Managing the Peak Fossil Fuel Transition: EROI and EIRR
Posted by Gail the Actuary on December 22, 2009 - 10:32am
This is a guest post by Tom Konrad, Ph.D. This article was first published on his Clean Energy Wonk blog.
Current renewable energy technologies must be adopted in conjunction with aggressive Smart Growth and Efficiency if we hope to continue our current standard of living and complex society with diminished reliance on fossil fuels. These strategies have the additional advantage that they can work without large technological breakthroughs.
In this post I will talk about a topic which is likely familiar: Energy Return on Investment or EROI. I will also talk about Energy Internal Rate of Return (EIRR), a measure which is similar to EROI, but reflects how quickly society gets its energy return back from its energy investment.
Energy Return on Investment
Energy keeps our economy running. Energy is also what we use to obtain more energy. The more energy we use to obtain more energy, the less we have for the rest of the economy.
The concept of Energy Return on Investment (EROI), alternatively called Energy Return on Energy Invested (EROEI) has been widely used to quantify this concept. The following chart, from a SciAm paper, shows the EROI of various sources of energy, with the tan section of the bar representing the range of EROIs depending on the source and the technology used. I've seen many other estimates of EROI, and this one seems to be on the optimistic (high EROI) end for most renewable energy sources.
The general trend is clear: the energy of the future will have lower EROI than the energy of the past. Low carbon fuels such as natural gas, nuclear, photovoltaics, wind, and biofuels have low EROI compared to high-carbon fuels such as coal and (formerly) oil.
The graph also clearly shows the decline in the EROI over time for oil. Other fossil fuels, such as coal and natural gas, also will have declining EROI over time. This happens because we always exploit the easiest resources first. The biggest coal deposits that are nearest to the surface and nearest to customers will be the first ones we mine. When those are depleted, we move on to the less easy to exploit deposits. The decline will not be linear, and new technology can also bring temporary improvements in EROI, but new technology cannot change the fact that we've already exploited all the easiest to get deposits, and new sources and technologies for extracting fossil fuels often fail to live up to the hype.
While there is room for improvement in renewable energy technologies, the fact remains that fossil fuels allow us to exploit the energy of millions of years of stored sunlight at once. All renewable energy (solar, wind, biomass, geothermal) involves extracting a current energy flux (sunlight, wind, plant growth, or heat from the earth) as it arrives. In essence, fossil fuels are all biofuels, but biofuels from plants that grew and harvested sunlight over millions of years. I don't think that technological improvements can make up for the inherent EROI advantage of the many-millions-to-one time compression conveys to fossil fuels.
Hence, going forward, we are going to have to power our society with a combination of renewable energy and fossil fuels that have EROI no better than the approximately 30:1 potentially available from firewood and wind. Since neither of these two fuels can come close to powering our entire society (firewood because of limited supply, and wind because of its inherent variability.) Also, storable fuels such as natural gas, oil, and biofuels all have either declining EROI below 20 or extremely low EROI to begin with (biofuels). Energy storage is needed to match electricity supply with variable demand, and to power transportation.
Neither hydrogen nor batteries will replace the current storable fuels without a further penalty to EROI. Whenever you store electricity, a certain percentage of the energy will be lost. The percent that remains is called the round-trip efficiency of the technology, shown on the vertical axis of the graph below, taken from my earlier comparison of electricity storage technologies. (Click to enlarge.)
Round trip efficiency (RTE) for energy storage technologies is equivalent to EROI for fuels: it is the ratio of the energy you put in to the energy you get out. You can see from the chart, most battery technologies cluster around a 75% RTE. Hence, if you store electricity from an EROI 20 source in a battery to drive your electric vehicle, the electricity that actually comes out of the battery will only have an EROI of 20 times the RTE of the battery, or 15. Furthermore, since batteries decay over time, some of the energy used to create the battery should also be included in the EROI calculation, leading to an overall EROI lower than 15.
The round trip efficiency of hydrogen, when made with electrolyzers and used in a fuel cell, is below 50%, meaning that, barring huge technological breakthroughs, any hoped-for hydrogen economy would have to run with an EROI from energy sources less than half of those shown.
Taking all of this together, I think it's reasonable to assume that any future sustainable economy will run on energy sources with a combined EROI of less than 15, quite possibly much less.
It's Worse than That: The Renewables Hump
All investors know that it matters not just how much money you get back for your investment, but how soon. A 2x return in a couple of months is something to brag about, a 2x return over 30 years is a low-yield bond investment, and probably hasn't even kept up with inflation.
The same is true for EROI, and means that users of EROI who are trying to compare future sources of energy with historic ones are probably taking an overly-optimistic view. For fossil fuels, the time we have to wait between when we invest the energy and when we get the energy back in a form useful to society is fairly short. For instance, most of the energy that goes into mining coal comes in the digging process, perhaps removing a mountaintop and dumping the fill, followed by the actual digging of the coal and shipping it to a coal plant. Massey Energy's 2008 Annual Report [pdf] states that "In 2008... we were able to open 19 new mines, and ten new sections at existing underground mines." This hectic rate of expansion leads me to believe that the time to open a new mine or mine section is at most 2 years, and the energy cycle will be even quicker at existing mines, when the full cycle between when the coal is mined and when it is burnt to produce electricity requires only the mining itself, transport to a coal plant, and perhaps a short period of storage at the plant. Most coal plants only keep a week or two supply of coal on hand.
In contrast, Nuclear and Renewable energy (with the exception of biofuels and biomass) present an entirely different picture. A wind farm can take less than a year to construct, it will take the full farm life of 20 years to produce the 10 to 30 EROI shown in the graph. Solar Photovoltaic's apparent EROI of around 9 looks worse when you consider that a solar panel has a 30 year lifetime. Only a little of the energy in for Nuclear power comes in the form of Nuclear fuel over the life of the plant: most is embodied in the plant itself.
Jeff Vail has been exploring this concept on his blog and the Oil Drum.
He refers to the problem of the front-loading of energy investment for renewable
energy as the Renewables
Hump. He's also much
more pessimistic than the above chart about the actual EROI of most renewables,
and found this chart from The Economist
which illustrates the up-front nature of the investment in Nuclear and Wind:
In terms of EROI timing, those technologies for which the cost of generation includes more fuel have an advantage, because the energy used to produce the fuel does not have to be expended when the plant is built.
In a steady state of technological mix, EROI is the most important number, because you will always be making new investments in energy as old investments outlive their useful lives and are decommissioned. However, in a period of transition, such as the one we are entering, we need a quick return on our energy investments in order to maintain our society. Put another way, Jeff Vail's "Renewables Hump" is analogous to a cash-flow problem. We have to have energy to invest it; we can't simply charge it to our energy credit card and repay it later. That means, if we're going to keep the non-energy economy going while we make the transition, we can't put too much energy today into the long-lived energy investments we'll use tomorrow.
To give a clearer picture of how timing of energy flows interacts with EROI, I will borrow the concept of Internal Rate of Return (IRR) from finance. This concept is covered in any introductory finance course, and is specifically designed to be used to provide a single value which can be used to compare two different investments with radically different cash flow timing by assigning each a rate of return which could produce those cash flows if the money invested were compounded continuously.
Except in special circumstances involving complex or radically different size cash flows, an investor will prefer an investment with a higher IRR.
Energy Internal Rate of Return (EIRR)
I first suggested that IRR be adapted to EROI analysis by substituting energy flows for investment flows in early 2007. I called the concept Energy Internal Rate of Return, or EIRR. Since no one else has picked up the concept in the meantime, I've decided to do some of the basic analysis myself.
To convert an EROI into an EIRR, we need to know the lifetime of the installation, and what percentage of the energy cost is fuel compared to the percentage of the energy embodied in the plant. The following chart shows my preliminary calculations for EIRR, along with the plant lifetimes I used, and the EROI shows as the size of each bubble.
The most valuable energy resources are those with large bubbles (High EROI) at the top of the chart (High EIRR.) Because of the low EIRR of Photovoltaic, Nuclear, and Hydropower, emphasizing these technologies in the early stage of the transition away from fossil fuels is much more likely to lead to a Renewables Hump scenario in which we don't have enough surplus energy to both make the transition without massive disruption to the rest of the economy.
How to Avoid a "Renewables Hump"
Note that the three fossil fuels (oil, gas, and coal) all have high EIRRs. As we transition to lower carbon fuels, we will want to keep as many high EIRR fuels in our portfolio as possible.
The chart shows two renewables with EIRRs comparable to those of fossil fuels: Wood cofiring, and Wind. Wood cofiring, or modifying existing coal plants to burn up to 10% wood chips instead of coal was found to be one of the most economic ways of producing clean energy in the California RETI study. The scope for incorporating biomass cofiring is fairly limited, however, since it requires an existing coal plant (not all of which are suitable) as well as a local supply of wood chips. Some coal plants may also be converted entirely to wood, but only in regions with plentiful supplies of wood and for relatively small plants. The EIRR for this should fall somewhere between Wood cofiring and Wood Biomass, which is intended to represent the cost of new wood to electricity plants.
Natural Gas
To avoid a Renewables Hump, we will need to emphasize high-EIRR technologies during the transition period. If domestic natural gas turns out to be as abundant as the industry claims (there are serious doubts about shale gas abundance,) then natural gas is an ideal transition fuel. The high EIRR of natural gas fired generation arises mostly because, as shown in the chart "it's a gas" most of the cost (and, I assume energy investment) in natural gas generation is in the form of fuel. Natural gas generation also has the advantage of being dispatchable with generally quick ramp-up times. This makes it a natural complement to the variability of solar and wind.
However, I think it is unlikely that we'll have enough domestic natural gas to both (1) rely much more heavily on it in electricity generation and (2) convert much of our transportation fleet to natural gas, as suggested by T Boone Pickens. We're going to need more high-EIRR technologies to manage the transition. Fortunately, such technologies exist: the more efficient use of energy.
Energy Efficiency and Smart Growth
I have been unable to find studies of the EROI of various efficiency technologies. For instance, how much energy is embodied in insulation, and how does that compare to the energy saved? We can save transportation fuel with Smart Growth strategies such as living in more densely populated areas that are closer to where we work, and investing in mass transit infrastructure. The embodied energy of mass transit can be quite high in the case of light rail, or it can be very low in the case of better scheduling and incentives for ride sharing.
Many efficiency and smart growth technologies and methods are likely to have much higher EIRRs than fossil fuels. We can see this because, while the embodied energy has not been well studied, the financial returns have. Typical investments in energy efficiency in utility run DSM programs cost between $0.01 and $0.03 cents per kWh saved, much less than the cost of new fossil-fired generation. This implies a higher EIRR for energy efficiency, because part of the cost of any energy efficiency measure will be the cost of the embodied energy, while all of the savings are in the form of energy. This relationship implies that higher IRR technologies will generally have higher EIRRs as well.
Smart growth strategies also often show extremely high financial returns, because they reduce the need for expensive cars, roads, parking, and even accidents [pdf.]
Conclusion: Brain or Brawn
The Renewables Hump des not have to be the massive problem it seems when we only look at supply-side energy technologies. By looking at demand side solutions, such as energy efficiency, conservation, smart growth, and transit solutions, we need not run into a situation where the energy we have to invest in transitioning from finite and dirty fossil fuels to limitless and clean renewable energy overwhelms our current supplies.
Efficiency and Smart Growth are "Brain" technologies, as opposed to the "Brawn" of traditional and new energy sources. As such, their application requires long-term planning and thought. Cheap energy has led to a culture where we prefer to solve problems by simply applying more brawn. As our fossil fuel brawn fades away, we will have to rely on our brains once again if we hope to maintain anything like our current level of economic activity.
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Thanks, Tom.
The idea of energy return on energy invested tells us how many times over the amount of energy is to be returned, but nothing about the speed with which it is to be returned.
If I were the one looking at this, it seems like I would come out with a "Discounted Return" of energy invested which could be calculated with various discount rates. If the rate were 0%, it would correspond to the traditional EROI. But the amount could be calculated with a discount rate of 5%, or 10%, or 20% (or any other percentage), and each would provide a different net present value of energy returned, for a given investment.
