price increases. I suppose those who are in poor countries where they are deliberately marginalized and/or are subject to corrupt/incompetent government could be literally priced out of markets but in that case we probably aren't talking about the energy needs of socialized democracies.

In short, emergy is better than energy when it comes to comparing energy sources but we still don't have anything that compares efficacy of use, since that isn't strictly speaking something that thermodynamics addresses. For instance bringing the mileage of the average vehicle in the US to French levels would double what is done with Oil's available energy in terms of most of it's use in private transportation but that change wouldn't be reflected in EROEI from the POV of energy or emergy.

Hi Nate

Your hypothesis is wrong because average EROEI is not currently at or near 3:1. It may be close to that for marginal unconventional oil (which incidentally is where the price is formed) but it's still a million miles away from what is still being produced by conventional fields. And conventional oil still comprises the majority of todays production. When this changes, when for example the supergiants Ghawar, Burgan etc enter steep decline, EROEI could fall to single figures. But IMO that's not the case now.

To address your specific points;

a. nat gas consumption is rocketing in KSA because of huge infrastructure projects and economic growth.

b. PoO increase driven by the cost of the marginal barrel.

c. Oil co SP's lagging PoO as it was believed there would be a correction as speculative and other short-term factors would fall out of the price. This has happened although it still leaves oil E&P's undervalued IMO.

d. Petro SWF profits tend to suggest they still operate at high EROEI!


In other words, even if marginal EROEI falls to 1:1) the remaining high EROEI oil will still make up a large chunk of our production for some time? While true this is not exactly encouraging. In any case this is what needs to be quantified.

I agree with c), but wasn't speaking of this particular selloff, only that if oil rallies to say $200 in the future, the average oil stock will go up far less than this leverage implies.

Also, I do not profess that 20:1 and 3:1 are the right numbers - but its the relationship between the two that is critical, not the absolute numbers (yet)

I'd suggest that one way to look at the problem is to ask how far we are willing to allow current additions of low EROEI resources to dilute not just presently produced EROEI but that of the past as well. At some point, all the sunk costs we would have to give up in terms of pipeline infrastructure and such no longer balance the extra pain of using tarsands or corn ethanol etc.... When the last drop of oil is extracted, what will the overall EROEI be? 5:1? Buckminster Fuller has a point that we might think of fossil fuels as a head start that allows a solar economy to spring up, an endowment that needs to be fruitfully invested. But, it makes sense in that way, I think, only if we are willing to say that we won't go below some level of EROEI with fossil fuels over the entire arc of their use. I'd suggest that that level should not be much lower that the achievable EROEI of hydro, wind and solar today which is above 30. So, we have a little banked up EROEI from the early days of oil around 100 but that is being fast diluted by lower than 30 EROEI high oil consumption today. Investmentwise, it would seem to make sense to rapidly taper off of oil now before junk oil erases the past advantages and weakens oil as a functional endowment.


When the last drop of oil is extracted, what will the overall EROEI be? 5:1?

We will continue to extract and refine oil below energy breakeven (e.g. EROEI < 1) due to its extremely high quality. E.g - combine some liquid fuels (diesel) and electricity generated from renewable sources (and perhaps some associated gas) to pull out oil will look like a good trade long into the future.

I wonder how much those efforts will dilute the overall EROEI? If the volume is small, then not much. If we are going for all the oil in place, then we'll need a huge build out of renewables to throw enough energy at the extraction problem. In that case, we may end up seeing oil as a bad thing from the beginning.


Currently most of oil's energy input consists of natural gas, and with an EROEI of less than 2:1 for what's produced/refined/etc in CA as of ~2000, I doubt we'll ever use the high exergy energy provided by renewables for most of oil's inputs. In fact, I'd say that EROEI may not be pertinent in every situation since some could involve using energy reserves that aren't viable economically and/or energetically to access/create energy reserves that are viable economically and/or energetically.

In other words, while it may hurt overall efficiency to use copious amounts of other resources in order to get oil, that doesn't mean that if we didn't use them to get oil we would be able to use them for other purposes. For instance the EROEI of THAI is probably low because quite a bit of oil is being burned to access the rest, but since EROEI doesn't take into account energy that can only be used in certain ways just energy that's expended, in this case to get oil that we otherwise couldn't have nabbed, it won't reflect this distinction. Another example could be using stranded natural gas to help extract oil. The EROEI may take a hit, since it doesn't make any distinctions regarding whether or not an energy source is usable in and of itself, but the alternative would lead to no energy at all from the natural gas since it's stranded or from the oil since it wouldn't have been extracted with the input from the stranded natural gas.

All very good points on why EROEI should not be THE deciding factor on energy decisions. Quality is huge.

Economics can even play a part. Expensive energy storage tends to result in more efficient vehicles that need less energy, so the superior energy density of limited liquid fuels can only hasten their decline outside of industrial use to an extent.

For instance the EROEI of THAI is probably low because quite a bit of oil is being burned to access the rest

That's a matter of efficiency, not EROEI. The oil that THAI burns in-place isn't "invested" by the producer.

If society gives a producer 1 unit of energy and the producer returns 10, that's an EROEI of 10:1, more-or-less regardless of how the producer did so. If they produced 20 units of energy and threw away 10, that's functionally the same as if they produced 5 units and had 5 more given to them by magical pixies: 1 unit came in across the system boundaries, and 10 units went out. EROEI 10:1

EROEI makes no distinctions about whether or not the input energy was usable or how usable it was, just whether or not the ouput energy is usable.

From Wikipedia...
In physics, energy economics and ecological energetics, EROEI (Energy Returned on Energy Invested), ERoEI, EROI (Energy Return On Investment) or less frequently, eMergy, is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource.

From TOD...
There are a couple of important EROEI equations. The first is that EROEI = Energy Output/Energy Input.

For that matter, if EROEI did take into account the usability of the input energy it would have to assign a coefficient/weight to that energy depending on type/location/etc... For instance, if EROEI took into account usability, then stranded natural gas or oil that could only be used to acquire oil near it would have a very low coefficient. On the other hand, when using electricity as an input during the day time we would need a very high coefficient for it since it's in demand, has high exergy, and can be transported long distances with good efficiency, but due to lack of effective storage compared to alternatives using it at night w/ little to no demand would lower that coefficient significantly.

That being said, AFAIK EROEI doesn't do this and just looks at the ratio of energy input to the ratio of energy output. An example of this is from the same TOD post as the definition...
The case of Brazilian sugarcane ethanol deserves special mention. It is often quoted as having an EROEI of 8 to 1. I have even repeated that myself. But this is misleading, and I have to give credit to Nate for challenging me on this. The oft-cited Brazilian EROEI is really a cousin of EROEI. What is done to arrive at the 8 to 1 sugarcane EROEI is that they only count the fossil fuel inputs as energy. Boilers are powered by burning bagasse, but this energy input is not counted. (Also, electricity is sometimes exported, and credit is taken for this). For a true EROEI calculation, all energy inputs should be counted.

To provide "a true EROEI calculation" there are surely further pivotal data to be incorporated,
namely that of any energy yields lost as a consequence of the usage of the energy option under analysis.

For instance, when fossil fuels' usage destabilize the climate of California,
to the extent that forest fires increase 6-fold in 25 years (since early '80s),
there is little or no remaining prospect of commercial reforestation projects for diverse wood-energy yields.

That potential energy production has been precluded.

Examples of such usage-impacts on net energy yields are very numerous,
and extend directly into food and fodder production,
and are perhaps most easily quantified in the example of rising global losses of hydropower yields.

Yet it would be at least extremely complex (if at all possible)
to account the globally liabilities of individual fossil energy projects,
particularly given the diverse atmospheric residence periods of the various GHGs.

Therefore it is plainly more efficient to assess a standard decrement-factor per unit of GHG emissions/kwh supplied
to charge against the net EROEI of fossil fuel projects.

Until this is done as a matter of standard practice,
those trying to promote EROEI analyses will predictably face a credibility gap
when addressing climate-aware energy planners.



That's heading into economic externalities, so I suppose we could quantify the energy costs of dealing w/ these externalities. Like you stated, much greater than average energy expenditures fighting forest fires, or the increase in energy needed to account for the increase hospital visits due to pollution from automobiles, and so forth. The list is pretty extensive but it's also subjective since it's assuming some outcome. Clearly most people may not be o.k. w/ the impacts of climate change, but I doubt the people making boat loads of cash from the sale of commodities, that are causing and probably will cause these problems, care much about the impacts. Even if they say they do. ;)

EROEI makes no distinctions about whether or not the input energy was usable

If it's not usable energy, how can it be used as an input?

Technically, enormous amounts of solar energy went into the creation of oil; we don't count that because it's not an energy cost that the oil producer has to pay. Same for THAI burning oil in place - it's not an energy cost the producer has to pay, so it plays no role in the EROEI calculation.

The first is that EROEI = Energy Output/Energy Input.

Yes, that's exactly what I said.

Since the oil burned in-place by THAI is not an input by the oil company, it's not part of the denominator, and hence plays no role in EROEI.

You're trying to do something very strange with system boundaries by counting the energy in the oil deposit only if it's burned. If that same fraction of the oil were simply left in the ground forever, you would say the EROEI had gone way up even though the energy cost to society was exactly the same.

That's not the way "return on investment" works. To see that, consider regular ROI: if I buy a stock for $1 and sell it for $2, my ROI is 2:1, regardless of what the stock did during the time I held it.

Value out divided by value in. It really is that simple.

For a true EROEI calculation, all energy inputs should be counted.

Do you count the energy of the sun against solar power? Against wind and hydro? Again oil?

If you're taking into account "all" of the energy inputs, you must. If you're being sensible, you don't: you only take into account the energy costs invested by the producer. Anything they don't have to supply you don't count.

Take, for example, RR's example of a 10:1 EROEI for gasoline refining; he's wrong. The refinery inputs 10 btus of oil to output 9 btus of gasoline, which is an EROEI of 0.9. More sensibly, it's a conversion efficiency of 90%.

Conversion efficiency and EROEI are not interchangeable, though. While they're the same in this case - as there are no "free" energy inputs - they're very much different in the case of, for example, solar power, where a conversion efficiency of only 10% can result in an EROEI of 20:1, thanks to the vast majority of the energy involved being "free" (solar) rather than a cost the producer has to pay.

ROI = Value Received/Cost Paid. If it ain't a cost the producer had to pay, it doesn't go into the denominator; simple as that.

I think your criticism of Robert is off base. The refinery takes only 1 unit as an energy input, not 10. You can cast this as an efficiency, but that does not mean that Robert can not discuss the EROEI of the refinery, or the combined EROEI of the well-tanker-refinery-pipeline-ICE system. This last is quite important when we consider alternatives such as the mine-train-power plant-transmission-EV chain.


If it's not usable energy, how can it be used as an input?

Technically, enormous amounts of solar energy went into the creation of oil; we don't count that because it's not an energy cost that the oil producer has to pay. Same for THAI burning oil in place - it's not an energy cost the producer has to pay, so it plays no role in the EROEI calculation.

Good catch! I meant it's not usable outside of that application, so I suppose the correct statement would be it isn't usable in other applications.

We don't count the solar energy that went into creating oil because it isn't there for us to use as solar energy, just as oil. If we only counted energy costs the producer had to pay then we wouldn't count in house oil or natural gas that was used on site to help w/ extraction and/or refining as well as usable products via Ethanol. However, those do matter, as was illustrated by including bagasse or natural gas even though they didn't cost the producer anything.

Yes, that's exactly what I said.

Since the oil burned in-place by THAI is not an input by the oil company, it's not part of the denominator, and hence plays no role in EROEI.

You're trying to do something very strange with system boundaries by counting the energy in the oil deposit only if it's burned. If that same fraction of the oil were simply left in the ground forever, you would say the EROEI had gone way up even though the energy cost to society was exactly the same.

It's only counting the oil that's burned if it produces the energy needed to get more of that oil reserve. In this context we have two situations. In one we use however much energy to extract the oil via the usual methods and then leave the rest in the ground. The overall EROEI of the well is higher, but we get less oil. In the other, we use some more energy for operations and energy from the well to get more oil out. The EROEI probably drops, and we get more oil, consistent w/ the low hanging fruit idea. We get the easiest stuff out first and then move on to the harder more energy intensive extraction methods. The energy cost to society wouldn't be exactly the same even w/o counting the energy provided from burning oil underground since drilling/operations/air injection requires energy as well.

