Teetering on the brink of the ‘energy cliff’

Declining ERoEI – energy return on energy invested – is a worrying trend, Vincent Kaminski argues

A corn ethanol refinery

The incredible progress that human civilisation has made over the centuries can be attributed to two technological breakthroughs. One is the emergence of the food output surplus. The other is the harnessing of energy trapped in fossil fuel deposits.

Thanks to the increase in the productivity of labour employed in agriculture, humanity was able to divert resources from hunting, gathering and farming to more sophisticated pursuits, including manufacturing, scientific research and education. More recently, the unprecedented economic growth and accumulation of wealth the world has seen during the past 200 years would not have been possible without a growing reliance on energy inputs to production processes.

Joseph Tainter and Tadeusz Patzek offer a dramatic illustration of this fact in their recent book.¹ They calculate that an average US resident continuously uses 100,000 watts of power, or 0.01 megawatts (MW) – 100 times more than the minimum energy a person needs to live. An average agricultural worker in the US Midwest, they estimate, consumes 0.8MW of power in the form of fuel, machinery, electricity and field chemicals and outputs 3MW of power in the form of crops. "Therefore, an agricultural worker in the United States has at her disposal the power of 8,000 ordinary people," Tainter and Patzek write. By a similar calculation, an average US industrial worker commands the power of 28,000 people – the population of a relatively big town.

Amid the current depressed prices of fossil fuels, one can take the abundance of energy sources supporting all critical activities of modern society for granted. There is, however, one potential problem lurking on the horizon. It has to do with an important indicator of the efficiency of the technological processes used in energy production, known as Energy Return on Energy Invested (ERoEI, also sometimes abbreviated as EROI), and its evolution over time.

ERoEI is as important as it is elusive. It is defined as the ratio of energy used in the production of energy to energy output; loosely speaking, it is a gauge for how costly it is to produce new energy resources. It is a simple concept, but its practical usage is fraught with difficulties. These are related to the availability of data needed to estimate ERoEI and the conceptual difficulties in defining the boundaries of the system within which one wants to capture energy inputs and outputs.

For example, consider how one might figure the ERoEI for the production of corn ethanol. Energy inputs into the process include the liquid fuels used by farm machinery to produce and deliver the corn and any necessary fertilisers; the fuel consumed in the ethanol refineries; and the fuel used to transport the final product to gasoline-blending outlets. The calculation becomes more complicated if one takes into account the energy used in the manufacture of farm equipment, the construction of transport infrastructure and measures to counter the adverse environmental impact of ethanol production and use. On the asset side of the equation, one has to adjust for the energy value of ethanol plant byproducts, known as distillers' grains or DDGS, which are used as animal feed.

It should be clear from this example that any estimate of ERoEI can be distorted through omissions and/or the double-counting of inputs and outputs. In practice, one can see a wide dispersion of available estimates of ERoEI, which makes it quite difficult to compare the efficiency of energy production in different parts of the energy complex.

Despite all the conceptual and practical difficulties in estimating ERoEI for different energy sources, one troubling trend emerges from multiple studies: ERoEI tends to decrease over time. This suggests that, over time, less and less surplus energy will be available for activities other than energy production.² How low can we go? The expert consensus is that the lowest feasible ERoEI is in the range of three to seven. At these levels, society is reaching the so-called ‘energy cliff', a situation where more and more resources are diverted to producing energy, rather than fuelling all the other things humans do.

The answer to the dilemma posed by falling ERoEI is technological progress combined with a shift from fossil fuels to renewables. It is impossible to provide a satisfactory discussion of the issue in a short column like this one, so all we can do is flag up the importance of the problem and recommend a good dose of scepticism towards anyone offering easy answers. As the respected analyst and author Euan Mearns observes in his blog Energy Matters: "[T]he greatest risk to human society today is the notion that we can somehow replace high ERoEI fossil fuels with new renewable energies like solar [photovoltaics] and biofuels. These exist within the energy web because they are subsidised by the coexisting high ERoEI fossil fuels... Fossil fuels provide the monetary wealth to pay the subsidies."³

Human ingenuity offers hope, but we cannot forget that, by necessity, fossil-fuel production operations migrate over time towards locations that are costlier, environmentally riskier and more challenging from a geopolitical standpoint. This is because the lowest-hanging fruits tend to be picked first. The likely impact of technological progress will be periods of alternating increases and decreases in ERoEI, as new technologies offset deteriorating natural conditions, followed by periods in which resource scarcity returns. This may in turn contribute to more pronounced macroeconomic fluctuations.

Eventually, a scientific breakthrough will offer a solution to the ERoEI conundrum. In the meantime, we need to make the best use of the energy available today. Energy is critical to our standard of living, and the efficient production and use of energy is impossible without a well-oiled (no pun intended) market, which sends signals about the costs and scarcity of different commodities to both producers and end-users. That's why the development of efficient, globalised energy markets should be a top priority of economic policy.

Notes

1. Joseph A Tainter and Tadeusz W Patzek, "Drilling down: the Gulf oil debacle and our energy dilemma", Copernicus Books, Springer Science + Business Media, 2012.

2. A comprehensive review of the literature can be found in Jessica G Lambert, Charles AS Hall and Stephen Balogh, "EROI of global energy resources status, trends and social implications", October 2013, available at http://r4d.dfid.gov.uk/pdf/outputs/Energy/60999-EROI_of_Global_Energy_Resources.pdf.

3. Euan Mearns, "ERoEI for beginners", May 25, 2016.