It seems like the choice of the rate of return depends on how valuable we see energy in the future to energy now. If energy in the future is more valuable than now, and very certain, one could almost use 0%, or a negative percentage. If energy in the future is likely to be unusable, because the rest of the network cannot be maintained for more than, say 10 or 20 years, then a higher discount rate would make sense--perhaps 15%, to price in the "default" risk, of the electricity not really being usable, when it is available.
So I guess I am a little confused. Does the EIRR have an interest rate attached to it? How is the default risk recognized in the calculation?
Gail,
The discounted calculation you're asking about is called "Net Present Value" or NPV (ENPV in this case) and it uses an interest rate as an input. IRR/EIRR can be defined as "the interest rate at which NPV/ENPV is zero."
Projects with positive ENPV should be undertaken if you can borrow at the underlying interest rate, so EIRR tells you the underlying interest rate at which you should no longer proceed with a project.
The appropriate discount rates to use in the ENPV calculations should be much higher than the financial discount rates around 15% you suggest. Nate Hagens thinks we need a societal EROI of around 20 to maintain BAU... that corresponds to energy discount rates of 50-100%
I expect you get into some interesting situations with nuclear.
The big decommissioning costs are way out in the future. Saving for these may not be feasible in any sense--certainly not by buying stocks or bonds, if there are financial system issues in the next forty (or sixty) years. This might make the investment a no-go, if consequences for those living after us are considered.
But if you assume that we can save for these, these future costs become relatively unimportant in the calculation.
It seems like if we really need an EROI of around 20 to maintain BAU, nuclear may be a no-go, regardless of how one evaluates the issue.
An excellent point WRT nuclear, and probably implies that nuclear -- at least as we know it -- only works financially in the "large regulated monopoly utility" model. Many years ago I did engineering economics and NPV for the Bell System. We did studies with very long time frames, and included salvage costs incurred 25 or 30 years in the future. Working for one of the regional companies after the break-up, one of the changes that really stood out was elimination of that long-term view in the analyses.
That's one of the reasons I'd like to see more effort being put into modular nuclear. It might be more attractive if it were possible to ramp things up in 100 MWe increments, and then eventually be replacing small units on a regular basis rather than having the huge expense all at once.
I would like to add that there are other proven ways to split atoms in ways that would potentially improve EROI dramatically. For example, molten salt reactors operate at atmospheric pressure and are intrinsically safe, which together obviate the need for massive containment structures. Safety (e.g. from terrorism) could be ensured most cost effectively by underground siting. The very high power density cuts the size of the reactor vessel and supporting plant by up to one half by some estimates. Moreover, fuel enrichment energy costs don't exist and fuel mining / fabrication would be a tiny fraction of conventional nuclear as fuel utilization would be 100 times greater. So, a 100MW liquid fluoride thorium reactor, for example, would have a higher EROI than a LWR approach of similar energy output, perhaps dramatically so. Any LFTR experts free to do a thorough analysis?
My point here is that we need not fall into the trap of thinking that technologies of the future must remain the same as what we use today, or that any real technological improvements will be impossible. With the millions-fold energy density superiority of nuclear over any other source, MANY options exist. We should be attempting to commercialize many new designs in parallel and pick the best one in an open and competitive environment. We should pursue new nuclear with EROI as a design condition. Mass-produced, inexpensive, small modular reactors with higher EROI could radically change the equation here.
Size could be cut by a lot more than that, especially the turbomachinery. The elimination of pressurized coolant eliminates the need for the containment to be sized for its expansion if it escapes, and the resulting containment is positively tiny compared to the reinforced-concrete pressure tanks used for LWRs.
This is an important truth. Reading Vaclav Dostal's PhD dissertation is a very enlightening experience.
I remember when you first posted the sizes for the supercritical CO2 turbines. I remember thinking to myself at the time, "What are the shafts for those turbines made out of?" What does a single shaft, apparently a foot or so in diameter, need to be made from to stand up to the torque represented by 450 MWe? That's on the order of 600,000 horsepower?
The shafts can be about as big as the ID of the turbomachinery itself. The turbine shaft can be double-ended, with one side going to the compressors and the other to the generator, so it only has to be sized for the greater of the two torques. Dostal's design has a net output of ~250 MW (net of in-plant consumption) so let's use that as a basis for further calculation.
At 3600 RPM, a 250 MW transfer requires a torque of about 500,000 ft-lb. By my BOTE calculation, a shaft 36" diameter and 3" wall thickness would require a shear stress of about 1000 PSI to transmit that torque; this is a rather light load (roughly 1/3 of the shear strength of type 304 stainless steel). The diameter of the turbine in Dostal's design is about 48" (120 cm), so a shaft close to that diameter can be used.
You could use a part of the cash flow from nuclear plant generation one to pay for preparations for waste storage and the initial waste storage, then you use part of the cash flow from nuclear plant generation two for storing the rest of the waste from generation one and start storing waste from gerenation two and then you build generation three...
Since it is paid by cash flow it dosent matter if the cash is €, $, post inflation $ with six zeroes removed, kWh tokens, or any other currency.
But trying to save is of course also a good idea although it only works out if there is a productive society making the savings worth anything.
Since this simply represents an extra tax, why not use tax money directly ? Hiding taxes does not make them go away, except to the exceedingly stupid. Your second statement about the currency is bullshit, for obvious reasons. Storage means digging. It is dependant on the cost of building materials, labour, ... the works.
Unfortunately your deception is not the only one. Here's a nice way to massively deceive people :
The Renewables Hump des not have to be the massive problem it seems when we only look at supply-side energy technologies. By looking at demand side solutions, such as energy efficiency, conservation, smart growth, and transit solutions, we need not run into a situation where the energy we have to invest in transitioning from finite and dirty fossil fuels to limitless and clean renewable energy overwhelms our current supplies.
This is a VERY clever way to say that renewables cannot produce anywhere near the REQUIRED energy level to keep everyone alive, and that "we're just going to have to deal with it". I wonder what you're going to say to people living in the many places where this statement means "move away or die of exposure". Say Alaskans. Or anything in Europe to the north of Belgium. Just about all of Russia, and so on, where savings of more than, say 10%, are unbelievably unrealistic, because you just cannot tolerate a family's home to drop below 19-20 degrees celcius.
But of course the honest way of saying this would be "(current) renewables are not a solution". And then elaborate that photovoltaic would need efficiency increases of a factor 10, which is theoretically impossible (you cannot make 11% efficient panels 10 times more effective), no matter the cost (and the requirement is obviously 10x efficiency increase without raising the cost). Wind would need a factor 4 or 5 efficiency improvement, again without raising the cost ...
This also should be a lesson for all the people who have already installed either photovoltaic or wind energy : you are not helping, in fact you are even sabotaging, the transition to renewable energy (if it ever happens). By installing insufficient and inefficient technologies today, instead of saving up that money to invest when it will be efficient, you're causing a horrible situation : losses today ("investment" with negative ROI), and losses tomorrow (the negative ROI and loan intrest parts). Then let's suppose someone invents actually working renewable technology (algae, sea or space based solar power, hell even fusion, why not), there won't be any money (or building materials, or ...) available to implement those solutions. At the very least, you're making sure uptake of actually working technologies will take longer.
So the effect of convincing people to install (esp.) photovoltaic, or wind today is, in reality, putting up a blockade against implementation of actually working renewable energy installations. Installing solar panels or wind turbines today works to prevent your precious "transition".
The stupidity otherwise seemingly intelligent people are capable of when reality contradicts what intuition says is staggering.
" because you just cannot tolerate a family's home to drop below 19-20 degrees celcius."
What do you do at home? Walk around in your gaunchies?
Our house is never above 19 degrees celcius. At the momemt, it's minus 20 outside (with the windchill) and I'm typing with warm hands and a house temperature of 18 celcius.
I don't know where you live, but in this part of the world, we can purchase, or make, a clothing item we call sweaters, though they don't actually make you sweat. Being long and lean, though not a john, I also treat myself to longjohns. Try some; they're actually very sexy.
In addition to wearing WINTER clothing in WINTER, we also took the time during the summer months, some years back, of decreasing the thermal transfer potential of the exterior walls of our dwelling. Insulation, in a word.
Our house never goes above 19 Celcius in winter, either. At the moment it's -20 outside (before the wind chill), and the dog was really glad to get back from his morning walk.
I rely on down vests to keep me warm in winter (and T-shirts to keep me cool in summer). The 95% efficient furnace, the 15 cm of insulation in the walls and 30 cm in the attic, and the strategic planting of trees make it comfortable all year round. The lowest temperatures we get are about -40, and the furnace can handle that.
We have a programmable thermostat that maintains the house at 17 Celcius during the day and overnight, but sends it up to 19 when we get up at 6:00 in the morning, and again at 6:00 at night. When we go away, we turn it down to 12 and hit "Hold".
There's no point in having air conditioning here - we open the windows to let the wind blow through and let strategically positioned trees block the sun. When it gets really hot we go out on the deck and enjoy it while it lasts.
This is all very nice comments. Very attacking, totally unfair, and utterly beside the point. Have you thought about taking up politics ? You say, the temperature outside is -20. You're heating your home, obviously. You're also expending electrical energy and eating food. The 2 probably use similar amounts of power, especially if it's -20 outside.
Of course, the story states that you'll have to save, probably over 50%. So which is it ? Do you let your home temperature drop to -20 ? Or do you cease to use any electricity or food ? Will you move to Mexico perhaps ? According to a friend of mine, people can still freeze to death on some locations in Mexico, so perhaps Venezuela ? It's got a real nice communist-sponsored murder rate. You will, of course, not forget to buy "carbon offsets" for the move, right ? And you will willingly freeze to death if they're unavilable ? Oh, wait, you won't, as you're a hypocrite too. After all, "evil companies" and "the rich" must buy those offsets for you probably.
Since in either case it will not be possible for you to survive ...
If I hadn't studied AI, I'd probably wonder how someone who supposedly believes in evolution would be so stupid as to defend a position that would make it impossible for him to survive. Such thinking would, after all, seem close to proof that intelligent design is true. But the explanation is simple : you're too stupid to see your own thoughts and motivations. Humans are not rational, and so you're not either. You're just imitating the majority position on this board, and you'll probably agree that I'm making a very good imitation of a total asshole.
Don't feed the troll...
I didn't realize there was a troll lurking in the area. I was only waxing eloquent on ways to reduce your energy consumption without inconveniencing yourself unnecessarily. I didn't think survival was an issue because the local electricity supply is still supplied by the two hydro plants in town, the nearby gas fields are still producing gas for the furnace, and if they give out, the fireplace still works and the forest is still here behind the house.
Speaking of lurking, apparently two wolves have taken up residence in the forest behind the house. I was walking to the mailbox today, and one of them raced across the road behind me.
We're dog sitting a small dog for some friends, and this is a matter of some concern. The local coyotes would like a nice, light lunch but I can intimidate them without much problem. A wolf, though, could be a more serious problem. Not as dangerous as the local grizzly bears and cougars, but still something to worry about if you're walking a dog.
Not you, mon...
Never mind I just saw the don't feed the troll comments...
Remember to use the "Flag as inappropriate" option for those sorts of comments too - its not only dumb, but also abusive - 5 votes "hides" it from view...
I'd agree the rate problem. NPV-ing is a reasonable response, but choosing an appropriate discount rate is challenging. Your suggestions are way too high. The climate change economics people have been giving this some thought latetly. See eg Stern and Garnaut.
Another issue is that all energy is not created equal. What we actually use is heat, light and work; mostly work. Energy does not equal work in the real world. We mostly use heat engines to do work (directly or indirectly, via electricity). A good one of those (an automobile engine or a power station steam turbine) is about 35% efficient. So one unit of heat energy does just 0.35 units of work.
EROI calcs that ignore this are rubbish. Express the energy as work-equivalent or electricity-equivalent, and we get closer. It's not clear whether Figure 1 is so corrected.