That's not the way "return on investment" works. To see that, consider regular ROI: if I buy a stock for $1 and sell it for $2, my ROI is 2:1, regardless of what the stock did during the time I held it.

Value out divided by value in. It really is that simple.

If it was that simple we wouldn't count in house products used in the energy creation. But, as was pointed out in the ethanol example, and in modern extraction/refining operations, we do.

Do you count the energy of the sun against solar power? Against wind and hydro? Again oil?

If we could somehow use solar, wind, or hydro to access more solar, wind, or hydro then I don't see why not. But it's a flawed analogy in that we can't do what we're doing w/ oil in the case of THAI to solar, wind, or hydro. They aren't the same forms of energy (chemical, kinetic, and radiant) and we can't manipulate them in the same way.

If you're taking into account "all" of the energy inputs, you must. If you're being sensible, you don't: you only take into account the energy costs invested by the producer. Anything they don't have to supply you don't count.

EROEI can't take into account the energy that creates an energy source since that energy isn't available to whoever is extracting the energy. All EROEI counts is how much energy we have to input to access some quantity of energy. Even assuming, for the sake of constructive debate, we don't include the energy of combustion from THAI, products that the producer didn't have to pay for, such as the natural gas used for extraction/refining, should still be used as inputs in EROEI, even if they aren't useful in any other context. Also, while conversion efficiency plays a part in EROEI of refining, so does the spread and use of refined products. We wouldn't count tar used in asphalt as an energy output unless it was used as one, and we also wouldn't count all the oil as an energy input. We would just compare the energy values of oil's refined energetic products to the energy values of it's inputs, mostly electricity and natural gas for the EROEI.

If you want to look at energy quality and not include inputs that can only be used in a specific context while not costing the producer anything, feel free, but that isn't EROEI.

Good post and many excellent comments.

Presently public data from some net exporters (of oil and/or natural gas) shows stagnant volumetric production and growing domestic consumption.

Question is how much of the growth in domestic consumption comes from increased wealth (domestic consumption growth due to increased oil and natural gas prices) and how much of the growth comes from declining EROEI?

The same should apply to all producers of oil and/or natural gas.

As I pointed out in a similar thought experiment a few days ago (, one of the consequences of this scenario is that uninformed analysts and policy makers will draw exactly the wrong conclusions. As net energy declines, the price of oil will rise, even though consumption is down and (gross) supply is up. They will be unable to understand why price is rising in apparent contradiction to fundamentals, and they will look for other causes -- speculators, manipulation, above ground factors -- and miss the real problem. IMO, this is precisely what is happening today.

I think the EROEI is one of the concepts that seems to cause problems when technology is applied to energy problems. In some cases i.e catalysts its a tremendous boon and technology wins the day. But on the other side of the coin technology implies specialists to create the technology and a surprising withdrawal from the net energy account. The technologists don't realize that when technology is applied to the energy extraction/upgrading phase that the pyramid of specialists and manufacturing supporting them must now become a debt to society not a plus.

Only if the technology can overcome this negative is it a plus. Given the large pyramid of support behind technology this movement in accounting can result in large drops in overall EROEI.

Next as energy itself gets more expensive it generally become more profitable to invest in. On the economic front we are seeing the same effect investments of capitol in maintaining our current energy structure are very competitive with other investments thus capitol flows into the energy production part of the economy at the expense of the rest of the sectors.

And finally our energy industry is a mature one with most of the profits concentrated at the top so energy consumers tend to short circuit the flow of money with it rapidly concentrating at the top of the financial pyramid. This flow of cash into the wealthiest is rarely spent optimizing the general economy. In most cases it simply results in gold rush style inflation in the energy producing region. This also removes large amounts of cash from the other sectors of the economy as the wealthiest are inefficient at reinvestment of the energy windfall back into the economy. This alteration of the flow of capitol in a sense can be converted into a sort of negative EROI concept. As capitol that has accumulated in the current energy system is not spent to underwrite alternatives that permanently reduce demand and thus the price of the current sources of energy.
Also of course the ability of energy consumers to maintain debt payments is undermined because of increasing defaults so individuals and industries outside of the energy industry becomes rapidly poor loan risks esp vs

Overall it seems like these secondary effects although difficult or impossible to measure may change the real EROEI by several orders of magnitude. This probably why for any reasonably complex system the real breakeven point of a direct EROEI measurement is probably closer to 1:6 not 1:1 as secondary monetary and technical flows serve to amplify the net energy loss.

As and example one could consider the similar military/industrial complex where little real value is produced and net output is actually negative. Looking farther back in time you could even look at Sparta and its military based society or any ones after that and see that theses societies eventually fail. As the energy industry begins to become more similar to the military/industrial complex it too should fail.

And of course on that note the massive military forces developed during the 20th century and the large pyramid of industries to support them are based on the availability of ample excess of fossil fuel. As energy for the base economy contracts the ability to maintain these cold war relic militaries becomes impossible. Effectively we now have two huge industries that have no net gain the energy industry and the military.

Expanding beyond this you have general government services which overall are highly inefficient and also effectively only possible with cheap energy.

The point is that in a complex system with a number of large complexes that offer little real value developed of the excess of the society as the net energy production declines the impact of the secondary energy drains grows exponentially since the first thing to be lost is excessive tax money as the regular economy becomes focused more on staying alive then generating excessive wealth.

So EROEI and EROI declines initially eliminate the excess but this same excess is whats been used to develop the massive government and military infrastructure that "runs" our societies.

A simple example is in times of old when the crops failed the farmers hid the grain and did not pay taxes. Or own tax systems are experiencing the same effect. The regular economy ability to generate tax revenue shrinks rapidly. Also of course over the short term the energy industry because of its wealth will be able to sidestep shouldering the tax burden formerly held by energy consumers.

So it seems that the concepts of EROEI and EROI can be fairly easily extended to include other non-productive complexity developed under cheap energy regimes and it points out the real underlying cause of collapse will probably be falling tax revenues coupled with inability to reallocate taxes to the new inflows of wealth to the top.

Its amazing how self destructive the system seems once energy/finance/goverment/military are considered as a unified whole. It seems that splitting the world into this group and everyone else is sufficient to figure out the broad scale reasons for collapse.

Memm - Negative eroei is impossible. Pls see my post below about EGOEI.

Negative eroei is impossible.

I think you mean "imaginary," rather than "impossible." The concept of the square root of a negative number is quite useful, and so might the concept of negative EROEI.

Pedantry aside, I agree that the OP was probably thinking of "below unity" rather than "negative."

Actually I was wrong there. An example of negative EROEI would be if I "invested" in firing a torpedo at my full oil tanker and sank it. But that's clearly not what people have in mind on these pages, so my main point about the unhelpfulness of this concept still stands. Or maybe we should start a more systematic consideration of nstances of such negative EROEI?

Mr Vernon wrote:

When does an energy cost become an indirect overhead? Perhaps, a portion of the energy needed to build and run the foundry and its equipment; and maybe also a portion of the energy needed to train, feed, entertain and motivate the foundry workers? The calculation would rapidly become very time-consuming and prone to error. Ultimately, a slice of the entirety of the remainder of society’s activities could notionally be apportioned to each energy gathering activity, giving all energy sources an EROEI of 1:110. Clearly an EROEI which included all indirect costs, however tenuous their association to the energy system, would not be a helpful tool for assessing how best to meet society’s “energy needs”...

...So, if all the most tenuous, indirect energy costs of our global energy system were to be included in an EROEI analysis, the global energy system would have an EROEI of 1:1. Does this point to a more fundamental impact of EROEI on the nature of a society?

Actually I would argue the first point is covered by the second point and shows the pointlessness of EROEI arguments. How?

All the energy we use is the energy we use. Yes, a tautology, but one with meaning. If ALL energy production systems (oil, nuke, etc.) disappeared and we had to make due with a pre-industrial energy diet, we would experience a lot of misery, but we would have to use all the energy we use - it would just be a tiny fraction of what we use today. Energy production is a social practice, and arrives from a social circumstance. Sure: you could run a nuke plant without Moe's, or the QuikEmart, or the comic book shop, but: that's the whole point of the power station - to permit the existence of Moe's (so power station workers like Homer can go have a pint of suds), or the QuickEmart (so Apu can provide slushies to Bart), and the comic book shop (so a fat geek has somewhere to go 8 hours a day).

Moe's is critical to the operation of the plant, as it is a social focal point for Homer, and without Homer the whole thing would go critical and melt down and kill everyone. OK, maybe Homer is disposable, but you get my point. The powerstation provides the power so the society can function, and the society functions so people will work at soul deadening jobs like the powerstation.

Imagine if our society had NO use for petroleum. If we chased the bison herds for a living and scratched some plants out of the soil. Would we use petroleum? No. What would EROEI matter? nothing at all. People either starve or not. Energy production is a product of social practice and cannot be separated out from society, as society itself is an energetic and entropic process, of which energy production is part and parcel.

Hence, EROEI is ALWAYS 1:1. Forever. The question, in my opinion, is one that devolves on labour. The common wisdom is that 2% of society in our petroleum based system makes the food for themselves and the other 98% of the society, who are thusly freed up from food production to engage themselves in such eminently worthwhile professions like croupier, online porn actress, advanced debt instrument designer, public relations account assistant, fingernail artist, market speculator, gangster, right wing think tank administrative assistant, cold call telephone sales associate, closet organisation assistant, dog walker, and whatever the job title it is of the guy who stands in the middle of the street holding the sign that says "slow - construction" when the street is clearly ripped apart an covered with orange cones.

There is a much more accurate way to determine the energy content of a society: how many people are engaged in subsistence agriculture, or food production in general? When the number of farm workers expands and the nail salons disappear, then you know your energy production systems are not generating the quantities it once did. When the gangsters are put to work digging ditches because the backhoe went idle, then you know things are getting slim.

You don't need elaborate abstract calculations of input and output - you just need to keep an eye on how many people it takes to feed society. That ratio will tell you how you're doing. If the EROEI is really high, then it will supply energy for something other than itself and more of the Fine Careers I listed above can be supported. If the EROEI blows chunks, then we will see more people growing food, as the quantity of energy left over from Energy PRoduction will necessarily be reduced and reduce the number of people working in such fields of endeavour.

Pretty straight-forward from my perspective.

a)you are forgetting the biological concept of the ratchet effect which manifests in humans via neural habituation. (a physical example would be gaining weight - it is impossible for a human body to reduce the number of adipocytes (fat cells) once they are created, implying that body fat, and thus body weight, can always increase, but cannot decrease). To a point this will apply to energy consumption, which is why a decline in energy profit beyond a certain threshold cannot be offset behaviorally unless there are fewer actors.

b)Chris Vernon didn't write this. He is TOD:Europe editor who posted this guest article by Adam Dadeby.

Mr Hagens wrote:

Re: Dabny/Vernon - thanks for the clarfication.

To a point this will apply to energy consumption, which is why a decline in energy profit beyond a certain threshold cannot be offset behaviorally unless there are fewer actors.
I am very apprehensive of EROEI theory, and as noted earlier, I believe there are more obvious and simple methods of measuring society's energy efficiency and ability, which I believe I have generally outlined. I am also deeply apprehensive of using biological science to analyse social patterns. It reeks deeply of the way the postmodernists (Lacan, Baudrillard) and new-agers (Tao of Physics, etc.) abused physics to justify their literary ramblings.

Secondly, declines in energy profit have resulted in catastrophe when the society in that situation refuses to adapt its customs and socio-ideological framework to the matters at hand, or they do adjust, in the worst possible. (J. Diamond, Collapse) Given that we have very specific and fairly precise data regarding labour statistics, and transport statistics, and a variety of other numbers provided by the wonders of petroleum, we can see how manual labour can be used as a measure of adjustment to lower energy states, and the efficiencies, i.e. EROEI, of a given energy programme are resulting in what people do for a living and how they go about living.

Since we don't have an example of global society losing energy value, we don't know how it will play out, but we do have micro examples, and again, as Diamond noted, some worked out better than others...

