This November will mark the 20th anniversary of my having worked offshore in the oil and gas sector. A career that has taken me around the world and given me many opportunities. So in many ways, I have a vested interest in the topic of Energy Return on Investment (EROI). Not insomuch as I fear for my livelihood, the Oil and Gas industry will be around for a long time yet, but I fear a cold, energy-poor future, as we seek to cross the chasm between hydrocarbons and alternative energy sources.
Much has been written about the absolute certainty of the requirement to make this transition. I won’t go into the whys, but rather the how. The component that strikes me as the most pressing is making sure that policymakers understand how EROI impacts our ability to fund this transition in the first place.
Wealth of Nations
Adam Smith’s The Wealth of Nations was first published in 1776. During this period, wood was still the primary source of power, alongside manpower, beasts of burden and flowing water for mills. It wasn’t until the 1800s that coal started to replace wood and our power supply graduated to a more energy-dense form. If you read Adam Smith’s The Wealth of Nations, you won’t find energy mentioned once. Yet as the Industrial Revolution came and went we have seen with absolute certainty the connection between the use of energy and the wealth of nations. There is no such thing as a rich, energy-poor country.
The natural sciences would seem to emphasise the significance of energy in economic production, yet conventional economic growth models tend to overlook its role. It is also true that as the wealthier nations have progressed the reliance on energy as a driver for economic growth has declined, leaving the remaining underdeveloped countries of the world lagging behind. Whilst we cannot say empirically that energy drives growth, or vice versa, it is certainly true that access to abundant, and/or cheap energy is a net positive for inhabitants of those countries.
EROI
EROI stands for Energy Return on Investment, it’s a concept used to measure the efficiency of energy production or the related extraction processes. It is a fundamental thermodynamic metric applied to power generation, measuring relative inputs and outputs. In simple terms, EROI helps us understand whether the energy we get from a particular source is worth the energy we need to invest to obtain it. Since Adam Smith wrote The Wealth of Nations we have consistently upgraded the energy density of our power supplies, from wood to coal, to oil, gas and nuclear. Each is a step up in terms of the energy generated per unit of measured input.
Oil and Gas are abundant, but increasingly more difficult to access and extract. Most of the easy sources of this cheap energy supply have been depleted and the effort taken to find new sources, and then extract them for use, becomes increasingly difficult and as a result more expensive. In real terms, the energy that it takes us to extract them is becoming greater over time relative to the energy that we are receiving in return. There will come a time when the energy required to extract a barrel of oil of equivalent energy, will be greater than the energy extracted in the process. This is where the system breaks
What should be more concerning to the energy industry is that we are attempting to replace our current method of energy generation with sources less dense than that which we are currently using. Hydrocarbons and related products account for approximately 80% of the current energy use of the world. This is down only single digits over the last 20 years despite the trillions of dollars that have been invested into ‘green’ or ‘renewable’ technologies. These replacement technologies require energy, from mineral extraction to the manufacturing process all the way up to end-point delivery.
We may reach a point where there is not enough energy to fuel the transition to a new energy source.
Energy Cannibalism
Energy cannibalism refers to a situation where the process of obtaining or producing a particular form of energy consumes more energy (usually in the form of fossil fuels or other resources) than it can ultimately generate or deliver. In other words, the energy production or extraction process becomes inefficient and self-defeating because it takes more energy to get the energy than you end up with as a useful output.
Let’s say you want to produce a new type of renewable energy technology, to manufacture these devices, you need energy to mine and process raw materials, transport them, and assemble the final product. If the energy required for all these steps is greater than the energy they will produce over their lifetime, you have a case of energy cannibalism.
Energy cannibalism is problematic because it makes the energy source or technology unsustainable and economically inefficient. Ideally, we want energy production processes to have a high Energy Return on Investment (EROI), meaning they produce much more energy than what’s needed to create them. Energy cannibalism can indicate that the energy source or technology is not as environmentally friendly or economically viable as initially thought.
Outside Risk
In pushing for accelerated energy transitions, or in creating inflexible deadlines, we put ourselves in a position where we may force a level of energy starvation on developed nations, cratering economic growth and defeating the aims of those policies to transition us to a better future. Some items to bear in mind:
- Resource Constraints: Rapidly scaling up the production of renewable energy technologies, such as solar panels or wind turbines, may strain the availability of critical raw materials like rare earth metals. This can lead to more energy-intensive extraction and processing methods, potentially offsetting the energy benefits. This is especially true in periods of geopolitical uncertainties when resources are under the control of potentially hostile governments.
- Infrastructure Development: Building the infrastructure necessary for new energy sources can be energy-intensive, particularly if construction relies on fossil fuels. If the energy required for building infrastructure outweighs the energy generated from the new system, it can result in energy cannibalism. A lot of the energy grids in the West are beginning to age and will require significant building of both capacity and transmission. This is a hugely capital-intensive process.
- Inefficient Deployment: Hasty deployment of new technologies without proper planning can lead to inefficiencies. For example, if wind turbines are placed in locations with low wind speeds, their energy output may not justify the energy invested in manufacturing and installing them. If solar panels are deployed in countries with low exposure to sunlight it reduces the efficiency and EROI of the panels.
- Waste and Decommissioning: Disposing of old, inefficient energy infrastructure and transitioning to new systems can also consume a significant amount of energy. The energy cost of decommissioning and disposing of old infrastructure should be factored into the transition process
Conclusion
Policymakers in all of our governments are pushing, by mutual agreement, for solutions to problems that will not be fixed in the time periods allotted. Cutting off funding and demonising the traditional energy sector could have dramatic effects on our ability to drive growth towards cleaner technologies. If anything, we should be pushing for more traditional energy generation in the short term, through clean natural gas, and clean coal, to build out the required infrastructure for alternative energy sources.
Ideally, we should be looking to increase our investments in more energy-dense sources, such as nuclear, and further research into fusion energy as the next step in humanity’s energy generation journey. Stop-gap technologies such as Solar, Wind, Geothermal, and Hydro will not drive the next step in human achievements, for that will require exponentially more power availability. I fear that it will very soon be clear that by pushing this solar and wind-powered future we leave ourselves cold, poor and unable to support our own economic activities.
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