A quibble, but only EROI comparisons that ignore this are rubbish. An EROI calc for a single technology - or any subset of it - is not rubbish merely because it ignores a work efficiency factor. Such a factor is not necessarily present for every given technology, and if the "EI" is in the same form as the "ER" then efficiency doesn't even need to accounted for, just consumption and production.
Not quite. If we're talking say heat energy, temperature matters. A lot. So if EI is at say 700°C (fuel combustion) and ER is at 150°C (low pressure steam), the work available per unit of energy is completely different (by about a factor of 3). Ignoring that renders the calculation of an EROI meaningless. See, for example, geothermal energy.
I think we are talking past each other, but fuel and low pressure steam are different forms of energy, and I referred to situations where forms are the same.
If in your comment here you were talking about a coal-powered steam shovel at a coal mine, then all you have to do to generate an EROI for that process is to sit at the mine and tabulate the amount of coal loaded into the shovel for fuel vs. the amount of coal the shovel mines. IOW, it's possible to conceive of meaningful and valid EROI figures that do "ignore" work efficiencies, in the sense of not including them in calculations. That was my only point.
Now if you're going to compare processes that deliver different forms of energy to market (say, gasoline vs. electricty), then you'd want to have some idea of work efficiencies in end use, and I agree this might be a problem in the graph you mentioned. Of course, it's not an easy problem to resolve, if you don't know to what extent a society is going to try to substitute one for the other.
Are high pressure steam (high temperature) and low pressure steam (low temperature) different forms of energy? Because, run through a heat engine, they offer up very different amounts of work, per unit of contained energy. The low pressure steam of course contains less energy, but, as well, that energy will do disproportionately less work.
Say you were computing EROI for a hot fractured rock geothermal project; the example I proposed. Do you compare the combustion heat of the diesel used to drill the wells with the thermal heat recoverable from the circulation fluid over the well life? If so, the answer is complete crap IMHO. Those are the same type of energy (heat!), but they have very different capacities to do useful work (by about a factor of 3, as I said). Get it now?
I suggest that a better measure for most (not all) human energy use would be net present value work-energy return on work-energy investment. "NPV-WROI"
You're saying that different technologies have different thermal efficiencies. No dispute with you there.
Why? You've defined an "input" and a "return" that can be compared. If you want to do some other "useful work" with the heat in the circulation fluid, then that heat isn't the "return", the useful work is.
(btw, there will be other inputs besides the diesel, but they could all be expressed in heat units.)
...and relatively similar capacities to heat things, such as buildings, if you are wishing to do that. I think I get this just fine.
Okay. Is that because we use most of our energy to do "work"? I'm not sure of quantities, but we use energy for a lot of things besides work. Heating, for example. I'm not sure how your definition is better for deciding between energy sources.
Problematic as it is, it seems to me that having the "return" be defined as "energy delivered to final customer" is as good as anything else for comparing societal energy uses. If the input can be properly accounted for and converted to the same units, then you've got a valid figure. It's accounting for the inputs that's really the hard part...
The difference is inherent. It arises from physics (thermodynamics), not technology.
But that's not how EROI is generally defined AFAICT. It's a straight ratio of energy out over energy in. That's generally with energy taken as heat - not work - although electrical energy (a work surrogate) is used where nothing else is on offer (eg photovoltaics above).
Of the main primary energy sources (in order of size):
Oil: Nearly all is used for transport (=work; about 80% in the US, even more elsewhere)
Coal: Over three quarters is used for electricity generation (=work; around 90% in the US)
Gas: Around a third is used for electricity generation; rest mainly for direct heating (US figures, elsewhere higher?)
Nuclear: Nearly all used for electricity generation
Hydro: All used for electricty generation
So the vast majority of our primary energy is used to do work, or to make a direct work surrogate (electricity).
Human use is implicit in the phrase EROI, so if we are still talking about EROI, the idea of technology is inherent. I agree that technology can't defy the laws of physics, but theoretical work potential is somewhat irrelevant to resource comparisons using EROI. Suppose for some strange reason human beings were unable to design technology that utilized high pressure steam to do more work (per unit energy) than low pressure steam. EROI calcs that are not rubbish are based on existing technology and use, which can be looked at empirically without much reference to physics.
True, because, as I said at the beginning of this thread, we generally want to compare different sources of energy that we might substitute for one another for the same purpose. We are really vociferously agreeing with each other here. My quibble (and I did say it was just a quibble), was that EROI can be calculated for other purposes, and those figures are not "rubbish" just because they might serve a different purpose than comparing energy source suitability at a societal level.
I think you've made a decent prima facie case for using something like kwh potential instead of btu in charts like the one above. (I guess this might result in slightly more optimistic figures regarding transition to renewables, because FF energy values would be lower?) However I do see potential problems. For example, the energy used for heating may be quite a bit less discretionary than the other stuff, and assuming our society experiences a general energy decline, heating could become a larger portion of our energy use. I don't think there's a perfect solution to this problem. Perhaps a comparison of charts using different methods would be the most illuminating thing.
Thanks; interesting discussion. Merry Xmas.
No problem. Happy holidays!
Great work Dr. Konrad. Do you have plans to study details of EIRR for fossil fuel extraction also? In the past on TOD we've chatted about the industry's dependence upon net present value in evaluating various FF extraction projects. Unlike a plant which has a relatively even output over its lifetime an oil/NG project seldom approaches such a steady state. The two immediate extremes that come to mind are shale gas wells and Deep Water oil field development. A good SG well, while not cheap, might recover its investment within 12 months (given high NG prices) and thus have a rather high NPV. OTOH, a Deep Water oil field suffers a lower NPV because of the time lag (4 to 6 years) from discovery to first production. Another complication to the model is that SG development is very dependent upon short term but relatively foreseeable NG prices while DW oil economics must predict prices correctly 6 to 10 years into the future.
Making such calculations even more difficult is how to account for the embedded energy in the equipment used for FF extraction. The energy industry doesn't utilize energy consumption in its analysis. It uses actual costs which are not completely independent of the value of the embedded energy. And these vary greatly over time making any model subject to large errors. The SG plays offer a good example: when NG prices were above $9/mcf many wells were drilled. But the high rig count also increased the costs significantly. When NG prices crashed so did the SG rig count. But that also brought about much cheaper drilling costs. These has allowed some regeneration of some of the more viable SG areas. A current example of the changing scenarios offshore: We've just spudded a well in the GOM that had an estimated dry hole cost of $23 million just 12 months ago. Our current cost estimate is $12 million. Obviously the energy input for this well has changed. But the NPV has been much improved. While oil/Ng prices may be lower now the reduction in costs has had a much greater positive impact on NPV.
I hope you have the opportunity to pursue the subject further. I think only a hybrid approach combining the critical aspects of EROEI and traditional NPV analysis can really capture the dynamics involved in the coming transition period.
We should not forget Alan's ( from Big Easy) comments in regards to Roman roads and railroad tunnels dug a century ago.
Of course anybody who is responsible for spending money that is expected to turn a profit and has to deal with the realities of IRR, NPV,tax law, interest rates and dozens of unknowns can't be expected to put much wieght on the residual value of an asset that according to financial and engineering dogma or actuality will be worn out in thirty years or so.
And it would be niave to expect but so much in this respect from our elected representatives, but there is some hope there-witness the clean water, endangered species,ss, medicare, defense establishment, etc, which are geared to the long term.
Personally I would be extremely suprised if it will cost more than a third to a half as much to overhaul a sun farm or a wind farm to essentially new condition at the end of it's thirty years if even a very modest amount of extra effort is expended during the original design and construction..
And while the engineering aspects of eroi and so forth are absolutely relevant in terms of recognizing the limits of what we can do over the long haul, we should not be overly concerned about eroi in the short haul as a practical matter so long as the financial side of renewables can be made to work.
Anyone with a modicum of common sense must recognize that this is so because we waste so much energy at the present time.Burning a million tons of coal or barrels of oil to build out renewables right now is not a problem at all and can only keep that particular million tons or barrels from being burnt keeping the advertising signs lit over fast food joints and convenience stores so the guys in 4by 4 f 250's can find the stores easily to pick up burgers and a six pack shipped in from a thousand miles away.
Later on fonding the energy to build renewables will be as formidable a problem as finding the money which is scarce enough NOW.
I am not an advocate of building solar farms in cloudy places or windfarms in places with marginal wind-for now we should be building only in the best spots.This obviously shortchanges places without really good wind or solar resources.
I suggest that any federal subsidy money be spent in such a way that people living in less favored areas get equal amounts of money per capita to spend on conservation above and beyond any other conservation subsidies. This would be roughly fair to every body nationwide.
A little less coal burnt in Texas and Arizona to generate juice means a little bit cheaper coal for everybody in the entire country, as well as less environmental damage.If the fine people of Chicago get a lot of wind power as a result of my taxes paying for wind farms and transmission lines on the high plains it's only fair that they return the favor to us poor hillbillies by subsidizing more fiberglass and triple pane windows for us.
And so far as I can see , for the time being and for the immediate future money spent on conservation earns a better return by just about any accounting than money spent on any new capacity of any kind.
I am very interested in hearing the opinions of knowledgeable people as to how long it will be until fuel costs are so high that it will be profitable in dollars and cents terms to build wind and solar out without direct subsidies.
ROCKMAN,
I don't plan on doing those calculations, I don't have the data. However, the lack of a steady state is no problem for calculating EIRR. All you need are the annual energy flows and a spreadsheet. The IRR function is available in Excel. The spreadsheet I used is available here:
http://cleanenergywonk.com/2009/11/16/a-little-more-on-irr-and-eirr/
NPV, the net present value function I referred to when responding to Gail is also an Excel function that can be used simultaneously oin the same spreadsheet.
Tom
thanks Tom - as you know one of my thesis papers deals with this the lack of accounting for time in EROI figures..
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Another interesting aspect of this is not only the EROI drop vis a vis fossil fuels but the interplay of the debt/growth imperative when it comes to assessing renewables. Most renewables that harness sunlight in various forms have 90% of cost upfront, whereas fossil fuel plants are 30% upfront and 70% of the cost is future purchases of fuel (coal, nat gas etc.). In a world with growth we would prefer to pay more upfront - in a world with flat or shrinking growth, paying upfront ends up being a big disadvantage - another reason while renewable scaling should have happened before Peak Affordability...
Rockman,
In your interview a few days ago, I think you said that you wouldn't consider a project that would return less than $6 per $1 invested, IIRC. I've been wondering if this might be a very rough way to estimate EROI (or EIRR) since on the one hand you could buy someone else's oil for $1 today, or you could take the gamble and hope you get $6 some time in the future. Also, isn't it possible that the EROI is actually less than whatever numbers are shown since it's "old" energy that gets used to extract "new" energy? That is, all of the equipment used in extracting oil from a newly drilled well was made with energy extracted some time ago, maybe many years, so we might be getting a false sense of high EROI.
EA -- Yes...right now we're shooting for 6 to 1 or better. Of course, not all wells work or find as much as you had hoped for. Thus the final economics tend to be lower. One reason we can prioritize with such lofty goals is the much lower drilling costs we see today. A year ago Prospect A might look like a good 3 to 1 shot. But even though oil/NG prices are lower the drilling costs are that much cheaper so the same deal might look like a 5 or 6 to 1 today.
You hit on one of the biggest problems with drilling EROI: sunk costs of equipment. Actually relatively little diesel is used in drilling a well compared to the total cost. Even beyond the embedded energy in the hardware is an even more difficult number: the embedded energy in the exploration process. 3d seismic is a very common component in the exploration effort. A large 3d survey might cost 20X times as much as any well drilled on it. But there will be multiple wells drilled on the survey. Also another hidden factor needs to be part of the equation: dry holes. Obviously the EROI of a dry hole is zero. But the energy expended is part of the process. And in the oil patch if you're not drilling any dry holes it means you're not drilling enough wells. Success rates are better than ever but you still dry holes. In 2007 I drilled a Deep Water dry hole in the GOM. At a $148 million cost you can imagine how much energy (embedded and otherwise) was involved. Somewhere in the effort of estimating EROI for the industry these dry holes need to be accounted for IMHO.