An example I forgot to add was transportation and bicycles. Less available energy outside of the energy production sector : More manual labour = more bicycles. At the same time, EROEI can be used (or its principles) in managing other aspects of the powerdown. Example: public transportation vs. private. This has already resulted in interesting values, demonstrating the variability of watts/joules per mile per passenger. Example: in the middle of the night, a streetcar is using massive amounts of electricity to move 3 people. No street car = loss of business for some nightclub who needs those three people to bury their misery in liquor / dancing / culture / distraction du jour. So, again EROEI in a strict sense, fails, and in a broad sense approaches 1:1.

When those people walk home, or ride a bike home, then that's another phase, where the energy for that night train cannot be spared and is more valuable than what it provides.

No, what the streetcar is doing at night is removing the need for those clients to own a car. If you can't rely on public transport to get around, then you have to be pretty poor before you give up the freedom brought by car ownership. Public transport, structurally, has to have tons of excess capacity to cope with peak hour, and needs to offer a minimum ride frequency off-peak to be credible. The existence of fewer cars per capita, as well as fewer car miles per capita, needs to be part of the energy calculation concerning the streetcars.

wrong. It depends on the car:

one of these mystery machines is a tiny fraction of what an automobile requires...

however, I agree that we need to have fewer cars around...

Well, this is my first comment on The Oil Drum, and I may be out of my depth here, but I don't necessarily agree with the assertion that EROEI is 1:1. Assume the EROEI on primary energy inputs is X:1. For the sake of simplicity, assume the EROEI of inputs to the primary inputs is also X:1, and the EREOI on inputs to the inputs to the primary inputs is X:1, etc., etc. Then for 1 unit of energy output, the cumulative input is 1/X + 1/X^2 + 1/X^3 ..., or 1/(X-1). So the total EROEI is (X-1):1.

Which raises the question, where did all the surplus energy go? I would argue that while some is "wasted" (e.g., in recreation), still much of it is embedded in our capital goods, of all types, physical and intellectual. Yes, if we were to run our civilization down to extinction, then all this capital would be depreciated, and then the long run EROEI would be 1:1. But only in that case is it true; as long as we have effective capital it implies that X > 1.

"All the energy we use is the energy we use. Yes, a tautology, but one with meaning. If ALL energy production systems (oil, nuke, etc.) disappeared and we had to make due with a pre-industrial energy diet, we would experience a lot of misery, but we would have to use all the energy we use - it would just be a tiny fraction of what we use today."

That is looking more and more like macroeconomics modeling. I'll take a look a Keynes he solved a similar contability problem ;)

Now, EROEI is important because EROEI defines the law of receding horizons. I see no other use for it, and no replacement for that kind of analysis. On a fast changing energy market, you can not plan without knowing the law of recedin horizons, but it is not a substitude for (monetary) ROI or any other usual metric, like some people imply.

Hence, EROEI is ALWAYS 1:1. Forever.

At the most fundamental level, one must realize that EROEI for the planet earth is positive simply because the biomass of the planet has gone from zero to millions of gigatons over the life of the planet. This represents the ability of life to harvest energy. Read 'Into the Cool' by Schneider and Sagan for IMO the best explanation of the life/energy relationship.

As an aside, I also believe that 'alternative' energy harvesting methods of solar and wind will only allow extremely slow growth, if any at all. Even if PV works out on paper to be 'more efficient' at harvesting solar than does photosynthesis, as Memmel points out, we are very adept at 'pissing it all away.'

Mr Vernon: "There is a much more accurate way to determine the energy content of a society: how many people are engaged in ... food production in general?"

You've hit the answer perfectly. As a famous commentator onces said, "That is all you know, and all you need to know"

All that frenzied "angels dancing on pinheads" EROEI stuff is complete nonsense. As proven several times above, EROEI can be made to come out to any number the calculator wishes, and the resulting number tells you nothing except as a measure of "propensity to compute ridiculous numbers to impress others with".

I'd also add that there is another useful measure in addition to percentage of workforce required to feed all. That is the relationship between market value of farmland v.s. market value of the crops it can produce. Someone somewhere knows something most of us don't, which is why bare farmland in Southern Ontario, without buildings or any prospect of ever having speculative development value, is now selling for an amount where the interest alone on the loans is three times the present cash value of the crops it can produce. This is a second quick, easy and useful measure of the health of present systems.

lengould wrote:

"There is a much more accurate way to determine the energy content of a society: how many people are engaged in ... food production in general?"

You've hit the answer perfectly. As a famous commentator onces said, "That is all you know, and all you need to know".



You wrote:

That is the relationship between market value of farmland v.s. market value of the crops it can produce.

Land in S.Ontario is extremely expensive for two reasons: 1. the ever expanding suburbs, where an acre of land can result in a huge pile of poorly and quickly built condo townhouses. 2. wine. Wine is VERY profitable per acre, and continues to be profitable.

After the peak, I would expect the price pressure from the townhome developments to cease, and the price will fall back down to "more reasonable" levels, as people intensify urban agriculture in the GTA (esp. in the green zone) and move closer to their jobs, which will be mostly in the cities and along rail lines.

Wouldn't thermodynamic loss to heat mean that EROEI is always less than 1:1? The total energy-output of a system would include a portion used to do useful work, and a portion lost to heat.

In the middle of a cold winter, that lost heat can be very useful. Maybe it can't do any useful work, but it could still heat apartments.

Should EROEI be the most important criterion our society uses to decide how it meets its energy needs?

No, but it is very important and must be considered. One of my thesis components is 'The Limitations of Net Energy Analysis for Energy Policy" which expands on several of the points the author raises.

No single criterion on how to meet our energy needs will be satisfactory until we re-assess our end goals - that needs to be done first otherwise we are a donkey running after a carrot, and periodically stopping to graze before we start chasing it again.

I think I detect a little movement from previous posts where EROEI was called important.

It is not important for reasons I have posted many times. EROEI is largely backward looking mourning for the Helicon days of gushing oil from large oil fields. Those days are over.

EROEI is only valid when comparing like and like as in the production of two adjacent oil wells. When it veers off into comparing different forms of energy it is totally invalid and silly nonsense.

Judging different forms of energy fairly is a significant problem in the Post Peak Oil world.

If price is ignored, which EROEI does, there is no way to adjust for the lower energy content of ethanol and it is rejected as inferior to gasoline because equal volumes contain differing usable energy. Price matters and it is very relevant. It compensates for varying energy densities.

EROEI also ignores unique characteristics like renew-ability. An energy source that is renewable is more viable long term than one that is not and which is being used up. EROEI treats this important concept as irrelevant. It is not irrelevant.

Some forms of energy are more useful than others. Electricity is very useful and its low EROEI is compensated for by its utility. Similarly ethanol has more utility than corn and natural gas since it is for now the only practical substitute for gasoline.

EROEI ignores utility. Utility of energy is important. A very dense energy source such as uranium does not help if it is not useful for practical applications such as liquid fuel for transport.

EROEI when applied across unlike energy forms is totally invalid as a criteria for judging appropriate actions to be taken to mitigate Peak Oil.

Your point about utility is useful and related to the efficiency of a given technology at converting energy into useful work. A compact florescent light bulb is good at converting energy into light, a 2000kg SUV is bad at converting energy into moving your 70kg body 5 miles to work.

The important point here is that when high EROEI sources were available we used energy with very inefficient technology - like 10mpg SUVs. As the EROEI falls, we'll stop using that technology and swap it for 30mpg cars, for 60mpg cars, for bikes etc. As EROEI falls, I expect we’ll use an increasing amount of energy in compact florescent light bulbs and a decreasing amount in SUVs.

Our utility, our useful work done, won't fall nearly as much as our net energy supply falls because we can drop the inefficient technologies. Such inefficient technology only exists because of high ERORI.

EROEI analysis certainly does not reject ethanol in favour of gasoline because of energy density! It's rejected due to the ratio of input energy to output energy, density is not a factor.

EROEI also ignores unique characteristics like renew-ability.

An energy source that is renewable is more viable long term than one that is not and which is being used up.

I don't know who gave X a negative rating or why. (It wasn't me.)

A common misconception among lay people is this idea of "renewability".

There is no such thing. It is a quaint politician's spin.

Here's the way energy works in our solar system:
1) Part of a finite amount of Hydrogen fuses in a body we call the Sun.
2) Radiative energy due to E=mc^2 leaves the Sun and heads for the dark void outside our solar system, never to come back again.
3) A tiny fraction of this vast river of outwardly bound radiative energy strikes the Earth.
4) A small fraction of the incident energy becomes temporarily stored as a combination of oxygen present in the atmosphere and carbon (or hydrocarbons) held in the crust. When these chemicals are combined (combusted), the produced energy leaves the Earth and heads for the dark void outside our solar system , never to come back again.

On a bigger scale, since the Big Bang, our Universe is unfolding towards maximum entropy. It's a one way trip. Nothing gets "renewed".

ah, come on!
We're not talking about "we'll be dead in millions of years anyway". "Renewable" means using energy sources which are produced faster than they are (can be)used/used up.

Oil is not one of them. Solar is. Geesch.

Sorry, I'm not coming on.

With due respect, you don't get it. The big, step back picture I mean.
Oil is necessary for humanity to get into outer space; to build giant solar mirrors up there before it is too late and the bulk of the oil is gone forever. What we need is a world-wide Icarus Project. We need to lift ourselves above the clouds and close to the Sun so that we can gather its energy with giant mirrors and focus more of the one-way bypassing energy towards a designated energy center (and a desalination center) on Terra Firma.

I repeat, there is no such thing as "re-new-able". Entropy means never having to say hello again to your spent energy. Once it's radiated away from Earth, it's gone forever. None of it is renewable.

No Step Back, you're just being difficult. He seems to get it just fine.

'Renewable' doesn't mean you get the exact same Photons, Waves or Wind Gusts back again and again, but that you live in a system where these things are recurring phenomena, and that they can repeatedly provide energy for you, and will for the forseeable future. What is Renewed is the refilling of your energy basket, just as the crops and other living food sources are Renewed in their cycles.

We gonna argue about how many angels can stand on the head of a pin, or rich men getting to heaven now? Or is there something better to do with our time?


Scarily enough, there are many people who believe you do

get the exact same Photons, Waves or Wind Gusts back again and again

I didn't save the link on my current computer, but a few days ago there was reference to an economics professor (his name was something like "Prentice" IIRC) who explained to his economics oriented followers that there is no energy crisis because the Second Law of Thermodynamics says so: energy is neither destroyed nor created, it is merely moved from one form of fuel to another according to the economics Prof.

So the whole problem according to the Economics Prof is to find the economically appropriate fuel. Simple as that.

Of course a TOD commentator quickly sprung up to call the Eco Professor a maroon and to make a sarcastic inference to the 3rd Law of Thermo.

But the point is that there are many people out there who do believe you get the same energy back, again and again. The word "renewable" reaffirms that concept in their minds.

"just as the crops and other living food sources are Renewed in their cycles."

BTW, growing biofuels is not "renewable" because you are depleting the minerals from the soil. Once the artificial fertilizers run out, what are we going to do?

As for crops, I didn't mean to apply these in their use as so-called renewable energy supplies, just their use as food, simply to say that naturally grown food is 'Renewable' the same way that Solar and Wind are.. of course with biological processes, you have a role in the cycle and have to put your outputs back into the system as inputs. And yes, we're overpopulated and running that process 'non-renewably' as well.

As for people misunderstanding the context of a word like renewable, I don't have a problem in re-educating people who are confused as to what I mean when I say it. Some will remain confused, but not everyone.

... a few days ago there was reference to an economics professor... who explained to his economics oriented followers that there is no energy crisis because the Second Law of Thermodynamics says so: energy is neither destroyed nor created, it is merely moved from one form of fuel to another according to the economics Prof.

That's actually the First Law of Thermodynamics -- shows that economics professors shouldn't dabble in physics!

This is doubly ironic, since the Second Law of Thermodynamics (entropy) actually says exactly the opposite of what the professor claims: that when you transform energy, you lose a bit to small amounts that cannot be effectively used.

Wish I would have been there to set this professor straight. :-)

I think you are missing some key effects in your step 4. For example, wood that is burned for heat is not held in the crust. Neither is water that falls as rain to produce hydropower. Because you have limited yourself to exhaustible fossil fuels, you find that none are renewable. However, if you look at the larger energy flows rather than the very limited formation of fossil fuels, you'll find that they are renewable.


you are missing some key effects in your step 4)


First let me say that I am pro-solar (a political affiliation sort of like being pro-choice).