I believe wholeheartedly in energy efficiency and smart growth, but I'm afraid I don't follow the logic of postponing the development of more renewables to a later date, when we will have even less energy to invest. We wouldn't build them all at once, and the electrical generation capacity is currently overbuilt, so this seems to be a hasty generalization that is not grounded in current and projected energy consumption patterns.
Certainly adding gas turbines can help add more generating capacity as needed, so I don't see this as an either/or situation. Jumping over to natural gas exclusive of renewables development simply puts us in another frying pan of relying on a depleting fossil fuel that has highly questionable reserves.
Missing are the important technologies of passive solar, solar hot water, and concentrating solar thermal, among others, such as tidal, wave, and algal biodiesel.
There are other sources of information (noted previously in an Oil Drum article) that are significantly different from, and are more detailed and less suspect than, the brief chart from SciAm;
Will Stewart,
I have already spent too much time writing on this board this morning, but I could not help replying to your post, which I think is exactly correct. If we assume the EROEI of the fossil fuels is going to drop (and I think that is a very valid assumption) then we are actually racing the clock to get to a place where solar can be somewhat self feeding.
I think this is possible, if a correct forward path is followed:
(a) We must really look at the EROEI of thermal systems, including solar hot water in the sunbelt first, and then working outward from there as the systems prove themselves, and
(b)Concentrating mirror solar, which seems to offer the greatest "bang for the buck" upfront, both in return on capital and return on investment.
(c)recaptured methane and methane produced from agriculture by product (tons of animal byproduct are dumped into our streams and held in holding ponds as an environmental liability today, wasting a greenhouse causing gas (methane) into the environment) The recapture of methane and use of methane digesters would give us an energy dense high quality fuel to use in concert with renewables to handle some of the variability problems of solar/wind.
Methane digesters are a tried and true technology, and most of the materials used can be recycled as the plant ages...likewise with concentrating mirror solar. As developments continue in reducing the waste and materials usage to build the concentrating systems (there are even systems proposed using inflatable lightweight and recycle-able light plastics, some made from vegetable product)EROEI levels on these systems would be good at the beginning and continue to get better with time.
But there is no denying that the first generation of such systems would rely heavily on current energy production by fossil fuels,nuclear plants and hydroelectric plants. The conversion to renewables should be done in exactly the way that oil and gas were done...pick the low hanging fruit (those options with the best EROEI first)and get them into play so that their return can begin as soon as possible. Again, it's a race with the clock, while we still have the energy available to make the switch, but as importantly, while we still have the 4 C's, Command, Control, Co-ordination and Communication system in place to pull it off...if we ever let that lapse then trying to bail out will be almost impossible and take decades if not centuries. We would be consigning the children of our nation to a new dark age. The time to go is now, but competing with relatively cheap fossil energy at the front end is very difficult.
RC
The conclusion does say that the renewables hump isn't really an issue, so I should rephrase some of my earlier statements. Most of the article seemed to point away from starting the renewables transition now, so the conclusion doesn't seem to follow most of the findings in the article.
The renewable transition HAS to start ASAP... that's not something I meant to question. What I hope that my EIRR calculations help inform is *how* to start that transition.
EIRR points away from large investments in Solar, Hydro, and other low-EIRR investments (even if they have high EROI), and towards more emphasis on Energy Efficiency and Wind in the short term. In other words, the intent of the post is tactical, not strategic. Strategically, nonrenewable fuels are bad, and renewables and energy efficiency are good. Tactically, we will benefit from being discriminating about which renewables we emphasize.
Then I would gently point out again that;
- your figures for PV need revisiting vis a vis the chart I provided above
- you need to include other renewables such as passive solar, solar hot water, concentrating solar thermal generation, etc. which have a higher return on EIRR (or energy payback, which is a commonly considered metric).
- EROI will continue to drop over time for fossil fuels. A snapshot now is like looking at today's gas prices, instead of what they will be 5, 10, 20 years from now.
You would also need to make the case that the renewables you mentioned really do represent a 'hump' that current capacity could not meet, along with currently lowered demand.
And including external costs (pollution, depletion, GHG emissions, etc) would provide a more balanced means of examining the more optimal alternatives.
hmmmm...I'm no expert, but the real world examples I've seen don't jive with this statement. Source?
Google shows many references, one example being;
Robert H. Crawford and Graham J. Treloarv, Net energy analysis of solar and conventional domestic hot water systems in Melbourne, Australia, doi:10.1016/j.solener.2003.07.030
And here's a calculator from the Florida Solar Energy Center.
Tom, here's another reference for PV energy payback, from NREL;
It's good to notice the growing EROI for newer solar techniques. Solar has just begun mass production (e.g. China is only producing solar on a large scale since 2003) which will increase EROI due to well known scales of size. Old techniques rely on sawing silicon crystals in thin slices and treat them with loads of chemical processes on rigid carriers (e.g. aluminium or glass sheets), while newly developing tehcniques use roll to roll printing on plastic. The amounts of materials involved will be much lower and the production process will switch from batch to continuous which all will contribute in lowering energy and resource requirements and much higher EROI.
Besides that, EROI isn't probably the alpha and omega. We're now seeing that funding of large energy projects via banks and commercial investors is difficult and that the 'just leave it to the market' dogma no longer holds merit. At the same time one sees private money devalue on the bank because inflation and low interest rates. Also. everyone knows how the stock markets have performed the past few years. So I argue that it could be wise to invest (surplus) private money in energy autonomy (using solar) which makes you insensitive to future price hikes, lowers basic expense for about three decades and inflation will make the investment today look like a cheap bargain in 10 to 20 years.
A fascinating article, requiring more study and more time to follow out the links. I predict a headache and eye strain for myself as I now have something to do over the normally non-eventful Christmas day. :-)
Several interesting points came to mind immediately, in no particular order.
-It is interesting that the highest carbon fuels seem to come out to advantage, but I am assuming this is only true if you leave the costs of dealing with the carbon issue off the books. Am I correct in this assumption?
-Likewise other infrastructure issues: Coal comes to mind, in which the already "sunk costs" of the rail and or barge system to move the coal around are seemingly left "off book", and only the costs of mining/extraction seem to be factored in.
-On solar, it is notable that while PV is given with its attendant numbers on EROEI, there is no mention of concentrating mirror thermal solar. Can we assume the EROEI numbers and EIRR statistics might be very interesting there?
-Are there any usable statistics regarding methane recapture from landfill, sewage, agricultural and timber/paper usage and production? This seems to a very large but mostly not discussed source of methane release into the atmosphere, and also a large waste of energy. How large, and what would the EROEI and EIRR statistics look like for recapture of waste methane? (This is no small matter: The County Sanitation Districts of Los Angeles County (LACSD) is now the 20th largest power producer in California on biogas from captured methane, producing some 119 megawatts of electricity or 54% of all the power the agency consumes, with more development still to come)
-Is there any factor given or considered for potential efficiency improvements on the renewables? Many reports denigrating PV solar are using efficiency statistics that were already out of date in the 1990's as solar cell efficiency has increased with each pasing month. Concentrating lenses on solar cells may prove to be a great leap upward in efficiency IF the cells can be designed to stand the heat. How does one factor in the technology improvements, or are they simply discounted on the assumption that all technology advance will stop in place?
-Over the last decades, the EROEI of fossil fuels has gone down, while the EROEI on renewables has gone up. IF, and this is a big if, we assume the technology of renewables will continue to move forward, would there be a point at which the lines would cross and EROEI of renewables would be greater than that of fossil fuels, especially so if the carbon issue were to be placed on book?
-Any consideration of onsite or DG (Distributed Generation) would include potential reduction in grid losses due to avoidence of moving power produced long distances to where it is consumed. Has there been any studies done of Distributed Generation using "smart grid" technology in combination with demand side control of consumption?
The discussion of moving the transportation fleet of the U.S. to natural gas is fascinating, and potentially dangerous all at once: If we simply switch the transport fleet to natural gas without improving the efficiency of the fleet, this could be the greatest waste of one of our last remaining energy resources in the U.S., an almost criminal abuse of a resource that is priceless, a chemical that in many ways is much more valuable for what it can do than even crude oil. I think you are correct, we simply cannot afford to use the gas for transport unless we have reduced waste in the sytem to a minimum first (i.e., efficient appliences, insulated homes, efficient lighting systems and use of renewables such as wind and solar wherever possible) The natural gas engines should be used in concert with hybrid and plug hybrid to raise the efficiency of the vehicles to the maximum possible level.
My fear is that cheap natural gas will encourage a new generation of natural gas "land barges" that will make the SUV of today look like a skinny piker by comparison, and a national treasure will be burned up in less than a quarter century, leaving us in truly dire condition for the outlying years.
Sorry to go so long, but as you can see, I found much to think about in your article, and still more to learn. Think you again.
RC
A double ditto on that thank you to the author.
That's It I'm Out: (dealing with your points in order)
- Correct , I did not account for the energy costs of cleaning up after fossil fuels.
- I didn't really deal with boundary issues of EROI, I just used the EROI numbers from the chart I showed. But boundary issues are as much of a problem for EIRR as for EROI.
- I think that the EIRR numbers for CSP would be interesting. My guess is CSP has a better EIRR than PV because it has better financial returns, but probably not as good as wind.
- I don't know the statistics for waste methane, but the economics are very good (see:http://www.altenergystocks.com/archives/2009/06/what_does_clean_energy_cost_1.html)
- Distributed Generation (at least without large transmission investments) is a very low EIRR/EROI way to go, because it requires large amounts of electricity storage. See: http://cleanenergywonk.com/2009/11/17/heretic-battles-straw-man/)
- I don't think we have to worry about "Cheap" natural gas. Even the optimistic shale gas players say we need $8 gas to make shale plays economic. And if we end up converting *both* electricity generation and transportation to natural gas, it's likely to become much, much more expensive.
Great article Tom, as ususal it makes me think about my previous writing and conclusions.
I think EIRR may be a valuable tool to guide us in our future energy choices. However, I share a few concerns with some of the comments above, and will raise a few others:
First, one failure of EIRR as currently stated seems to be that it doesn't incorporate any assumption about long-term decline in fossil fuels EROI (oil, gas, and coal, with different time frames). While I'll concede that there is significant dispute about the timing (even existence) of such a trend going forward, I think that we need to do more than state the current EIRR of avaialble energy sources. I think we need to model where we think this EIRR will go over the next three decades or so. My assumption is that what appears to be excellent EIRR for natural gas and coal, for example, today, will not be so in 30, 20, or possibly even 10 years. My reading of your conclusions is that you recommend transitioning to these currently high EIRR sources so that we'll keep societal EROI sufficiently high today, and thereby mitigate the renewables hump. It seems to me that this vision assumes that these sources will maintain their high EIRR, such that after society also invests in efficiency, we'll then have the surplus energy required to build out a truly renewable infrastructure. My concern is timing: if the EIRR holds steady for the next 20 years, then I think this is accurate--we'll be able to keep EROI high by relying more on these high EIRR sources while we free up surplus energy through efficiency measures that can be diverted to bridging the renewables gap. However, if these EIRR numbrers decline over time, as I expect they will (all high EIRR sources on your graph are, after all, fossil fuels), then we're betting society on the outcome of a race between our ability to improve efficiency and the rate of declining EIRR of these fossil fuels.
Second, while I think your push for efficiency is valuable, feel that efficiency on its own will only lead to a Jeavons' Paradox situation where more energy is available for increases in energy consumption per capital globally (where the vast majority of people still hope to increase their consumption to something still well below American levels). While you don't state how you'd like to see efficiency encouraged, I feel that it's a classic case of market failure: IF we don't use policy to proactively drive efficiency, then we'll see market-driven efficiency that will come too late to ensure that we have the energy to prower society AND divert surplus energy into investment in truly renewable generation that will sustain us after the decline in fossil fuels EROI has cut the legs out from under currently high EIRR energy sources. Instead, I think we need to drive efficiency proactively through policy (probably tax policy) and divert the revenues generated to subsidize investment in long-term sustainable generation before the market would otherwise do so, thereby mitigating the renewables hump...