Secondly, no I didn't miss key effects. Hydropower is possible because incident solar power vaporizes water, lifts that water to new heights so as to convert solar energy into E=mgh potential energy. Ultimately that energy radiates out toward outer space, for example when the hydro plant powers an incandescent light bulb whose output is mostly in the IR spectrum (waste heat).

Similarly, burning of wood is possible only if free oxygen is available thanks to photosynthesis where the latter occurs as a consequence of incident solar radiation hitting the leaves of trees. Wood is a primarily a carbohydrate (CxOyHz). When you burn wood, you are liberating the temporarily stored energy to continue its travels toward the outer reaches of our solar system.

if you look at the larger energy flows rather than the very limited formation of fossil fuels, you'll find that they are renewable.

No. The larger energy flows are all in one direction: from the Sun to here and then from here into the blackness of deep space.

You're only proving my point that many people do not understand this fundamental aspect of how energy flows. None of it is renewable.

This is silly and only about semantics.
Step Back is correct that none of it is renewable from a thermodynamic perspective, however windpower, solar, tidal, etc. are all renewable on human civilization scales e.g. hundreds to thousands of years.

I would say that what MOST people are concerned with is civilization making it through the next century or two. (actually most people probably don' think past next bill cycle).

Well, in that case, worrying about Peak Oil is also "silly".
Why we'll simply burn some coal to make it through the next billing cycle, heh, heh.

(Pretend it's Ronald Reagan making that ending "heh, heh" noise. He had the gift of washing away all concerns with that swift boat chuckle of his. Voodoo economics? Why there you go again, heh, heh. Solar panels on my Whitehouse? Why no way, heh, heh. The free globalized markets will solve all problems, heh,heh.)


I consider you one of the geniuses on this blog. Thank you for confirming that "none of it is renewable from a thermodynamic perspective". Exactly.

The word "sustainable" (downthread) is better. But is it sustainable once we've run out of the cheap oil needed to keep it going? That's the question.

Only an Icarus project can save our current population.

What we need is a world-wide Icarus Project. We need to lift ourselves above the clouds and close to the Sun so that we can gather its energy with giant mirrors and focus more of the one-way bypassing energy towards a designated energy center (and a desalination center) on Terra Firma.

You are not catching the distinction that the word renewable captures. This is not about reusing energy. It is about fact that we can repeatedly participate in the energy flow without exhausting it. It is important to try to understand what people mean by the words they use before jumping on them. The energy is renewable in the sense that it is refreshed.


Chris -

disdain for the Downing St term “Renewable” is not limited just to physicists,
but is also held by numerous ecologists, among others.

For over a decade “Renewable” has become the favoured chliche'd signal for people to stop thinking
about whether or not energy supply options are Sustainable or Ethical,
and instead start joining in the unhelpful adulation of the (very) few options promoted by corporations
Notably Government & Media, and Corporations & NGOs have wallowed in this convenient cliché’.

That it is a classic spin-term, implying one thing to the public
while serving corporate interests in antithetical projects,
is demonstrable.
Take for instance the option in which Britain allegedly has world leadership status -
that of “Battery Chicken Dung Power”.

Its lobby hopes for big market globally, with > 12 billion birds in China alone.
And the excrement keeps flowing - "inexhaustibly"

Yet, beyond the direct immorality, and apart from the agribusiness chickenfeed issues,
the danger of this practice,
with crowding maximized for profit's sake,
and with antibiotic cage-sprays required as routine,
is that this is quite the best way known to science
of vastly accelerating the evolution of new, highly contagious lethal diseases.
I suggest we have no right to take such risks with either human or livestock or wildlife health.

And what would be the energy costs and opportunity costs
of just a moderately lethal pandemic, that only infects say one in six worldwide ?
And this option is our most promising UK "Renewable"
that gets significant govt support?

This kind of grossly incompetent selection is neither unusual
(e.g. some tropical mega-hydro plants emit more CO2-equiv methane per kwh of yield
than trad. coal-fired power stations),
nor it it surprising, given the rigid exclusion of a sustainability criteria.

Consideration of an energy supply system's 'global replicability'
(i.e. of its tech being appropriate for the global majority, not the troubled elites)
and of its 'local legitimacy', (being its demonstrable social benefit)
are equally urgently required, but apparently have yet to warrant any official attention.

Meanwhile, here at TOD we are asked to agree that EROEI "is the most important factor"
for evaluating the diverse energy options,
when in reality it is only a second order quantative comparison of net yields
that perforce lacks any data concerning each energy options’ usage-impacts on other energy production systems
and that is unavoidably subject to prior compliance with the qualitative criteria
that might (perhaps) be termed “sustainability, accessibility and sociability.”

In order to at least extend the scope of EROEI analysis,
if society could only apply enough research capacity,
we might start to get a serious data stream as to the specific net energy costs and energy opportunity costs
of the ongoing worldwide impacts of an increasingly destabilized climate .
Which data could then be calculated into options’ EROEI ratio.
But then, maybe we need to focus such a massive investment of effort & loot into production,
not academic data gathering for later evaluation and reportage ?

As I write, here in Wales, the wildly extreme rains have destroyed the hay crops en masse
which were to be fodder (fuel) for the flocks & herds this winter,
These rains are now within a few days of utterly degrading the wheat harvest,
of around 4 million tonnes.
If the rains were to end suddenly,
then what grain can still be harvested may only be useful as low-grade animal feed.

For a TOD article to present EROEI as the primary criteria for options' selection
despite the growing incidence of such weather impacts from fossil options’ usage
seems at best a little hasty.


Disliking the word renewable for other reasons is fine. The issue here is failing to acknowledge what people mean when they use the word.

I'm sorry to hear about the problem with the rain.


IMHO most people don't mean anything by the noises they make (the words they use). They simply like to make noises that mimic what they consider to be the main stream noises of the herd. (*Whazz up bro?" Just chillin it here ma homie. For shizzle. WTF?)

If you're going to use a term like "renewable" with some sense of meaning, first you have to define what "new" energy is. Then you have to explain how some energy becomes new all over again.

If you're exposing your PV panels to slightly old energy that just came off the sun and you want to call that energy "new", fine. But don't give it that double back spin of being "re"-newable as if the photons can cycle around and come back to hit your PV panels yet again and again. It happens one time and then that's it. Nothing gets renewed.

Another nonsense noise that is popular with the herd these days is energy "independence".

Pardon me? Unless you are dead, why would you want to become no longer dependent on energy. As for me, I'm always dependent on energy.

Most of these words are psychological spins intended to create subconscious deception: "foreign" oil, "addicted" to oil, "alternative" energy, "clean" coal, yes we can, ingenuity, rebirth, etc.

Again, renewable means that the source refreshes. That is what people mean by it and it happens to be true.

On independence, you are being equally silly I think.


Perhaps this confusion is precisely the reason that Imperial College London has changed the name of its "Renewable Energy Technologies" MSc course to "Sustainable Energy Technologies"?

"Sustainable" seems like a much better word to use as it implies the usage of something that won't eventually be depleted like Oil.


Reading "between the lines" of your many previous objections to EROEI, it seems that your central complaint is that EROEI analysis shows that ethanol from corn is not a good solution to declining crude oil supplies.

Are all your arguments arising from your apparent a priori support of corn ethanol?

EROEI also ignores unique characteristics like renew-ability.

No it doesn't. In fact it's central to Arguments supporting Renewables. When solar or wind is given an EROEI value, it is limited, but not because the wind and sun are limited in their long-term ability to repeatedly refill those batteries, but limited by the lifespan of the collecting equipment that will eventually have to be repaired and replaced, and hence is a cost/value equation that lets us know how far that investment will carry us. If we can build a more durable windmill, solar collector or tide/wave generator, etc.. then its EROEI will increase, and that information is of great value for us to know where to invest our efforts, money and energy.

Electricity is very useful and its low EROEI is compensated for by its utility.

Somebody correct me if I'm wrong, but I can't see how electricity has a low EROEI. It all depends on the system it is generated and used within. In many situations, I often use this very point as well, however. The AA batteries that are running your GPS or Flashlight or Walkie Talkie and get you alive out of the woods have an absolutely horrendous cost/KWH compared to the energy you take for granted in your grid-connected house.. but this is the EROEI of Battery Power, not 'electricity'. But if that speaks to anything, it is that we are still enjoying just ludicrously underpriced energy. As the availability of those batteries and that power that can be used remotely gets costlier and ever more precious, the EROEI of the sources of that electricity will become clearer, and the EROEI winners will have the advantage.

Electricity does not have an EROEI. It has a conversion efficiency, utilizing some other primary energy source that does have an EROEI (e.g. coal, wind, hydro). X/Practical has ignored this fact for several years. He is not alone.

That's quite a subtle point Nate - EROEI vs conversion efficiency – which you're going to have to explain to me.

If electricity does not have an EROEI at all, I presume corn ethanol and gasoline don't either, they just have conversion efficiency from the primary source like electricity does?

If coal has an EROEI of (for sake of argument) 100:1, then coal fired electricity has an EROEI of around 30:1. 30 times as many kWh of electrical energy out of the power station than went into the production and transportation of the coal.

Chris - it is a subtle and often confusing point, but an important one. I wrote about it in The Energy Return on Time

In the above graphic "E" is the actual energy consumed (by humans). Our entire energy supply snafu can be simplified into X (the energy), Y, the efficiency of harnessing it, and Z, the efficiency of using it. EROEI is the composite of X and Y. If we cut X (the energy) in half, we can still arrive at the same E by doubling either Y (the efficiency/technology through which we harness the energy) or Z, (the efficiency with which we use the energy).

EROI is strictly a measure of energy and its 'harvesting' costs in energy terms, not the efficiency of its use or it's transformation to another energy vehicle. For example, coal, of various qualities sits in the ground and is basically free to whoever buys the rights to it. Then some energy is spent to access it. Once this coal is procured out of the ground at a particular energy return, the decision, and subsequent efficiency loss to turn it into electricity or Fischer-Tropsch diesel, are both part of Z, the consumption whims of society. Each energy technology (e.g. in situ mining for tar sands) is a composite of X and Y in the above graphic - a combination of the density/BTU caliber of the energy source and how much energy it takes to procure it to a useful form.

Combining everything then, x times y for each energy technology (oil, coal, solar, nuclear, etc) gives us the net energy, (or energy surplus) for each of earths energy sources. Add all these together and we get X, which is the current planetary energy resource. Multiply them by Y, and we have how much energy is available for human use. X times Y changes over time, as the race between depletion of high quality stocks/flow sites versus better technology unfolds. The 'x' of the sun is enormous, but the usable E we get after harnessing and conversion costs is (so far) very tiny.

In the end it gets down to how much free energy flow we have access to -coal, hydro, oil, nat gas are all ecosystem services - energy sources that nature (either historic or current) has provided. Can we combine technology with current ecosystem flow rates to make up for (surpass?) the free (but declining) flow rates from fossil fuels without large environmental externalities? I hope so...

Isn't this just a question of EROEI system boundaries?

If EROEI were to be used as one of the criteria for making an individual energy generation (or saving) investment decision, in the absence of an agreed system of "energy accountancy", we can't do much more make a pragmatic, case-by-case decision about where to draw the boundaries. For example, if we were comparing a tidal barrage vs. an off-shore wind turbine farm vs. lots of micro-generated wind and PV - all notionally delivering the same gross energy, it would make sense to define the output boundary as electricity delivered to the premises of the consumer. If the electricity was notionally going to be used to charge private electric vehicles and you were comparing this with some form of liquid fuel, you could define the boundary as the number of vehicle miles delivered. Neither of these examples would address Z but, given that electricity and energy for transport can be used for so very many different purposes, it becomes very difficult to include the Z factor in an option appraisal for an energy generation investment decision. Not very satisfactory. Maybe you have to accept that delivered electricity is a key milestone in the journey from X to E. Once you have done your X to Y EROEI, you could do additional Z to E EROEI analyses to identify which are the best ways to use the delivered electricity to get the most energy services.

A Z to E type EROEI analysis could look compare the relative benefits of different amounts and types of insulation. But most of the Z to E analyses would consider the relative efficiencies with which we use the energy delivered at Y. For example, the energy used for one person to travel between London and Paris by Eurostar vs. car/boat vs. plane. This wouldn't be an EROEI analysis though, would it?

Hope all that makes some sense!


You left out the "PP" factor.

PP is the profitability potential.

If we humans can make a large "profit" on in E (the used energy) in its current form, then we will maximize X (because it's most profitable to do so) and not worry too much about trying to increase Y or Z because the latter steps appear to be too "costly". They appear to damage the "bottom line".

Stated more mathematically, we have eROeI times Profit returned on Energy used (pROeU).

Divide that by cost of energy invested and you get to the all important $ROI number.

Solar PV panels convert sunlight to electricity with a certain efficiency. All other things being equal the solar panel with the highest conversion efficiency is the most cost effective. However, it is rarely the case that "all other things are equal", so that conversion efficiency is only one factor to be considered in evaluating the relative economic value of different solar electricity options. Without a doubt if you put a solar electric panel on your roof which has zero efficiency (i.e. it produces no electricity) you will have wasted production resources in producing and installing it, but this statement does not reveal any profound truth about the economics of solar energy production.

Now consider the effect of energy consumption during the solar panel production process. The effect of this energy consumption is to effectively reduce the efficiency with which sunlight is converted into electricity. That is over the lifetime of the solar panel some fraction of the energy produced by the panel has to be used to produce a replacement panel, and so is not available for producing useful goods and services (remember that energy is means to end and not an end in itself). If you install a 20% efficient solar panel and 25% of its expected lifetime output energy was consumed during manufacturing and installation, then the solar panel effectively harvests only 15% of the solar energy with respect to providing useful goods and services. Again all other things being equal the solar panel with the highest effective efficiency will provide the best economic value. But if "all other things" are not equal then energy balance alone is insufficient to understand the economics of energy production. For example, if you had two different solar energy sources providing the same amount of net energy, one of which required that 50% of your labor force had to be employed full time in the energy producing sector, and the second of which required that only 5% of your labor force had to be employed in the energy producing sector then the two energy sources are not economically equal.

It is labor gain, land gain, fresh water gain which matter. These gains are reduced by the fact the input energy has to be subtracted from the output energy if you want to run your economy on ongoing basis. But you cannot analyze the economics of energy production without taking account of the cost of all of the necessary inputs.

As far as PV is concerned, you missed one of the major factors in the equation which is durability, or 'Lifetime Watt/hours' that a panel will produce. An NREL paper that is a little old at this point has found that 3 of the common technologies of PV Panel can replace their Embodied (Total Manufacturing/Materials) Energy in 1.5 to 3 years IIRC, while the panels are routinely rated for a 25-30 year lifespan at within I think 90% of their stated wattage. This already reaps a net of some 80%+ of the energy required to produce the panel, or an EROEI of some 5:1, while you can see that this number is already a very fuzzy averaging.. still, the surplus is clear, whether or not it is 'enough' for our society. After those 30 years, the rampdown of that panel is still providing energy.. we just don't know how much more you'll get or for how long. Will thin-films last as long, longer?

One final factor will be the cost of producing a next-generation panel with the recycled PolySi that is being recaptured from old panels and other electronics. Is it better? and is it much better, or just a little better than mining and refining fresh Silicon?



Thanks for the comment, but I did not 'miss' the life time effect of PV panel energy production. I stated (emphasis added):

If you install a 20% efficient solar panel and 25% of its expected lifetime output energy was consumed during manufacturing and installation

The problem with lowering costs with long lifetimes is that the full cost benefit is only realized in long term steady state equilibrium when only worn out panels are being replaced. During a period of growth the cost is substantially enhanced over the long term equilibrium cost.

Sorry, must have missed it.. running through everything too fast today.


Then again, I still have to take issue with this formula you proposed.

The 20% efficiency of the panel is only it's relation to the ideal availability of a square meter of sunlight providing around 1kw of energy, which in that case would make it a 200watt panel. That 20% does not affect the panel's gross watts against those that were required to produce it, so your net yield is simply 'Actual lifetime KWH produced' minus 'KWH(equivalent)required to make the panel', and the amount of sunlight that spilled out of its cheeks and was lost while chewing (inherent inefficiency) has no place in that calculation.

If a panel generates the equiv. of its embodied energy in 1.5 years, and goes on to run at the same level of output for 30 total years, then the net yield is 95%, not 15%. Even IF it was a low efficiency panel, that just means it took up more area to do the same work than a higher efficiency one. It might cost more or less to make, as well.. but again is a different evaluation.

EDIT: Or to simply follow your original example, the 20% panel whose Embodied energy would take 25% of its productive life to recapture would yield a net of 75%, not 15%, as that 20% efficiency is Already deducted before the watts have emerged from the panel.. what we would be counting is actual watts produced, which this efficiency does not touch.


I did not claim that the effective efficiency that I defined was a sufficient or an ideal parameter for characterizing the economics of solar panels. I merely said that all other things being equal the solar panel with the highest such efficiency has the best economics. 'All other things being equal' in this case means equal non energy related costs of manufacturing and installing a square meter of solar cells with equal life times. I admit that this is an awkward normalization. I was using in this instance because I wanted to illustrate the absurdity of the frequently made statement that EROEI is an important parameter because EROEI=1 represents hard limit on possible energy production. It is of course true that an energy producing process that does not produce any energy is a economic loser. It represents a negative return on investment. The point being that return on investment in energy production cannot be analyzed without taking account of the cost of all inputs not just the input of energy.

If fact, properly speaking, under the assumption of the economic equivalence of all forms of energy (Yes, I know that this is a false assumption) which is generally the basis of EROEI calculations, an energy producing process with a positive energy balance has no energy cost. If the production process reproduces the input energy then there in no opportunity cost associated with dedicating that energy to the production of more energy. Running a low but positive energy balance process does not prevent a high energy balance process from running in parallel with it. However, the non-energy related costs (labor, land, fresh water, soil loss, pollution, etc.) of reproducing the input energy do have an opportunity which must be accounted for in analyzing return on investment in the energy process. Energy balance is important, but EROEI is a incorrect metric for analyzing return on investment in energy production even to zero'th order.

"X/Practical has ignored this fact for several years."

Yeah, I know. Just claw-sharpening, I guess.. and speaking to the lurkers. I don't expect X hears my points any more than I guess I can quite figure out how he gets to his conclusions...

I was originally going to write that 'Electricity simply doesn't have an EROEI'.. but took a different tack. Like Hydrogen, it is basically a carrier of energy, and it's the generation, transmission, storage and usage efficiencies that will determine the In to Out ratios.


I think of the EROEI criterion as being a bit like a speedometer in a car (where the speed is the net energy flow rate). Clearly we don't need a speedo to tell that the car is in motion but if we are on a journey across a largely featureless desert where we have decided we need to maintain a certain minimum speed, it is much harder to do it accurately without a speedometer. Obviously, we need to pay attention to other criteria too: fuel, tyre pressure, etc. And, we need to ask whether we really need to get to our destination as quickly as we'd assumed and, as you say, we need to sure we are not needlessly going round in circles. Meanwhile, most of the debate about the car journey amongst the passengers has focused on what we can do to improve the in-car entertainment system.

In the past we were able to use our progress across the landscape as a proxy for a speedometer. The high EROEI fossil fuel era has blunted our senses - making the landscape like a featureless desert. At the same time we have been accelerating, getting into a situation where sudden braking or swerving could seriously injure the car's occupants and wreck the car.

Maybe I'm stretching the analogy too far :)

Good job Adam!

I think EROEI is very important for two main reasons:

1. The economists claim that problems like peak oil will solve themselves because as the price of oil rises, high cost alternatives will become more attractive. EROEI explains that actually what will happen is the economy will contract and energy is consumed in production. Transition will not be easier, it will be harder. Low cost energy sources allow economic growth. High cost energy sources restrict it.

2. The rate of change in the economy (rate of growth or rate of transition from one type of energy source to another) depends on the net energy after wide boundary analysis. (Say for oil, the net after you subtract energy cost of oil production, refining, road building, car construction, etc. That net is the energy left over available to move people and goods around the society.

That net is also the amount left over to reinvest in new energy sources. Which is going to be much less than the total energy produced. As the average EROEI drops, the amount that can be invested will keep falling and the maximum rate of change will keep shrinking. The US WWII economy might have turned on a dime with 80:1 EROEI energy, but todays economy will have a much harder time.

Societies that wait for high energy prices to try to transition will have a much more difficult time (or possibly not have enough energy surplus to achieve a transition). The time to transition is when fossil energy sources are cheap!!! Nate makes this point in his post. We need high EROEI fossil sources to make the transition!

Neoclassical economics gives us exactly the wrong advice for energy sources. Thus the bind we are in over peak oil.

I think the EROEIs that really matter are primary high grade energy sources like electricity and liquid fuels. I'm not even sure that energy byproducts like district heating and distillers grains matter that much. I suggest we need high primary EROEI to create a diverse and vibrant economy. For example you might think that stockbrokers are parasites who will be forced into Amish lifestyles after the big powerdown. However I think the world would be more boring without the stock market.

Suppose the economy's 'spare fat' is (E-1)/E where E is the return for high grade energy. Then 'fat' is 98% for an E of 50 declining to zero when E is 1. The graph is the mirror image of Euan Mearns' energy descent curve for which he suggest the cliff starts around an E of 10. Others think society can function with an E of 1.5. Last time that happened I think was in the Neolithic era when people bred with their close relatives, ate weeds and their bellies carried giant tapeworms.

I'm saying that a world without high primary EROEI will be a miserable place.

well said.

I think the EROEIs that really matter are primary high grade energy sources like electricity and liquid fuels

Said differently, as long as our society is built around electricity and liquid fuels, sustained high EROEI of these technologies/sources is what matters. Alternatively, if somehow we were not reliant on these 2 energy quality vectors, but a portfolio of different ones, perhaps EROEI would matter less. Basically, not only does EROEI matter, but it also has to match up with existing infrastructure - otherwise you require even higher energy gain to make the transition.

This concept has been discussed six ways to Sunday here, and I get the sense that some few really get it, and others are either vehemently opposed or really don't grasp the significance. Today I read a decent paper in Energy Policy (L. Gagnon / Energy Policy 36 (2008) 3317–3322)(Thanks Sparaxis) titled 'Civilization and Energy Payback' all about these issues - the problem was that the paper basically treated energy profit as a 'new' concept, and ignored the invention, implementation and explanation of the wheel that took place in the 70's.

EROEI is so simple, believe me, everyone coherent here "gets it". What many of us don't get is why we should think its significant? Beyond a very simplistic tool for trending historical oil recovery, and perhaps when we might expect oil to become "uneconomical to recover" (in todays economy) it tells us nothing.

What's the EROEI of an in-situ coal gassification project?

Or an Optical Rectenna solar collector system operating at 96% efficiency made with a few grams per square meter of carbon, metal and plastic in an automated print-to-roll process? Four days ago INL announced sucessfully producing Optical Rectennas which can receive far Infrared. Remains only to reduce the feature size of the schottky diodes by a factor of 1000 to get rectennas working on the solar spectrum. At that point a lot of this doomer stuff will look just as silly to everyone as it does to me now. Sorry, but doomers hoping for the crashing down of all organization really turn me off, especially when they try to sell it unproven and unqustioned to the unsophisticated, as here.

Sure, oil is going away. PROVE anything from that. Convincing uneducated city people to go develop garden plots at the country cottage is not doing society any service.

Len - Is this you?

He is also sole inventor named on several patent applications currently pending, in the fields of synchronous motor and generator design and heat engine design

I for one would welcome a guest post on heat engine design. I (also for one), do not 'hope for a crashing down of organization' - I am hoping for quite the contrary, believe me. Regarding doom, by definition to mitigate and or adapt for a certain sociocultural systems collapse has to occur before its collapse and the current n=1 experiment of 6.8 billion on a finite sphere cannot be 'proven' until after the fact.

We're having a discussion here on what courses, if any, are viable.

And the part that people don't 'get' is the wide boundary part, as in how to get all the parts, labor and equipment for Rectennas around the world 'without oil' as you say.

Yes EROEI is significant, even if we quibble about the details. I'm reminded of some quote about having to answer to reality whether or not you acknowledge its existence. The amount of denialism here is discouraging.