Bottom line, I'd like to explore how EIRR methodology can incorporate varying assumptions about the rate of decline in fossil fuel EIRR over time, and how this compares to our long-term ability to improve efficiency (and how Jeavons' Paradox and growing global demand will dampen this effect). Ultimately, I think this analysis will help us better understand the playing field, and argue for a tax policy to drive the efficiency you talk about, while simultaneously minimizing the rebound effect caused by global consumers (though this raises moral worries for me) and subisdizing investment in renewables...
Jeff,
To your first point, EIRR is another way of looking at energy flows for a specific project. You should calculate the expected EIRR of any gas or oil well when it is drilled, and these numbers will decline over time, just as the numbers for EROI decline over time.
Regarding EE and Jevon's paradox, EE is not unique in terms of getting people to use more of a thing when they feel it is cheaper. I know many people with solar panels on their homes who intentionally uses extra electricity because they feel that it is not harmful to the environment.
The form of energy efficiency also makes a big difference in terms of how much Jevon's paradox is a factor. Riding the mus is more energy efficient than taking a car, but I don't think there is anyone who is likely to ride the bus more because of that.
Similarly, if your home is better insulated and sealed, you are actually more likely to set the thermostat at a lower level, because a leaky, draft house will always have some cold spots, while a well sealed and insulated house will have a much more uniform temperature. Both of these examples are cases where switching to energy efficient modes actually leads people to use less, not more.
In terms of encouraging EE, I think the best way for transport is switching to Vehicle Miles Traveled (VMT) taxes and insurance (see vtpi.org for more on this.) This give people the incentive to drive less no matter how efficient their vehicle, although the VMT charges should probably be lower for more efficient vehicles.
Higher per-kWh charges coupled with lower fixed charges and real-time feedback on utility charges are also a good way to encourage stationary efficiency, and should also be immune to Jevon's paradox, because of the higher unit charges and feedback will probably raise unit costs, even in the face of more efficient processes and appliances.
Thanks for the clarification, Tom. Like a few other comments, I think I was reading a few things into your post that you weren't actually saying. EIRR seems like it essentially addresses the timing issues that aren't captured by EROI. I'd be interested to hear David Murphy's take on this concept, which seems like it can only be useful to me...
I do, however, reiterate my comments above on market-driven efficiency vs. tax-driven efficiency--I think EIRR can be used to help support that argument. EIRR seems to provide the missing link to argue that we can choose between either massive investement in coal or efficiency. If we wait too long and let the market make this choice, we'll end up with too much coal and not enough efficiency. Unless, of course, some miracle occurs in the mean time and we manage to internalize the present externality of climate/pollution into the cost of coal... I'm not holding my breath.
I second the motion. The real project, however, is to convince the public that their tax dollars will be well spent. This is harder in America than in many countries.
What do our gas taxes currently fund? Roads only?
There's something to be said for this, actually. Spreading it out deliberately so we all go down equally together might result in fewer wars. Opposite scenario is that wars do the spreading out for us. Either way (renewable push or Jeavon's) there's a benefit to efficiency.
From Wikipedia:
Energy is an abstraction like grain and metal. It is undefined. It exists only as an idea of one one of the characteristics of concrete forms of energy like those cited in the first chart. It is similar to the idea of bushels of grain or tons of metal.
We can not make any judgement about EROEI as relates to different forms of energy anymore than we can judge the value of different forms of grain by comparing grain return on grain invested. Nor can we make any judgement about the metal situation based on tons of metal return on metal investment.
Energy is an abstraction because important questions about it can not be aswered. Is it renewable or not? What is it's price? What is it's utility, i.e. what is it used for? What is the infrastructure that demands its use? These are important questions that must be answered and not ignored as the author is doing.
The chart shows different forms of energy. The only valid point on the graph is oil in 1930 with an EROEI of about 100, assuming that oil was the main energy input and obviously the output. All the other forms listed in the chart are nonsense since they compare different forms of energy inputs and energy outputs.
EROEI is not analogous to $RO$I where inputs and outputs are converted to the same momentarily concrete form, the dollar.
Financial analysis can not be applied to general energy analysis. EROI is only valid when the input and output forms are the same as is usually the case with oil. Other applications are false.
X-
If you think EROI is worthless, then EIRR is also worthless. I'm simply saying that if you think EROI calculations are of any value (and many of us do,) the EIRR's ability to incorporate timing of energy flows can add depth to the analysis.
You are basically saying "We need perfect data before we can say anything." I have news for you: waiting for perfect data is like waiting for Godot. Good luck with that.
Don't feed the troll. Open the comment subthread in a new tab (important!) and click the flag button.
Looks like you have stated as fact some ideas that you have (like "EROI is only valid when the input and output forms are the same as is usually the case with oil. Other applications are false").
We convert energy from one form to another all the time. That is the basis of life on earth.
I guess when I flipped on the light switch in my bathroom this morning, thus converting electricity into light and heat at a known wattage, I was guilty of "reifying" energy. Or was it the light bulb that was guilty? Our electric meter must have been especially guilty.
Gee, hope I didn't "reify" the bathroom, too...
You've gone so far as to suggest that grain, metal, light, heat, and matter are not "physical entities." Apparently, in your world, words can mean whatever you want them to. Good luck communicating with anyone else.
X,
I've tried to understand what you might possibly mean by this and made a comment on a post of yours addressing this very issue before. I wanted to give you the benefit of the doubt by assuming that you might posses some deeper insight and I was simply missing your point.
But every time I do that I come up short and say WTF? How do you reconcile your views with the laws of physics and more specifically with the laws of thermodynamics?! Energy and Matter are not abstractions. They are very clearly and specifically defined.
Please explain what about energy is abstract? I won't even ask you to try explaining how metal can be an abstraction...
Much of EROI analysis is silly on the face of it.
Investments are made with dollars not btus. A pound of gold has zero energy in it and it goes for +$16000 while a pound of uranium metal costs $90 and produces 56 Mwh heat in a LWR or a pound of bituminous coal cost 2.5 cents
and can produce 3 kwh of heat.
I know ecological economists claim to be able to convert $ to energy equivalents but their various attempts such as with ethanol have proven to be ridiculous.
I think fossil energy is far more btu-valuable than any of their analysis shows based on the fact that almost all of our energy still comes from fossil fuels.
Accountants use Saving on Investment Ratio to choose between projects.
The SIR = the Present Value of Savings(Profit)/ Present Value of the Investment.
EROI and Savings on Investment(SIR) are similar concepts but if you use SIR ANY project with an SIR >1 is considered feasible. The way you use SIR ratings is to choose projects starting with the highest SIR to the lowest and adopt them until you run out of funding however ANY SIR >1 should be implemented.
This is the same as saying 'positive net energy is the only requirement'.
This actually good news for renewables because it means that if the energy source is net energy positive it is still probably worth doing even if the investment(real world dollars) is high.
X,
Have you looked at the work of the ecologist HT Odum who attempted to equate different sources/forms of energy in terms of original sunlight (emjoules) required for their formation? His analysis pulls out a massive difference between, for example, wind energy and FF energy and is a way to attempt to quantify the observable differences between fuels - energy/power density, general utility etc.
Another concept that Odum tackled and which IMO has relevence to EIRR is the 'maximum power' principle - power is after all an expression of the rate of energy utilisation. From Wiki;
"The maximum power principle can be stated: During self organization, system designs develop and prevail that maximize power intake, energy transformation, and those uses that reinforce production and efficiency."
Perhaps a relation to human activity can be expressed in monetary terms as well - i.e. maximisation of ROI.
Just a couple of thoughts from an Odum fan.
TW
First, I'd like to echo the praise for this post. Very interesting and though-provoking.
I do have a couple of quibbles with smart growth though. For one thing, growth (smart or otherwise) tends to offset efficiency gains. For another, growth (smart or otherwise) is unsustainable.
Most smart growth discussions assume that we need, and will inevitably have, additional growth (as do all popular current economic models). The smart growth strategies, if applied to stable (or, heaven forbid, declining) populations, might have significant impact from a long-term energy perspective (assuming the energy costs of moving populations, constructing energy efficient living areas, and improving/creating efficient public transportation did not destroy the energy return... and ignoring the social/economic ramifications of dealing with the roughly 150M Americans currently living and working in grossly inefficient suburban areas). However, they are not applied to stable populations. They are applied to growing populations. More people, more energy use, more consumption of all kinds... all acting counter to any efficiency gains we may get. (And this doesn't even get into the hassle involved in working around Jevon's Paradox.)
I guess if we're assuming that we can continue growing forever and that such growth is pre-ordained, required and beneficial, then, obviously, being smart and more efficient will be helpful. And here I mean "pushing off collapse by a tad".
Personally, I find this premise, shall we say, iffy. As long as we continue to grow (in population, consumption, resource use, etc.), energy efficiency and smart growth are likely to be overwhelmed by the increased demand. For us to exist on this finite sphere with anything resembling our current standard of living will require that there be a whole lot less of us consuming a whole lot less than we currently do in the western developed world.
That said, I'm not suggesting that we should not address renewables, efficiency or strive for denser, more walkable living arrangements, etc. All that is to the good. We must work within the framework we have, while trying to change that framework to something more realistic.
What I am saying is that we cannot isolate consumption issues (of all types, food, water, energy, etc.) from growth issues. They are tied together. As long as we think and search for solutions in terms that assume "growth" we are likely to be spitting into the wind. Only when we address growth itself will we be able to get the most out of our various ideas and solutions. At the very least, when we are calculating metrics like this in order to analyze various options relating to our ongoing consumption of various things, we must add into our calculations the effect of growth.
Just one man's opinion. Again, excellent post.
Brian
I agree. Smart "growth" is not good. What I'd really like to advocate is "Smart Urban Renovation" - making existing cities work better, not expanding them. I was using a lazy man's shorthand using the word that was already in the lexicon.
"Smart growth" is better than the more common "stupid growth" that we usually experience.
Not all communities will grow (look at Detroit), but many will. The population as a whole is growing, so that it is inevitable that more communities will be growing than shrinking.
It would be better if growing communities were designed so that they are livable in an era of negative energy supply growth. A city that is designed to be transit and pedestrian oriented will more livable in an era of increasing energy costs than one which can only be navigated by automobile, which is how most post-WWII communities are designed.
To reject "smart growth" because you prefer "no growth" is an example of the Perfect Solution Fallacy. From Wikipedia:
Personally, I'm not arguing for the perfect. I generally agree that you can't let the perfect be the enemy of the possible, or nothing will ever get done. However, it is critically important to always understand the long-term, contextual reality of what you are talking about, doing, choosing, etc. I'm all for choosing smart growth over stupid growth. But smart growth, like a parachute over an active volcano, will only keep you out of hot water for a little longer, not forever. Everybody needs to understand that fact.
We need to set long-term goals that reflect the necessary realities of life on a finite sphere with rapidly depleting resources. Then we need to constantly monitor, analyze, set and redefine short-term goals to take into consideration the short-term realities, but always with the explicit goal that every change must move us closer to the long term realities.
In this context, I am all for smart growth. We just have to understand that smart growth is not good enough. It is a short term transitory tool. Eventually, we have to figure out how to make the system work with no growth, or even with contraction, because, sooner or later, either we or Mother Nature will correct our overshoot.
Brian
If you're operating in a vacuum, sure, being 'brainier' to transition over the renewables hump makes perfect sense. But aren't we forgetting the economic implications on the downslope of oil extraction? Aren't we forgetting that without copious amounts of FF are needed for agriculture to sustain 7 billion + people? Are we not deluding ourselves to think the grid will be there to power the electrical in our homes during this massive transition?
Seems to me the people that find ways to live off the grid will do best. Not that our family has made this transition, but I'm definitely angling towards solar (in spite of its low eroei) for the purposes of having some secure electrical in our home should the grid go down or even during brown outs. Gail has often suggested a possible future when the grid goes down.
Some power in the home is far better than none. Candles don't make the grade. I think the future needs to plan for solar on rooftops - wind in applicable corridors - and sure, use NG as long as it lasts. But I think its almost certain the economy will dump at some point. Like someone wrote: The oil age will end with food riots. When oil went sky high in price, so did food and riots occurred in many nations. It seems that is a look into the future.
PE, I think the real point you are making is that there is more to an energy decision than the monetary and relative IRR values. Often we make the mistake of "running the numbers" to the exclusion of "life quality" factors.
I think we will have to use multiple criteria when considering energy options. I wonder how EIRR relates to something like
( plant lifetime - payback period ). Thus if an advanced PV installation had a 30 year life span and a 10 year payback period that gives 20 years of 'free' energy. Clearly that free energy period needs to be longer than the payback in order both to pay for its replacement and produce a surplus for other needs.
The fact that EROEI, payback, round trip efficiency and so on are not complete answers becomes apparent when thinking about switching transport to onboard natural gas. Cap and trade (if tough enough) will force a shift from coal to natural gas for electrical generation the same time we need to replace oil based transportation. Should we make special rules for natural gas or does the technology indifference of c&t have its own wisdom? I would add that we need to think about the sunk costs of the gas grid and the fact that syngas or biogas could replace natural gas, albeit at greater cost.
My feeling is that we will exploit all the quick energy options until even political conservatives admit it is a crisis. Then it will be too late to make a smooth transition to something more sustainable.
We should all recognize that a time will certainly come, whether it be two decades or two centuries from now, when renewables will no longer be an alternative to fossil fuels, but essentially the only game in town.
When we approach that point, then all these academic analyses of the EROI and EIRR of renewables versus fossil fuels will become moot.
However unattractive the EROIs and EIRRs of renewables are, that is what we will eventually be stuck with, so we best prepare to work around it.
I disagree. If the ERoEI of, say, solar PV turns out to be less than 1 (the pessimistic view) then solar PV will not be part of the only game in town. It will simply not be. If it turns out that solar PV is 2 and wind is 20, we'll have more wind than solar PV. Or vice versa. And so on...
ERoEI is worth looking at precisely because EROI measurements are (some of us think) meaningful enough to help us choose between different technologies. That won't be any less true when the available technologies are all renewable.
jaggedben -
The EROI values for things like wind and solar power are already fairly well established with a sufficient degree of certainty so as to permit decisions to be made.
Unfortunately, when it comes to renewables, the choices are not all that many, and are largely dictated by comparative capital costs and location-specific considerations rather than highly generalized EROI figures.
If one is on the coast of Maine or in the upper Great Lakes, there can hardly be any doubt that wind power is going to be preferable to solar; just as if one is in Arizona there can hardly be any doubt that solar is going to be preferable to wind power. The feasibility of hydro, geothermal, and wave/tidal power is even more narrowly constrained by location.
Some of these choices are intuitively obvious. One does one site a corn-based ethanol plant in Alaska. Likewise, small wood-burning power plants might make sense in places like Maine or Oregon, but not in west Texas.
Nor does infrastructure considerations come into play all that much in decided between alternatives. Both a wind farm and a solar array of the same output will require similar infrastructure to enable hook-up to a grid. So that largely becomes a wash. And potential future manufacturing difficulties or material scarcity will be reflected in price, so that consideration will sort of automatically manifest itself.
However, the picture gets far more complicated when energy storage is involved, as that is not nearly as location-specific and involves all sorts of technical/economic problems. This will become a bigger and bigger stumbling block as reliance on renewables becomes more widespread.
Let's face it: if fossil fuels were to remain abundant and cheap, no one in their right mind would build a wind farm or a solar power system. But clearly they will not, so we are left with a narrow set of far less attractive and highly problematic options.
Sorry, but I have substantial disagreements...
I wish I could agree wholeheartedly with this, especially regarding solar, but I really think the jury is still out on the accuracy, and meaning, of these figures.
If the EROI for PV is really above 4, then why isn't the financial return on PV more unequivocally positive? Why isn't it already clearly worth it to convert oil or natural gas into solar PV? Why isn't everyone doing it yet? And if it's not worth it to do it now, will it ever be? My most optimistic responses to these questions are that there are artificial constraints (such as electricity rate structures), that we are still scaling up the manufacturing (and thus prices will fall when supply is sufficient) and that there is still a learning curve regarding PV's proper installation (so energy payback isn't always as good as it should be). But I surely wish I had more ammunition to support those arguments, and counter skeptics. If you haven't read Jeff Vail's stuff on this, I think you should. And if you have, perhaps you can point me to your previous responses to it.
I think the only way we will settle these types of questions once and for all is with more real world experience. Which is to say, we do not have a sufficient degree of certainty. We are still working with educated guesses.
Again, assuming solar is worth doing at all. Mind you, my guess is that it is or will be, at least in Arizona, but I don't think it's a slam dunk case.
This made me want to do research before deciding if I agree. Do most wind generators generate AC or DC? (If AC, could the cost of inverters for solar PV be a huge difference?) Perhaps you can offer some reading to back up this statement?
jaggedben,
blockquote> Why isn't it already clearly worth it to convert oil or natural gas into solar PV?
Of course it is and we are doing it all over the world.
Here is a list of Solar PV manufactures around the globe:
http://www.solarbuzz.com/solarindex/cellmanufacturers.htm
That's a bit like asking Why isn't everyone building nuclear reactors in New York City?
Like all technologies there are circumstances where it makes sense and some where it doesn't. It isn't a one size fits all but as the industry matures it is sure to continue filling those potential niches where the payback makes sense.
Disclaimer: I sell residential and commercial PV installations I have home and business owners who obviously think it is worth it from an economic and investment standpoint right now. Most of these people have done very detailed payback analyses and even without subsidies and incentives have concluded that the numbers work for them and that from a straightforward investment standpoint it is a secure long term investment.
Yes there are plenty of artificial constraints and vested interests involved, both on the side of the solar industry and those defending their turf who naturally oppose any incursion into their potential profits. This is a relatively new and constantly evolving industry. Certainly there is technological advance occuring in the efficiency and manufacturing processes all the time. Check out this company as an example: http://www.nanosolar.com/
Disclaimer I am not affiliated with this company and cite it only as an example of the manufacturing process they have developed.
Proper PV installation is a complete non issue. I am affiliated with a solar engineering company that regularly designs systems certified to withstand Cat 5 Hurricane conditions. Any reputable solar installer or contractor can handle an installation. It's not brain surgery.
Don't get me wrong, I generally am optimistic about solar. (And I also work in PV installation.) You caught me out in a skeptical moment. I'm just frustrated with the slow pace of adoption, and the fact that I keep encountering examples where the financial payback does not seem unequivocal, along with those where it does.
Customers and neighbors have to be smart too.
When my parents had solar installed on their house a few weeks ago, the installers were ridiculing an installation about a block away because it was installed level on a flat roof, instead of tilted up to the south. (We are at about 38 deg N) I have a feeling that wasn't the installers decision.
You might also want to look at this comment, and even here.
I think its a real issue, and if the EROEI of solar is as marginal as 3 or 4, things like this could be make or break.
I hear you and do upon occasion share your frustration.
We try our best to educate them, however if at the end of the day they are willing to sign off and do something we explicitly do not recommend, That's their perogative and their money.
As the saying goes, "you can lead the horse to the water but you can't force it to drink."
Cheers!
Perhaps there is less movement toward renewables now than there will be in the future because of the high wages of employees in the industry. Said employees consume plenty of energy in their home lives, which should be accounted for in EROEI's of today's renewables. We can expect that wages of employees will fall in the future, leading to less consumption of energy in their home lives. This should have the effect of greatly increasing EROEI and lead to the more obvious decision to build out renewables.
If we consider the costs of renewables to include only energy and wages, then as wages decline relative to energy the move to renewables should become more obvious. Just examine the last decade. Ten years ago we saw less renewable transition than now, partly because of the high relative costs of wages versus energy. I am optimistic that with EROEIs greater than 10, transition should be obvious and the market will fund it.
Fair enough, if the employees of Fossil Fuel plants also have their energy counted.
Then we can count the energy involved in driving to and from the shops for food, the energy used by the shops for lighting, refrigeration etc, then the energy used getting good from the warehouses, then the energy used by the warehouses, then... The energy used by the employees of the shops, warehouses, delivery companies etc can also be counted. Let's not forget the energy used by the plumbers, sparkies, roofers, insulators...
At some point, it just gets ridiculous.
jaggedben, you said " If the ERoEI of, say, solar PV turns out to be less than 1 (the pessimistic view) then solar PV will not be part of the only game in town. It will simply not be."
We are right there at the crux of the whole issue I think. Given the searing flood of heat and light falling on the earth every day, if we cannot arrive at some solar solution that is better than EROEI of 1 to 1, and by a considerable margin, we are basically saying that human beings are stupid to an extent not known anywhere else in nature. It may end up being PV, or it may end up being some rarified development of a thermal solution, or it could even be direct conversion of water to hydrogen by direct light with no intermediate electricity needed at all (such cells have been tested) but as for me, purely on a point of principle (principle being humans are not totally ignorant) I will not accept that the most abundent form of energy being recieved on earth (sunlight) cannot profitably be used. It is non-sensical on the face of it.
(Recently my sister and I were standing in her yard in the summer in a typical suburban neighborhood. As luck would have it were talking about solar energy, or trying to, because the noise from the air conditioners in the neighborhood was so loud you really could not easily carry on a conversation. She asked me if I thought solar energy could produce enough energy to make a real difference. I asked her "Do you hear the noise from every house around us (including yours) and see the heat waves pouring out the top of the air conditioners?...that is how much energy it is taking to FIGHT solar energy, so do you think it can produce enough to be useful?")
Joule said in a post just above yours.."However unattractive the EROIs and EIRRs of renewables are, that is what we will eventually be stuck with, so we best prepare to work around it."
I think what we need to get away from is being "stuck" with a source of energy (fossil fuels) that are filthy, carbon laden, placed in pockets on the earth in the least strategic places and most trouble prone places possible (which came first there, the chicken or the egg? Is the oil simply "unlucky" enough to be in trouble prone spots,or are the spots trouble prone because oil is there? Hmmm...)
Either way, until we begin to view a scenario in which the renewables are, on an all around basis, viewed as superior and not inferior to the depletable fossil fuels, progress on developing renewables will be slow, almost glacially so. Oh, that was an important point, the fossil fuels are depletable and depleting, fast according to my friends at TOD...and the fossil fuels are still regarded as superior huh? :-)
RC
Where does ENTROPY come in to all this ?
AN EROEI of 1:1 may be ... plant receives daily sunlight ... human eats Plant.
Humans give each other a hand...
Actually, we would be no stupider than any other plant or animal that has lived entirely off energy stored though photo-synthesis. To utilize solar energy by some other process, we would have to be smarter than any other organism has ever been in 2 billion years.
We are already using sunlight profitably - by eating food. The question of whether we can invent and sustain a separate method of directly gathering the sun's energy has not yet been definitively settled. It is not nonsensical to believe we can't - or won't - come up with such a method; I hope we will. But it may turn out that we can't do better than the rest of the biosphere has done in 2 billion years, and we should all be studying permaculture instead of installing PV. FWIW, I advocate working both those options until we have more information.