As far as peak oil is concerned the only relevant criteria is oil returned from oil used to produce that oil. Its a big issue where more and more oil is being used to recover each new barrel of oil. You may be able to extend this to include both oil and gas, but not to energy in general unless it can be demonstrated that the world is approaching peak energy. Thus the electrical energy used to pump oil and gas should not be as critical as the diesel used for drilling or shipping.
Since wind, nuclear and solar energy have a relatively high EROEI but more importantly the inputs for creating more wind, nuclear and solar infrastructure are not high users of oil or natural gas, its difficult to see why European or N American countries cannot continue to expand total energy use, provided they can replace most oil and gas used in transport with other energy sources, especially non FF sources. We have working EV's now, and we have had very workable coal fired steam powered vehicles and trains in the past. A switch away from oil based transportation doesn't require any more infrastructure than is being created by vehicle replacement. The developed economies have massive electricity production and distribution infrastructure, much more than is really required for a very high standard of living. Part of the reason is that electricity is use has several orders of magnitude of "value". Thus the first 100watts per household to power a TV or refrigerator is "worth" much more than the next 1000watts that powers lights and most appliances, while the next 1-2 Kwatts is used for much lower value uses such as heating , cooling, outside lighting, pool pumps.

Enthusiasts for wind and solar electricity usually cite high EROEIs yet I believe unbacked systems may never be able to run conventional economies. Further confusion arises when wind and solar calculations talk of embodied energy, plant lifetime and capacity factors. Yet these variables are not mentioned when discussing the EROEI of corn ethanol for example.

We need a 'one size fits all' approach to working out the EROEI of wind or solar when backed up by say combined cycle gas plant. For example when a new 200 MW nameplate windfarm with 25% capacity factor is balanced by a pre-existing 500 MW gas plant with an earlier planned decommissioning date. We also need to know the embodied energy of the gas plant and the net energy of the gas, which of course will decline over time. That should also enable a calculation of the paypack period for the hybrid system.

Without doing the cumbersome calculations the backed-up system EREOI should work out as a weighted average of the two. Thus the system average could be nearer say 8 than 20 for wind alone. I also think if new or upgraded transmission line is required that should be included in the energy debt that needs to be recovered. This is why I agree with Kunstler and others that renewables won't get there medium term.

Correct they won't "save" us. But they are critical to keep smaller high tech enclaves functioning.
Plenty of places have enough coal,nuclear,hydro power to produce plenty of windmills and even NG or coal fired plants you don't have to assume right off the bat that the embodied energy needs to be included. We will even from hydro alone have enough manufacturing capacity to make PV cells and Windmills for growth.

Or more realistically regrowth. If you quit trying to save everyone and focus on saving a few then it becomes obvious that wind farms in say Texas and Oklahoma coupled with the NG reserves and agricultural wealth of the region mean that the southern plain states and lower Mississippi region will probably do just fine.

The key is that the region needs to aggressively build out its wind power systems and build out electric rail yesterday. It has enough resources to do it "to late" but if it starts early the better it will be.

This solution needs to be done on a regional basis with regions doing everything they can to become renewable.

Its really just ELP (Economize Localize Produce) on a slightly larger scale but it can be done on any scale from the community level on up.

ELP in my opinion works well from the level of small communities of a few thousand on up. It can be practiced at the individual level of course and this is needed but the real power comes when a community of say 1000 are 100% renewable. This can be replicated rapidly.

Smart communities will recognize that ELP and my enclave concept are simply the same idea and they will work to become potential enclaves. By making a big head start in the renewable energy area these areas gain stability in the future ensuring that the limited amounts of resources available as time goes on are probably going to be spent expanding existing renewable infrastructure in stable regions.

Communities that do nothing will be left by the wayside.

So long Los Angles.

So long Los Angles.

This may be somewhat off topic, however does anyone have any thoughts on how the future economic realities may or may not affect the good fortune of the so called rich and famous?

Probably not as badly as you'd like.

I would add sustainability to the list of criterion for selecting practicality of energy systems.
And not just sustainability in the short term. Few hundred years at best when considering fossil fuels.
I mean in the long term as in thousands of years. And when you think of energy systems with this in mind the ones we are currently using are just not viable.
Coal. Oil. Nuclear fission. Natural Gas. All fail this test.
Even the basic economic imperative for eternal growth fails this test.

We live in interesting times.
Interesting times as in the old Chinese curse.

I mean in the long term as in thousands of years. And when you think of energy systems with this in mind the ones we are currently using are just not viable.
Coal. Oil. Nuclear fission. Natural Gas. All fail this test.

Coal, oil, and natural gas I'll give you, but when you can generate 1 GW/year from 1 tonne of uranium or thorium and theres 160 trillion tonnes of this in the crust, if we used nuclear power at 1000 times current global energy consumption it would last some 16 million years.

That sounds long term to me.

What about nuclear waste?
It has to be stored permanently. You can't just dump it somewhere.
Also once the uranium is used it isn't regenerated. It is finite.

Only a very small percentage of that uranium and thorium is worth the extraction cost EROEI-wise. Also the uranium ore in the ground has to be processed and only a very small percentage of it is actually used as fuel. It is a much more complicated process than the relatively simple ones used in the petrochemical industry.

There is also a lot of discussion about the adverse effects of uranium mining on the environment. Nobody wants a uranium mine on their backyard.

The price of uranium fuel has skyrocketed along with all other commodities recently. 1000% in the last seven years.
This could be an indication of uranium price's link to that of oil. Or it could be an indication of the difficulty of mining uranium. Either way the price is rising.

The price of uranium fuel has skyrocketed along with all other commodities recently.

And, as with many other commodities, has since fallen. It's now about $65, down from over $100 in 2007.

Compare to $10-15 in the 90s. It's still up quite a bit - triple, inflation-adjusted - but it's hardly running away at the moment.

Considering the topic of this thread, use EROEI not price.

EROEI of nuclear is probably less than 9. I'd recommend Paul Denholm's work on the lifecycle energy costs of nuclear fission. He's done a great job on determining what went wrong with other lifecycle analisis that gave extreme values. Very objective piece. EROEI of roughly 2 to 9 was calculated using reasonable assumptions.

Dezakin's assertion that crustal abundance is a good indicator for resource abundance ignores technical issues as well as EROEI issues. Most likely, the only hope for LWR and HWR once through cycles is sea water uranium extraction. But the engineering issues and scalability are unclear at this point.

I would just like to take a moment to say that from Adam Dadeby forward this has been a damn good string of posts!

I have had my issues with the way in which EROEI has been calculated by some in the past (mainly centering around the issue of sunk costs and sunken energy, i.e. money and energy already contained in existing infrastructure)and in the way in which carbon is counted (does an energy system that releases huge amounts of carbon both in the creation of the original capital machinery AND in the production of energy day to day get counted in the same way as the renewables which do indeed release carbon in the creation of the original capital machinery but then produce energy without expelling carbon on a day to day basis?).

But many of these issues were well touched upon in the string of post or covered or at least acknowledged in the original post by Adam as well as later posts in the string by Nate Hagens in particular. I would say more, but there is still a lot of ideas to review in the posts above...damn good string of posts! :-)

Good stuff!

Can I ask how the EROEI of home insulation fits in. It would seem to me that insulating the UK housing stock has a very good EROEI.

What for example is the overall EROEI of one of the superinsulated houses at CAT powered by wind compared to a 'normal leaky' British house powered by a gas infrastructure chasing after declining gas reserves?

Also we need to consider each 'energy service' separately. The EROEI for lighting has declined dramatically over the centuries, so we can easily live in a well lit society without expending a lot of energy. See 'Seven Centuries of Energy Services: The Price and
Use of Light in the United Kingdom (1300-2000)

Roger Fouquet's new (expensive!) book Heat, Power and Light

deals with these energy quantities in society over the period 1300-2000 expressed in terms of 'real price' (i.e related to the cost of other things).

It would be very useful to rework this data (somehow!) into EROEI terms. Then it would be possible to compare the energy sustainability of various pre-oil societies in the past in both EROEI and monetary terms. The subsistance economy of the 14th century, the better years of Queen Elizabeth 1 in the 16th century and the early industrial years of the late 18th century might be good things to focus on.

What I want to know is - if we will be back to the Stone Age by 2030, will we be going back through the 19th Century first? Might we be stopping off for a little Shakespeare en route? (I'll be taking my wind-up LED torch with me).


Bob - I think its important to draw a distinction between the energy efficiency of energy production and energy consumption. THEY ARE EQUALLY IMPORTANT - as you know. It seems that many politicians and policy makers - hell even some academics, understand the importance of energy efficiency at energy consumption stages. Even Andris Piebalgs understands that. But very very few understand the importance of energy efficiency of energy production - which is eroei.

Time travels in only one direction (deliberate provocation) so the future will be very different to the past. Whilst many are starving to death in cold and damp squalor in Manchester (whilst blasting off Qatari gas into outer space, subsidised by the UK governemnt), others will be downloading music from iTunes and reading the latest PO book by the light of their wind up LED torch, searching for food bargains on the internet.

Thanks Bob.

I haven't read much about this but it is a topic of keen interest to students on my MSc course. It is very relevant to the UK, because so much of our housing stock is poorly insulated; so there's a big job to do.

Paul Mobbs, author of Energy Beyond Oil, give a talk last year (from memory) where he described an analysis he did of the energy payback of different thicknesses of loft insulation. He assumed that the building in question had a lifetime of 45 years* and made assumptions about the average heated temperature (16C*), the average external temperature (11C*) and the number of heating days per year. He looked at an insulating material with a specific embodied energy (can't remember what) that was obtained and manufactured locally. He calculated that insulation thicker than around 250mm would not pay for itself in energy terms within the 45 years. He contrasted this with similar calculation with a higher average heated temperature.

His point was that the "EROEI" of using one's fingers to turn the thermostat dial down a few degrees was massively more favourable than the EROEI of extra insulation (beyond ca. 250mm in his example). Of course, if the building stands for another 90 years, rather than 45, a not unreasonable assumption, you could double your loft insulation before reaching energy break-even, all other factors being equal.

I believe that the energy or (more likely) carbon cost of retro-fitting vs. building new has been analysed (I don't have any links though - sorry). There is a percentage of buildings that it would be better to demolish (re-using materials as much as possible) rather than retrofit.

Your link to the TU Berlin paper looks interesting. The point it makes about energy services is, as has been discussed here before, key in terms of setting the "energy out" EROEI analysis system boundary.

* - all these figures are from memory, so apologies to Paul if he's reading this.

Adam - I'm pretty sure we need as separate term for energy conservation measures:

energy conserved on energy invested


As your example shows this requires a time component and will vary according to circumstance. Loft insulation in Houston will have rather different ecoei to loft insulation in Manchester.

You're (almost) on to something! ;)

We use energy to 1. burn it up instantaneously or make things, which amounts to a kind of energy storage.

Right now we predominately burn it for our immediate use(transport, lights, heat, AC) rather than for machines--that improve the system EROEI,
housing, sustainability, renewable wind/solar(which never get burned up), etc. These are two different uses of energy.

The EROEI concept is really an ass-backwards version of the economic "law of diminishing returns", where (differential)marginal energy output per energy unit input(MEROEI) is equal to EROEI-1(which can be shown by a simple geometric figure).

What is interesting is that as long as the energy production is net energy positive we are on an upward slope and with an EROEI of 2 or more we are sharply upward. And of course there is the spectre of negative net energy of EROEIs < 1 and if all our energy were just burning fuel we would soon be at this point once coal goes.

The EROEI picture is also missing depletion which is externally reducing the average energy output and the argument the EROEI-ers should make is that EROEI of today's energy will not enable us to maintain the same level of energy production.(Why they don't phrase it like that is a mystery to me).

The proportion of energy invested in machinery,efficiency,etc. which is a form of stored energy will last even under declining EROEIs, while energy instantly consumed will be more sensitive to declining EROEIs.

ECOEI rolls off the tongue quite well. How did we cope before the acronym? :)

Don't all EROEI analyses have a time component? In our micro vs. large-scale onshore vs. off-shore wind turbine comparison (referred to elsewhere on this page) - our assumptions of the expected lifetime of the components had a huge effect on the relative EROEI figures for each of the three options.

Definitely agree that average external temperature would have a big impact on the energy payback period.


It all depends on the type of insulation. Cellulose insulation from recycled paper takes very little energy to produce relative to fiberglass. Making fiberglass requires high temperatures to produce the glass and to draw it into fibers.