Nuclear with centrifuge enrichment has 40-60 EROI.
http://www.world-nuclear.org/info/inf11.html
GWh (e) TJ (th) Annual PJ (th) 40 year Inputs centrifuge Mining & Milling - 230 t/yr U3O8 / 195 tU, at Ranger (x80%) 50 2.0 Conversion (ConverDyn data) 9.24 Initial enrichment: Urenco centrifuge @ 63 kWh/SWU 12.6 0.14 Re-load enrichment: Urenco centrifuge @ 63 kWh/SWU 7.3 78 3.12 Fuel Fabrication (ERDA 76/1) 5.76 Construction & Operation (ERDA 76/1) 24.69 Fuel storage, Waste storage, Transport (ERDA 76/1, Perry 1977, Sweden 2002) allow 1.5 Decommissioning (Ontario data) 6.0 Total (centrifuge enrichment) 52.5 Output: 7 TWh/yr 7000 75,600 3024 PJAreva Inc, the U.S. unit of France's Areva Group (CEPFi.PA) May 2009 announced a site in Idaho for a $2 billion uranium enrichment plant to open in 2014
http://www.reuters.com/article/idUSN0650489620080506
Two other companies are already building centrifuge technology uranium enrichment plants in the United States -- European consortium Urenco's Louisiana Energy Services at a site in southeastern New Mexico and USEC Inc (USU.N), which is building a plant in Piketon, Ohio.
Areva owns and operates the Georges Besse enrichment plant in France which uses the gaseous diffusion method, passing uranium gas through porous barriers to separate the uranium-235 needed to power nuclear power plants. The centrifuge method uses 50 times less electricity and much less water than the gaseous diffusion method, AREVA said.
Areva plans to open in 2009 in France a new gas centrifuge enrichment plant, George Besse II.
http://uvdiv.blogspot.com/2009/12/french-enrichment-plant-reduces-energy...
GE's laser isotope enrichment is predicted to be 3-10 times more energy efficient than centrifuges
http://www.nrc.gov/materials/fuel-cycle-fac/laser.html
More efficient factory built reactor module construction of the AP1000 and the South Korean reactors are reducing the amount of materials (steel and cement needed per MWH generated).
Dual cooled fuel (annular fuel) developed at MIT and being developed in south Korea can boost existing reactors by 20-50% which would increase the energy generated from roughly the same amount of input.
I can't offer you hard figures, but insulation generally consists of 80-90% air so there is little material involved. Besides little material use there are also developments where fossil products like EPS are replaced with bio alternatives with the same qualities. It is possible that transporting the insulation products actually uses the most energy.
Energy savings calculations for added insulation are quite simple, the only missing factor in the equation is indeed the energy required to produce the insulation and move it to the construction site. It would be an interesting exercise as it is claimed that insulating more is generally a wise choice to save energy.
Edit: Actually there are lots of alternatives for traditional insulation products like EPS, rockwool, glasswool etc: Cellulose made from recycled newspapers for instance, Hemp sheets, cotton, woodfibers or cellulose, seashells, argexpellets and many more.
Styno,
I have been fussed at for saying that the selling price of a manufactured product must reflect the energy embedded in it's manufacture. I could be wrong theoritically if the product is made from materials that are leftovers from other manufacturing processes or salvaged (recycled ) materials with a lot of embedded energy.
Obviously if a cast iron stove grate is made from scrap steel, it might sell for a price that does not reflect the cost of the energy that went into manufacturing the original steel.But this reflects a market failure to price scrap correctly, according to it's true value.
If a product is not made from recycled or left over materials otherwise without value (even coal fly ash has certain uses but unfortunately only in small quantities) then so far as I can see unless it is deliberately either subsidized or sold at a loss for some reason I can't see any reason to say that the various players in the manufacturing process do not recover he cash value of the energy embedded along the way to the products ultimate user.
Now if price signals mean anything, one thing meant is that energy has far different true values in different forms and places.Only a very small portion of the heat released in burning a ton of coal emerges from an incadescent bulb as useful light for instance.
It seems to be a very safe bet to me that if a product makes unsubsidized financial sense from an energy pov, compared to a given alternative, that the eroi is almost certainly positive in the grand scheme of things.
A new type of light bulb that is correctly market priced at ten dollars simply cannot have more than some lesser amount than ten dollars worth of embedded energy.If it is manufactured in any ordinary sort of environment, it will have been made using coal , ng,nuclear, hydro, and oil as the energy sources.
Now perhaps this product might be some super specialized item such as a piece of equipment headed to the space program where a ten watt light source costs a couple of thousand bucks just to get it into orbit and of course my rule of thumb would not hold.Any large amount of energy embedded in it would be sacrificed in terms of it's utility aboard the space station since energy there is obviously at a premium.
But I'm waiting for somebody to explain how fiberglass insulation bats can be made in way that embedds more energy in terms of the wholesale energy prices of ng, coal , or nuclear power than they sell for -absent deliberate targeted subsidies of course.
Some interesting ideas but all I see is BAU Lite. This might not be what Dr. Konrad intends. I don't know from his presentation.
To harp on a favorite topic of mine, this is why I believe that it is imperative that some effort be made to define the parameters of the scenario or ideas presented.
Finally, what is needed is "smart shrinkage" not smart growth.
Todd
This (especially the 4th graph) confirms my earliest worries when I heard about peak oil...that we'll turn to coal and hugely exacerbate the climate situation.
Perhaps this issue is addressed in the article and I simply did not see it.
One of the big problems with considering future energy solutions is the fact our current infrastructure was developed using cheap energy. And in general we have not done a very good job of maintaining it with large parts of it nearing the end of its useful life. Simply replacing it because we have to using cheap energy is and enormous cost thats been avoided to date not without consequences.
Looking forward even 20 years very little of the infrastructure we have today will even be usable without significant maintenance work 50 years out practically nothing is usable including many of the large dams providing a lot of hydroelectric power. Almost nothing is built to anything close to roman road standards.
This debt in deferred maintenance has to be paid regardless of how you pay it. You simply have no choice.
Excluding alternative energy its not clear we could even pay it assuming large supplies of cheap energy without serious economic impact. Future generations will have no choice but to spend enormous sums to finally fix what we have deferred.
If you consider a the issues in raised in this article along with maintenance I'd argue its a lost cause. Its impossible to save our current infrastructure and we are best served in abandoning it as it decays and focusing on sustainable expansion of an new low energy infrastructure. Your far better off to simply allow the road network to fail and put your limited energy and financial resources in redevelopment of trolly/rail relocalized cities etc. Effort put into the current infrastructure either via building electric cars assuming our road system is sound or supporting suburbia via ever more ridiculous lending processes is not only a waste its dangerous as it diverts resources from what I think is the only valid solution. The longer we refuse to recognize that our investments of the last several decades are fully deprecated the less able we are to create replacements.
In general we are simply digging ourselves deeper and deeper into a hole that will be harder and harder to climb out of.
Given the marginal excess energy availability as oil supplies dwindle the rate we can even climb out of a hole once we finally decided to attempt it declines rapidly over time.
For example deciding to not put in a electric rail line now could result in once we finally decide to do it a project that takes decades instead of years as the excess energy and other resources to put in a new rail system simply is not there. Not that it cannot be done simply the time scale expands. As and example consider the Cathedrals of the middle ages incredibly impressive but also taking hundreds of years to build. Not because of lack of ability simply because of the hard limits on the amount of resources that could be devoted to excess. Given our technological advances perhaps future time scales will be shorter but until we know for sure its best to assume that projects will be constrained to take 10 times longer than they do now if not more. Building a new coast to coast rail line could take 50 years to complete for example depending on when we finally decide to do it as constraints that have not been a issue for centuries return.
And last but not least this time around when we do build we better build to Roman standards we simply can't afford to replace infrastructure that often. It has to be built to last centuries. This of course increases the upfront cost significantly again something we have not done for a long long time.
Hopefully it should be clear that at the most fundamental level the way we need to do things is changed. I'm not convinced we actually even know how. We literally don't know how to live this way any longer as we don't have the experience. Planing for centuries simply has not been done. We have a lot to relearn to even understand how to do it again and it will take time to redevelop. Often mistakes can take decades to show up and eventually come at a high cost.
When you start talking in terms of centuries the relationship of a rail bed to say a river becomes and issue as you have to consider longer term changes or the changes in shorelines etc. Given the unknowns about climate change even the best laid plans of the near future may turn out to be futile mistakes. And last but not least it should be obvious that the current population distribution from how cities are built to where they exist today is a huge problem.
Building sustainable infrastructure in Los Angles assuming anything like its current population levels in 100 years is probably not a good idea. We need to fundamentally redistribute population to even support correctly designed infrastructure. Of course this also extends into agriculture etc.
Thats to to say it cannot be done but I'd argue this is the Elephant in the room that has to be addressed first without addressing it its difficult to see how other calculations are useful on a large scale.
However this is the big picture. The good news is on a local or regional scale the problem is easy enough to solve. Some regions can readily adapt others face serious problems. For example in general the cities along the Mississippi basin and Ohio etc have a intrinsic advantage a perfect transport system and generally excellent farming and low population density. To some extent many current harbor cities also enjoy and advantage albeit with a lower population.
Thus the situation is far from hopeless its just that by choosing to avoid it the places that have a natural advantage may do far better than those that don't. So waiting ensures some serious disparity between regions in the US and of course between different areas in the world.
This disparity is of course what lay at the heart of many ancient wars as the control of the areas with the best natural resources was important. Often the most valuable real estate and living areas of the oil age become the least desirable in a post oil world. The current haves become the have nots of the future. Your almost certain to have serious social issues if the problem is allowed to run its natural course without aggressive attempts to soften the transition.
In general it seems that the future we are looking at is one where all the serious problems that have happened over the past 1000 years all become present and grave at the same time and our past solution of expansion or migration is no longer viable. We will literally be forced to solve all the problems that have been left unsolved for literally thousands of years as we leveraged the worlds resources to avoid them. They will all come crashing back like a tsunami over the next several decades and of course it seems our natural response will be to ignore them.
Thats not to say we won't eventually get through the mess but I suspect we are facing problems far beyond what most people realize and it will take a long time and a fundamental change in our societies before we finally succeed.
If we even can without falling into a long perhaps thousand year or more dark age. We are in my opinion at the end of the first wave of civilization that expanded for thousands of years. The next step is simply fundamentally different from anything we have done in history and I think history will show that the next decades or centuries or more mark the dividing line between our youth as a species and our our maturing collectively into something else for better or worse.
If this is true then it makes sense that we will literally face the biggest challenges we have ever faced since the advent of agriculture itself don't expect it to be easy.
memmel,
As usual I agree with your dour assessment of our current situation and likely future. I've gained a lot from today's many posts and especially Tom's article' but can't help feeling that we keep getting caught in a loop about how to proceed toward our energy future. We at TOD have a certain amount of clarity about what our energy future holds, and we can be fairly certain that all of our efforts will fall short of the current energy paradigm. What we have left is, IMO, the "just do it" choice. We set a goal of mitigating future energy shortfalls and start pushing for all-of the above. Every watt saved, every sustainable watt gained is one small victory towards that goal. Many gains can be made by eliminating waste and adopting/adapting current technologies.
I have posted before on our journey towards personal energy self-sufficiency and would be glad to write a post on how I arrived at the idea that this was something we needed to do, and the processes that we have gone through as we progress toward that goal. While I admit that the analogy to our national/global problems are limited, a lot could be learned from getting inside the heads of some of the people who have reduced their liabilities from our collective energy conundrum. Know this, if we don't start paying some of this forward and think long term, shortfalls will be downfalls.
My experience of (using Steve from Virginia`s excellent term) "stranded assets" here (we have a lot of them in over-built cemented-over Japan) tells me that people learn absolutely nothing from their mistakes. When huge highways and skyscapers are abandoned (here those haven`t been abandoned yet, only smaller stuff) it`s unlikely that anyone in any position of authority will say "this was an error". There is always tomorrow. The people who made the decisions in the past were heros and pioneers, not idiots, is the prevailing orthodox view.
Civilization can`t handle this error, can`t process the information...this energy from petroleum was a one-shot deal and somehow we can`t understand that as a culture there has been a massive overshoor in infrastructure. I think we are used to energy being a steady flow not a huge wave and then coming to a crashing halt (virtually).
There is a lot of confusion. People live only 80-90 years (if they are lucky) and it`s not long enough to grasp the whole picture and make a system-wide correction while also worrying about putting food on the table and raising the next generation.
No coherent approach is possible probably. I`m seeing a lot of "noise" being generated by the problems and the govrnment is busy but rudderless.