Hi Adam,

Good post. Your list of factors to consider when appraising energy sources looks very similar to mine! A couple of refinements I would consider adding though:

'Waste' products - what are the by-products of the process. This could come under your environmental impacts category, but the by-products could theoretically be terribly useful and the environmental impacts positive.

Technical understanding - This would include things like having experienced operators for the energy production devices. It is debatable whether this is a physical factor, but examples like energy from controlled nuclear fusion or free energy devices seem to come out fairly well on your listed criteria. The only problem being that we can't do them! This could be considered a factor relating to a few of your categories, but is worth a mention somewhere I'd say, especially considering how many people sniff at peak oil on the basis that fusion will render it all irrelevant.

"You can’t solve today’s energy problems with tomorrow’s new technologies" – Jeddah Conference attendee


Thanks Shaun,

Re the "waste" products, in a few cases this certainly could be EROEI positive. In an outline analysis of three scenarios for deploying wind turbines that we undertook on my MSc, we found that the embodied energy of the turbine components would at the least make a significant contribution to the energy costs of decommissioning. This would be especially true of any component that contains high embodied energy materials that could be re-used without much additional energy input. As you say, the non-energy impacts would probably fit under the "environmental impacts category", unless those impacts could successfully be mitigated with an additional energy expenditure, in which case you could choose to include them in the EROEI calculation.

Certainly it is true that technical expertise is not in itself a physical resource constraint, it is a human resource constraint. However, an EROEI analysis could theoretically allocate energy costs to the upbringing, education and motivation of those technical personnel, and indeed the non-technicians that are also needed to make an energy endeavour function - this was something that Nate Hagens explored in a TOD piece some time ago.

In the accountancy world there are agreed rules or conventions about how to account for costs in financial ROI (return on investment) analyses - the financial 'cousin' of the manufacture & installation part of an EROEI analysis. Likewise the direct and indirect operational energy costs incurred during the working lifetime of an energy source are akin to the financial direct and indirect revenue costs that financial accountants/managers quantify and allocate between departments and functions of large organisations. Again, in the accountancy world, rules and conventions exist so that meaningful, comparative data is available to allow auditors, managers and investors to make assessments about the organisation's financial viability. Although the financial accounts system is not perfect, it is a better developed tool than exists in the EROEI world, or indeed in the world of carbon accountancy (although I have to admit that I know less about how well developed carbon costing is).

My sense is that developing similar rules and conventions for the EROEI world could be a daunting task, depending on the level of detail those rules attempted to codify.

To answer the title question, while very important, no, EROEI is not the most important criteria.

I believe the sustainability of a energy source is the most important criteria, else coal might be the 'winner' of the EROEI question. While reducing our energy demand should be an equally important main thrust, we need energy sources that will not force us to revisit peaking scenarios. Note that impacts on scarce water resources does not enter into the EROEI equation, and would be factors for tar sands, oil shale, biofuels, nuclear (cooling), hydro, and others.

I would also split the "Environmental" criteria into;

1. Air pollution (health, agriculture impacts)
2. Water pollution (to also include thermal gradients from cooling water)
3. Climate disruption
4. Land degradation (mountaintop removal, mine discharge, clearcutting, etc)

Should EROEI be the most important criterion our society uses to decide how it meets its energy needs?

Adam, short answer is yes. The problem we have with society, economics and science today is that the vast number of actors do not realise or understand this. It never (seemed) to matter in the past so why should it suddenly matter now?

The answer is in this chart that I've posted many times before. I sometimes think of net energy in terms of the number of people in society engaged in energy production. If eroei = 1 then everyone is onvolved in energy production and society collapses. If the eroei is 100, then 1 person is involved in energy production and 99 are doing other stuff - farming, manufacturing, sick, retired, teaching, blogging etc.

Now it makes insignificant difference to society if we have 2 energy workers and 98 folks doing other stuff (eroei = 50) and similarly 4 folks getting energy and 96 doing other stuff (eroei = 25). 8 getting energy and 92 doing other stuff (eroei = 12.5) and we're beginning to struggle to find enough folks who are trained at getting energy and to build the tools for them to work (deep water drill ships). By the time we get to 16 getting energy and 84 doing other stuff (eroei = 6.25) we are on the skids since the 84 are not enough to provide for the 16, especially if you remove 50% of their number which may be children, old folks, disabled. You're left with 16 energy workers, and 42 others providing everything else - its on the border of viability.

One reason I believe we will see a massive cull of elderly, sick and young at some point. Society can only carry them with all the free energy provided by high eroei energy sources.

Back to your question - the answer is yes. Energy will become the new global currency. eroei greater than 20 = Swiss Franks and eroei less than 3 = Zimbabwian dollars.

To turn to Nate's question:

I think one way to approach this problem is to model energy amortisation. To model global energy at any point we need to be able to compare free energy with that which we are still paying for.

Back in the 1980s the UK had 32 producing fields - but at that time some of these fields were still paying for their construction energy costs. Now we have more like 200 fields- and the energy costs on most have been paid. The aggregation of free energy with time I think is an important concept - made more complicated by the energy maintenance costs - which need to be deducted.

It is vitally important at this time that a sufficient amount of this free energy is prioritised for construction of new high eroei energy sources - instaed of flying folks to Spain to catch skin cancer and subsidising farmers to grow maize to blast off in a traffic jam.

I used to be optimistic about the solutions to this crisis but am growing increasingly pessimistic about Man's ability to grasp the opportunities.

Is yeast smarter than Man? At least yeast gets the pleasure of drowning in a sea of alcohol. If I was yeast I would move my family to Bordeaux.

Euan, in the UK (and the US) we are in a similar situation with 'free energy' from nuclear.
In this case the installed base is being run down, and new ones not built.
Regardless of the arguments of how high or low EROI is on nuclear power, the main reason why it is not higher is that it has not been economically viable.
Fast breeder, molten salt reactors or just re-processing would lift the EROI out of sight.
Instead of building more reactors in the UK we are burning increasing amounts of natural gas, which is being extracted at ever lower EROI.

Euan states: I believe we will see a massive cull of elderly, sick and young at some point.

Good Luck with that. As someone of median age (40ish) I expect the young will take everyone else out..

What is you WAG about where we stand on the cliff today? I'm guessing 97 but as you say there is a past endowment of development and "stored energy" which really needs to be accounted for.

We should assume that every drill bit, pipe, widget, dumper truck, ship etc needs to be built today, before we calculate project costs. Also training, food, childcare - everything at 2008 costs, to really see..

I have always felt we understate the embedded energy from decades before [when EROEI was higher] in all aspects of society - and therefore miss how dangerously close we are to the edge

Fixed vs marginal high EROEI is perhaps a good way to frame/analyze this problem. As the % of fixed high EROEI declines, we are left with an increasing % of marginal, lower EROEI sources.

Help with quantifying this would be welcomed.

How is the eroei of energy invested accounted for in eroei calculations?

In high eroei systems it matters a lot less if the energy used has low eroei. For example, using corn ethanol to drill a well on Ghawar is arguably OK.

Using corn ethanol to produce the tar sands arguably bat shit crazy.

I figure that it takes about 4 people to produce a million gallons of what is, admittedly, the least efficient type of ethanol - corn ethanol. A well-equipped corn farmer can raise enough corn, with, maybe, just a little part-time help, to produce 700,000 gallons of ethanol. An efficient corn-to-ethanol refinery can produce 100,000,000 million gpy with between 50, and 60 employees.

Let's assume that the more efficient ethanol processes (muni waste, forestry waste, energy crops, bacterium, etc) won't have an appreciably worse labor/gallon ratio. That means that we would have to put approx. 560,000 people (out of 300 Million) to work to produce all 280 Billion Gallons of biofuels needed to replace 100% of our oil usage.

That's what? 560,000/300 Million? Approx. Two Tenths of One Percent?

I think we can make it.

This is the point!! You are forgetting that ethanol (corn and other) are subsidized by high EROI fossil fuels - you could NOT produce ethanol with those ratios without plentiful nat gas, diesel, coal and infrastructure which has been built on high EROI fuel. Not to mention environmental costs.

If we stopped oil production right now, how much ethanol could we produce annually and how many people could live on the planet under the current system?

A Bunch.

The only fossil fuel input that's absolutely Necessary for corn ethanol is "Nat Gas for Fertilizer Production." For Muni Waste, or Energy Crops even that is not necessary (admittedly, some energy crops like switch grass, and sweet sorghum will do better with some nitrogen fertilizer.

Look, nat gas is required for the production of gasoline/diesel, also. I'm not saying there won't be challenges in the future. There, surely, will be no matter the course we take. My point was just about the Number of People that will be required in the production of biofuels.

I imagine similar numbers would apply if we were discussing Solar, Wind, or many of the Other Renewables.

This refinery will use No Fossil Fuels, whatsoever; and, the feedstock is Free.

I'll guarantee you, within 5 years every landfill in the U.S. will have an ethanol plant, or one under construction. That'll be between 1.5, and 2 million barrels/day, right there.

Hi Folks,

We may be in deep trouble.

This thesis has two very significant points which may be inescapable.

A)Empire demise has the following mainfactors.

1--Resource depletion;
2--Climate change;
3--Hostile neighbours;
4--Friendly neighbours.

B)As population densities and specialization increase, the energy systems that sustain them have to deliver more net energy. In doing so, they allow the population to grow further, hence a still greater percentage of the population (have to) become “non-productive” specialists.

At this point in history the US is well down on the main resource depletion. The Climate certainly appears to be changing. In the Global Village the US has about 2 Billion hostile neighbours wishing them ill. NAFTA nearly gave them friendly neighbours until they abused the system.

I would say that the US has more lobyists, advisors and politicians than production workers. I suspect that the "non-productive workers" advising on how to be more productive is growing on the square of the decline of production.

If we Black-Box the current US it has enormous inputs coming in, lots of gerbils running on the treadmill and very little coming out.

Sadly the UK is probably worse and the EU putting more gerbils on the treadmill every day as their production drops.


"lots of gerbils running on the treadmill and very little coming out."

Sounds like "life" to me. And in the long run, we're all dead..

Thank you. All.

This discussion about EROEI sounds very much like Olduvai theory.
Declining net energy vs. declining energy per capita.

As some have already said, it is (next to) impossible to plot EROEI in a graph like one would plot oilproduction from a certain field.
Still it is an easy to understand concept.

I always recommend reading this:

I think a lot of folks are not paying enough attention to stories like this one.

The "Gene-Splicers" are liable to change the future in ways that we're having a hard time imagining, right now.

Not at all.

There are dozens of limiting factors to various types of energy technology, and you need to make sure that NONE of them are prohibitive towards your plan. Any of them can potentially overrule the others.

A platinum-based photovoltaic array is going nowhere because of expense & total natural abundance.

Using runaway nuclear fission chain reactions (explosions) to generate power is certainly theoretically possible, has been explored, and is likely viable from an EROEI viewpoint - that doesn't mean anyone will allow the radioactive consequences.

Damming up every river in the world works just fine from an EROEI perspective, but the environmental and human problems associated with it are prohibitively difficult to smooth over.

Using underground coal fires and dense "geothermic" plumbing would be a dirt cheap way of harvesting coal seams - but being nearly impossible to control and environmentally devastating, noone's actively pursuing this.

You can explain away the above by assigning energy-prices to every consequence and factoring them in, but that's ultimately a semantic argument, and there are elements (say, the value of a working ecosystem) that will always be arbitrarily decided. An energy theory of value isn't quite the reality of our world, though no doubt we're moving closer. Is EROIE a necessary factor in energy development? Yes. Is it an important factor? Yes. Is it the important factor? That all depends.

I don't know why we have to decide if EROEI is the most important criterion, if it's a useful criterion, which I think it is. I'm responding primarily to the idea that money costs are an adequate surrogate for energy efficiency calculations. I was an energy industry executive and deeply involved in the last oil shale boom that ended in 1982 and am following the current boomlet as a casual observer.

I'm not at all sure that money costs are an adequate surrogate for energy efficiency, and if I were making energy investment decisions today I would like to know how the EROEI varies from project to project. One of the problems we had in financing an oil shale project was showing a large enough ROI. Typically, we had very solid capex and opex estimates as of a certain date, but the product price was a bit too low to get the project over the hurdle. Then global crude prices would rise and off we'd go--only to find out that our costs had risen by much more than we had expected, making the ROI marginal again. In retrospect, I have suspected that a large part of the cost increases was due to energy inputs embedded in the costs. If we had had the EROEI data and if they had been unfavorable, that would--or at least should--have suggested caution about the ROI analysis.

I suspect a similar thing is going on with Shell's oil shale process in Colorado. Shell uses resistance heating to retort the oil shale in situ. How efficient is that? Is this a complex way to convert Powder River coal into electricity and then into liquids? If so, how does the process compare with other coal-to-liquids processes, and if the comparison is unfavorable, would it be prudent for Shell to proceed with oil shale?

The potential energy in ethanol from corn contains, according to my reading, 75-80% fossil fuel inputs with only 20-25% being renewable solar inputs. This seems very inefficient--and undeserving of public subsidies--if the goal is to reduce fossil fuel consumption.

Final point: Not all forms of energy are equally valuable/useful. That's why, for example, there are persistent long-term differentials between the prices of oil, gas, and coal. So, putting aside greenhouse gas issues, there is value to be derived from converting coal to transportation fuels. This is also a reason why a simple EROEI analysis is not all one would want to know.

Thank you for your comments.

Then global crude prices would rise and off we'd go--only to find out that our costs had risen by much more than we had expected, making the ROI marginal again. In retrospect, I have suspected that a large part of the cost increases was due to energy inputs embedded in the costs.

This is the law of receding horizons seen with low energy gain systems. In addition to tar sands (which actually have a decent positive return excluding environmental costs, corn ethanol fits this description precisely. The EROEI of ethanol has changed little in past 3 years, when pressure to 'scale' started in political circles ending with our current mandate. But higher corn, natural gas and corn prices now make ethanol break even - and a loser if the subsidies are removed.

Hence your experience and comments are spot on. Net energy analysis allows for cheap demise of low energy gain projects, before 3 or 4 years pass and the actual financial results come in.

Roger, you might want to check out Corn Plus, in Winnebago, Mn. Several refineries are starting to adopt their "fluidized bed gassification" process. They are using about 17,000 btus of Nat Gas per gallon of ethanol. Add in 5,000, or so, of nat gas in the fertilizer, and seed drying, and you're looking at about 70% Solar, and 30% fossil fuels.

Add in the fact that a gallon of ethanol in a properly tuned (compressed) engine can deliver the same performance as 116,000 btus of gasoline, and the equation changes, again. Then, add in the unit to extract the 20,000 btus of corn oil, and it improves even more.

Next comes Poet's Liberty Project that fractionates the kernel, and processes the cobs for cellulosic, and process heat, and it gets even better.

In short, greater efficiencies are arriving, rapidly in the corn ethanol process. They can be hard to keep up with.

regards, Kum


You are clutching at straws

I think that even if they found some magic formula to increase the EROI for ethanol, it will not make any difference to our problem.

Our problem is more basic than ethanol, or even "fuel". We will keep expanding and squander whatever we lay our hands on. The only negotiable factor is the time in which we will squander it.

When China, India, and Asia start eating middle-class quantities of meat there will not even be enough corn for those at EROI's at about 10:1, in the wrong direction.

The coming exponential billions of fueled transportation devices will sink the planet no matter what they run on.

Our species gets one more chance to reverse its folly of our modern way of living, and soon, or I think it is game over.


I think this is an excellent concept, and should be followed up in the context of different large economies. To offer an example, in an economy like China's, the vast majority of the population still lives a close-to-subsistence lifestyle, and therefore has few economic expectations. Many are quite accustomed to living in a relatively marginal EROEI situation. At the same time, China's alternative energy (fossil and bio) industries are ramping up considerably. China has the benefit of cash-on-hand and little existing infrastructure (in relative terms). It also has the benefit of an efficiency-focused mode of development in alternative energy. Recent plans for coal-to-liquid fuel facilities (search for a presentation in August 2007 by Yuzhou Zhang at Shenhua), suggest high use of by products, co-products and waste heat that could result in relatively high EROEI for that kind of energy system (with the recognition that coal is also limited, and that CCS is still an unproven technology).

From a waste-to-energy perspective, China doesn't have any shortage of low-cost people who are perfectly willing to manually sort and process all the gross things that we in the West would only let fresh immigrants do.

Curiously, I think China is in a relatively good position: most people are satified with a marginal quality of life, people are generally open to suggestion from government on how they should live their lives (I know this is seen as immoral by many, but at the same time it may indeed be a boon to energy efficiency, sorry to force you into the grey ethical area), technology is evolving to a state where China could in the near future supply a good portion of its own energy domestically.

Curiously, I think China will begin providing renewable energy solutions globally in the near future, both from an innovation standpoint and from a production standpoint. Let's hope the West isn't too proud too cooperate, and let's hope China will continue to accept the West's bankrupt currency...

How's that for some optimism? Now excuse me while I run out to buy my remote farmland...

if all the most tenuous, indirect energy costs of our global energy system were to be included in an EROEI analysis, the global energy system would have an EROEI of 1:1.

There's a difference between energy consumption and energy cost. If a given btu of energy is not necessary for creating more energy, then it cannot reasonably be counted as a cost; accordingly, the world energy system will have an EROEI of much better than 1:1.

An example: an oil rig worker enjoys both ballet and food, and spends energy to attain both of them. If the energy were not available to provide him with ballet, he would still get his work done, so energy spent on ballet is not part of the cost of the energy he produces. He would not be able to get his work done without food, though, so (some fraction of) the energy spent on food is a cost of the energy he produces.

A key distinction, though, is that 100% of his salary does count as a monetary cost, as the oil company has no say over how he spends it. That means an energy source can potentially have poor EROEI but great ROI (high energy but low labour inputs) or vice versa. For that reason, among others, ROI rather than EROEI will continue to be the key factor in deciding on energy projects for the forseeable future.

As an aside, it might be more useful to look at exergy rather than simply raw energy. Spending 3btu of coal to get 1btu of electricity is widely seen as a good trade, but spending 3btu of electricity to get 1btu of coal would be terrible. Some measure of energy quality needs to be taken into account.


This is a great point and probably crucial to our overall understanding of the situation:

You said that an activity can have a low EROEI but a high ROI and thus it is still done.

A little bit of analysis shows that ultimately though we will still be able to do this (swap ROI for EROEI) it will depend on the provider of funds to cover the ROI being generated from a net energy positive activity in the first place.

(that was probably complicated but here's an example)
Take the Tar Sands for example. Right now I believe the EOREI is somewhere around 8:1 or so with the energy inputs being nat gas and diesel for the most part.

As the EROEI of nat gas continues to drop it may become unfeasible to do this even though the ROI is very high on oil sands. In this case both the ROI and EOREI are too low to be worthwhile.

If we used nuke, however, which has a higher EROEI than tar sands but the output has a lower ROI then it may make sense to average down the EROEI across the nuke and the tar sands and get a superior ROI than just the nuke alone.

And the winners will (probably?) be the early adapters who are also early adopters

By "adapter" I mean psychologically adapting to the likely reality that BAU is doomed and who also quickly adopt necessary appropriate technology. The adapter could be a community but is more likely to an individual/family.

My guess is that these people will not even care if the EROEI is negative so long as the technology fulfills a necessary need. Consider Richard Rainwater: Does anyone believe he wouldn't install, say a PV system, just because it had a negative EROEI? I know I sure didn't care when I put in my PV system. I needed a reliable electric power supply both for domestic water and to keep the freezers going if the grid went down (which it does frequently in winter).

And, now, we're into the Ayn Randian trap of Atlas Shrugged. Should people forgo taking action because it may eventually harm other people or society or because not everyone can take similar action?

Should governments ban the production of energy producing items that do not meet a certain positive EROEI? But then what about the products that consume energy and are inherently EROEI negative?


Edit spelling

Todd - It is impossible for EROEI to be negative. Yours is only one of the many proofs of the ineptness of this terminology which should be scrapped as soon as poss, see my post below about the more sensible terminology of EGOEI.

A little metal and a little glass, ...probably less than a couple of skyscrapers in one corner of Dubai.. 1900 horsepower per acre...

Anyone want to do an EROEI count? :=)


It is very pretty. I did an analysis using what data I could find on the internet about building and operation cost.

The EROEI was 9.

Glass and Steel are energy intensive. There is also quite a bit of energy running the pumping systems. Getting the fluid friction down was a major design improvement one article discussed. And quite a bit of labor keeping the system clean.

I think that EROEI level would come up with a mass production facility.

Here's something that is equally as important as EROEI in certain circumstances.
A few weeks back I raised a concept which we could call EROHI- energy return on human input. The point is that supposing (as wacko example for sake of argument) one could extract lots of energy by shelling peanuts and then sorting the rough shells from the smooth ones by hand. Or some other means that involves not a huge amount of energy input but a huge amount of human effort.

Certainly, different energy productions have widely differing EROHI. Travelling to some remote area and then carrying out extensive searching tech is a lot more human effort than just sinking a primitive wellpipe in a Texas backyard.

ERORI has a crucial importance in that once it reaches unity the production is pointless.
Yet I suggest that there could also come a time when human effort is at a premium and cannot afford to be wasted on daunting efforts to extract fuel even at passable ERORI.

Your concept is quite good. I remember reading that the EROEI of agriculture has plummeted as we input more and more fossil fuels. Somewhere I read 10 calories used for every food calorie delivered. Clearly, before fossil fuels, the ratio must have been better than unity or we could not have survived. But labor use has collapsed with the use of more fossil energy. So we clearly traded energy for human time savings.

ERORI has a crucial importance in that once it reaches unity the production is pointless.

This statement is like saying that in order to understand the economics of paint production it is 'crucial' to understand that buying a can of paint with no paint in it is a waste of money. The energy crisis we are facing is not a low EROEI crisis, it is a depletion crisis. We are running out of low cost fossil fuels. Yes, energy balance play a role in determining cost, but other resource costs are important as well. The return on total investment in energy production, including non-energy resources such a labor, fresh, water, and land, will reach zero well before zero energy balance is reached.

I agree with Roger - one of the bigger overlooked problems with net energy analysis is it assumes all other inputs are equal and they are not (look at ethanol for example - requires much more water, land, and soil inputs than oil)


ERORI has a crucial importance in that once it reaches unity the production is pointless.

As I've pointed out before (at least twice...;-), EROI by itself does not adjust for quality - so if we have very low quality energy in abundance we can and will procure high quality energy at an energy loss all day long -i.e. sub-unity is not the cut-off threshold for EROI - the bigger issue is relative vs absolute - what EROI are we REPLACING, with each incremental energy input?

You're correct on that last point of my error .... except in respect of a special case where one would be investing more oil in producing oil than one gets out - OROOI - Oil Return On Oil Invested. And that's not a concept to be dismissed as fantasy in respect of for instance some biofuels, or even some insane projects to extract oil from ultra-difficult places.

Also I think the terminology/concept of EROEI is most unfortunate, as indicated by so many people confused into imagining negative EROEI. A better concept would be energy gain on energy invested -- EGOEI. This is a more natural concept of what you get for your investment.

The point at which the job becomes worthless is when the EGOEI becomes zero. Sufficiently stupid technologies would of course give negative EGOEIs, indeed probably already do, some biofuel for instance.

I strongly recommend that people dump the EROEI asap and start using the more natural less confusing EGOEI instead. But they won't because people insist on sticking in the mud!!!!

what you refer to has been called many things in the literature - energy profit ratio, energy surplus, net energy, etc. We just typically refer to EROEI on this site.

You CAN have a negative net energy or energy surplus (would be an energy sink), but EROEI can only go 'sub-unity' (e.g less than 1, but never less than zero)

Thanks for your reply Nate but it just exemplifies my point about people insisting on sticking in the mud! "We just typically refer to EROEI on this site." Yes as I'd already noticed, but is it wise in view of the points I make, that as often as not people misunderstand what you are meaning or even what they are meaning themselves.

this was a great post Veron, thx.
And yes, I see the understanding of EROEI being the most important issue concerning the prospects for future energies, e.g renewables. The crust/soil will be robbed for fossil/uranium at a maximum pace, and there is nothing we can do about that, with climate or without climate challenges.

I wonder if any of the prez. candidates have any clues ,whatsoever, as to what this is all about.
McBrain has no clue, that's a no-brainer ..... but what about Obama Bi(nla)den ? /snark