Exactly I really think to pull this off with as little pain as possible and it will be painful we must abandon some of our current infrastructure and focus our energies on new ones more suited to a low energy environment.
My concern is if we don't we will fruitlessly waste the last of our cheap energy continuing to try to keep BAU going just a bit longer. And this is not just the end of suburbia but a deeper and more general change.
I'm not convinced we have the luxury of messing this up.
I think civilization can process the information but will need a bit of distance from the events we are only now beginning to experience. Very few people even accept that anything is really happening at this point. It is very difficult to process the details of the train wreck when you are inside the railcar as it is still being twisted and it is not yet come fully off the track.
Of course you have to actually survive the accident in a reasonably intact form to be in a position to assess the consequences.
memmel, valid points IMO
Sayings like 'Paradox of production', 'Receding horizons' and 'Road to Olduvai' come to mind.
I agree.
We must focus on light rail, subways, HSR (to link major cities)..., etc. I do think we should stop repairing roads. We must delocalize, and reverse suburbia. Big cities need to become denser. Las Vegas is history, treat it as such. L.A. (home) is too big. We built a nice rail system in a low energy past, it shouldn't be much of a problem repairing and rebuilding it. The hard part is reversing suburbia.
We must stop avoiding the elephant in the room..., overpopulation
And over consumption.
We must do away with planned obsolescence.
Future projects that rely on less energy, must be built to last.
Our throw-away society is coming to an end; it's time to get smart.
A steep gas tax 30 or 40 years ago would have been nice...,
Or
We can just simply let nature take its course and hope things get too chaotic or messy.
Imagine what would happen if rolling blackouts happen in major cities in the US.... It is guaranteed to become chaotic and messy.
Tom,
There appears to be an error on that first bubble chart. You have two bubbles labeled "NiMH". Should we assume the small one was really for NaS?
Thanks for catching that. The small one near the vertical axis is indeed NaS.
"Current renewable energy technologies must be adopted in conjunction with aggressive Smart Growth and Efficiency if we hope to continue our current standard of living and complex society with diminished reliance on fossil fuels."
Aggressive Smart Growth is not sustainable. I am surprised that Gail would not make a comment about this. Growth is at the heart of the problem. Without reversing Growth, the consequences are going to be like nothing this planet has seen before.
Very interesting, Tom, and from my perspective, very timely.
I'm coming at this from a background in market regulation and development, for six of them a director of a global energy exchange, and I've been working for the last ten years or so in the area where Internet and markets intersect.
I think that the existing 'deficit-based' financial system - involving money created as interest-bearing debt by credit intermediaries - is both demonstrably unsustainable, and in the face of the Internet, obsolescent.
I advocate the use of 'Unitisation' - which is simply the issue by energy producers of Units redeemable in payment for energy - as a basis both for cross-border trade, and for energy investment. Purely domestic investment may also involve the 'unitisation' of the use value of location/land, I think, but that is another story, as is the integration of the two.
Anyone who understands frequent flyer miles, or store loyalty points should be able to get an intellectual handle on Units.
This recent presentation to the Scottish Energy Institute covered the ground.
Unitisation changes the economics of 'payback' entirely, in very interesting ways if you denominate returns in energy rather than in $, £ or €. And for those who think it unlikely that investors will invest interest-free in energy, I point to tens of billions of dollars already invested in Exchange Traded Funds who are doing exactly that - and being pillaged by middlemen for the privilege.
If the Chinese were asked whether they preferred to invest hundreds of billions in US T Bills paying 0%, or in Units redeemable in payment for energy which yield 0% I think the answer would be fairly clear.
I believe that an International Energy Clearing Union is quite feasible, requiring:
(a) Value Standard - abstract unit of measure - consisting of a fixed amount of energy;
(b) Currencies - ie Units redeemable in payment for energy supplied;
(c) Credit - 'time to pay'; which requires in turn
(d) Framework of Trust - which I term a 'guarantee society', but which is simply a mutual guarantee agreement backed by the membership, and by a default 'Pool' funded from suitable payments for the use of the guarantee by both sellers and buyers.
A paper-based proof of concept of an energy-based currency has been around for a while in the form of Kilowatt Cards, while last week at COP15 in Copenhagen some Dutch entrepreneurs I know launched an electronic prototype Kiwah.
The outcomes for energy producers and consumers of such a networked architecture are IMHO so compelling it is capable - with suitably user-friendly infrastructure - of spreading virally from the ground up as a complementary mechanism to the existing one.
It opens up a simple but radical new path for the transition from carbon to renewables.
Pretty good stuff Tom (but then I'm a Tom also).
Only a few minor quibbles. EROI for coal/oil only seemed to count extraction, whereas using coal as an example, it is rather useless without a power plant to convert it into useful forms of energy. But in any case the numbers for past coal/oil largely reflect the fact that at that time we were using the easy stuff, which is mostly gone by now.
One plea, w.r.t. alternatives such as wind and PV, is that we need continuity of development, so that the industry can attract and retain talent. We should try to avoid the sort of boom-bust cycles that have been so damaging in the oil and natural gas industries.
Regarding stuff like residential solar. Storage is a non issue at low levels of penetration, but increasingly becomes an issue if penetration reaches interesting levels. So today on my block we have seventeen suburban houses connected to a single distribution transformer, and one 2.5KW PV array. Clearly my PV unit won't be pushing power back through the trannie, but might partially replace some demand of my neighbors. So we can probably absorb maybe 20percent solar before storage satrts becoming an issue.
There are other scalability issues. For example there are only so many good wind sites. There is only so much Gallium in the world, so while solar thin film may exhibit very promising economics at todays specialty metal prices, it is unlikely to be capable of scaling to the size needed for a rewewable energy powered world. So we want to be cautious that a buildout of good systems that lack ultimate scalability doesn't crowd out development interest in more scalable technologies.
Screw scalability. We don't build water heaters for whole neighborhoods or cities (unless you're in Iceland). Electrons don't care if they come from a 2KW solar array or a 200 MW coal plant.
I think you missed the point. The whole world probably can't be powered Gallium thin film solar modules, regardless of how they are grouped, because there probably isn't enough Gallium. Electrons do care if they come from Gallium or nothing.
My point was that technology doesn't always have to be scalable to contribute. We're going to need eveything we can throw at this problem. I feel that distributed energy production has its place in the mix with centralized forms of generation. The idea of a smart grid made up of many nodes (microgrids), large and small, has merit I think.
Really?
http://www.energy.rochester.edu/dh/:
"A recent census by the Department of Energy found more than 30,000 district heating systems in the United States"
Yeah, I knew someone would bite. Millions of households and businesses have the equipment to produce their own hot water. Why not equipment to produce some of their own electricity? I know all of the excusses about intermitancy, storage, etc. All of these are solvable and the technologies exist. Cost? We spend enough in the U.S. on bullshit to fund much of what has been proposed. It just isn't a priority because the big utes haven't figured out how to profit from it and the govt hasn't figured out how to tax it. One reason I decided to go it alone, off grid, is because I got tired of funding hypocrisy, waste, and fraud. When TVA and our EMC make me an offer better than the absurd, insulting deal they offered me to go grid-tie, maybe, just maybe I'll consider it. Their system is broken. Mine works great.
Because it's not cost-effective. I used to work for a company that had dozens of large natural gas processing plants. During the summer lightning season, the plants would disconnect from the grid and run on their own generators burning their own natural gas until lightning season was over. The reason was that it could cost $100,000 to restart one of these plants after a power outage, so they couldn't afford the downtime caused by a lightning strike.
However, the rest of the year it was cheaper for them to run on utility company power than their own power. It costs a lot of money to generate your own power compared to what a utility can do it for.
The extreme case was a plant my brother was managing. It was one of the largest natural gas plants in North America, and he was quite proud of himself for negotiating a negative price for the electricity to run it. The electric utility paid him money to use their electricity.
The catch was that, if the utility lost one of its main generating plants, he had to fire up the gas plant's rows and rows of 30,000 horsepower gas turbine backup generators and dump power back into the grid. The utility figured it was cheaper to give electricity away for less than nothing than face the consequences of a large-scale power blackout. The gas plant could supply its customers for several days on gas already in the pipelines, whereas the power company had no flexibility at all.
Tom, two things:
I'm sure you're right about the renewables hump. I think our biggest issue is going to be satisfying demand for both energy and materials feedstocks (e.g. hydrogen) and not getting stuck in a bottleneck when an early decision for disposition of something like biomass leaves stranded investments in plants we can't use, or worse, political demands to use those plants when they are counterproductive.
For a big EIRR graph (and for anyone who wants to include new technologies or alternative assumptions, you can download my Excel spreadsheet here:
http://tomkonrad.com/blog/EIRR.xls
The point of this article was to introduce EIRR as a tool... I know that many of my numbers are very approximate. In my mind, the ideal outcome would be for an EROI expert with detailed numbers on energy flows to use EIRR as a complement to their EROI calculations.
The author lost me with the phrase:
Can you have smart growth in a steady state economy? Smart growth in what? Population..., hopefully not, resource consumption..., no
growth in technology that relies on less energy..., yes
I just don't like the phrase "smart growth," because peak oil is a symptom and growth in population and consumption are the disease.
Thanks from a new forum member for a well thought out and provocative post. It made me wonder if a carbon tax would provide a mechanism to translate from EIRR to IRR?
Did you see the latest Scientific American plan (click to page 3) to wean the world off fossil fuels in 20 years?
It made the GREAT point that with economic growth the 12TW we use today would become over 16TW (in all energy forms), but by converting the oil based transport system to electricity we'd cut the ACTUAL energy required from 16TW to 11TW.
I think this is the main point Tom Konrad was making in his article above, but to a non-technical layperson such as myself looking "over the shoulders" at all these ERoEI studies, I note a truly VAST array of ERoEI figures, especially for the ever controversial nuclear.
But for now, back to getting that 16TW down to 11TW.
Doesn't that affect how we measure EROEI?
Let me explain.
Oil based transport running Internal Combustion Engines only gets about 10% of all that "high EROEI" oil energy to the wheels. So is oil really all that special after all? Maybe oil's ERoEI HAD to be that high for us to get addicted to such a nasty and inefficient form of transport. So what I'm wondering is if all the fuss over oil's high EROEI is wildly exaggerated.
Sure if you burn oil you get a lot of heat, and to get solar PV (or other renewable you want to pick on) to produce that kind of heat, well, that's gonna take a whole lot of Solar PV isn't it?
But what if we don't want heat, we want forward motion? What if 'heat' energy is irrelevant because we're using electrons directly in a new electric transport and mining system?
So I guess what I'm asking is do these ERoEI systems accurately account for new, ultra-efficient ELECTRIC transport systems in a post-oil world? Or do they just assume, like so many other doomers do, that today's transport system is all there is and all there could possibly be, and just WILL BE the way we try to mine ore, transport goods and get around in a post-oil world... leading to wildly inaccurate EROEI accounting for a renewables world. When measuring the EROEI of a post-oil world, have the "Energy Inputs" basically been slashed in half to account for a mostly post-oil, electric drag-mining, electric rail transport and electric people-mover system? If not, basing future ERoEI studies on oil based transport seems to a simplistic and dishonest assumption designed to reach a predetermined conclusion: that nothing can be as good as fossil fuels.
PS: 2012 sees "Better Place" begin its trial run in Canberra. Battery-swap stations enable 2 things: cars to quickly 'recharge' their battery by swapping it out for a new one in about a minute (faster than you can fuel up a petroleum vehicle) and car owners having the peace of mind that they'll never have to buy another battery if the current one is starting to fail... it will just be moved out of the system and recyled next time you go through the Battery Swap station.
Many analyses have come to that conclusion. Here's mine:
http://ergosphere.blogspot.com/2004/08/you-find-you-get-what-you-need.html
Oil is only "high EROEI" if we ignore all the energy needed to refine, extract in some cases, and transport it. Due to the energy intensive nature (needs a lot of natural gas) of refining alone, the EROEI of oil based fuels is capped at around 4-5:1, so in practice it tends to be much worse than most alternatives.