Energy Return on Energy Invested – Prof. Charles Hall’s Comments

In my most recent post, Why the Standard Model of Future Energy Supply Doesn’t Work, I made some comments about the calculation of Energy Returned on Energy Invested. Professor Charles Hall sent me the following response to what I said, which he wanted to have published. I have a few follow-up comments, but I will save them for the comments section.

Section of Why the Standard Model of Future Energy Supply Doesn’t Work Upon Which Comments Are Being Made

The Energy Return on Energy Invested (EROEI) Model of Prof. Charles Hall depended on the thinking of the day: it was the energy consumption that was easy to count that mattered. If a person could discover which energy products had the smallest amount of easily counted energy products as inputs, this would provide an estimate of the efficiency of an energy type, in some sense. Perhaps a transition could be made to more efficient types of energy, so that fossil fuels, which seemed to be in short supply, could be conserved.

The catch is that it is total energy consumption, that matters, not easily counted energy consumption. In a networked economy, there is a huge amount of energy consumption that cannot easily be counted: the energy consumption to build and operate schools, roads, health care systems, and governments; the energy consumption required to maintain a system that repays debt with interest; the energy consumption that allows governments to collect significant taxes on exported oil and other goods. The standard EROEI method assumes the energy cost of each of these is zero. Typically, wages of workers are not considered either.

There is also a problem in counting different types of energy inputs and outputs. Our economic system assigns different dollar values to different qualities of energy; the EROEI method basically assigns only ones and zeros. In the EROEI method, certain categories that are hard to count are zeroed out completely. The ones that can be counted are counted as equal, regardless of quality. For example, intermittent electricity is treated as equivalent to high quality, dispatchable electricity.

The EROEI model looked like it would be helpful at the time it was created. Clearly, if one oil well uses considerably more energy inputs than a nearby oil well, it would be a higher-cost well. So, the model seemed to distinguish energy types that were higher cost, because of resource usage, especially for very similar energy types.

Another benefit of the EROEI method was that if the problem were running out of fossil fuels, the model would allow the system to optimize the use of the limited fossil fuels that seemed to be available, based on the energy types with highest EROEIs. This would seem to make best use of the fossil fuel supply available.

Charlie Hall responds:

I have always been, remain and will probably always continue to be a huge fan of Gail Tverberg, her analyses and her blogs. I am also committed to try and make sure science, such as I understand it, remains committed to truth, such as that is possible, which includes an accurate representation of the scientific work of others. In that spirit I wish to correct a short piece (referenced above) that is attempting to represent my own work on Energy Return on Investment (EROI or EROEI) but does not do so in a way that is fully consistent with the published work of myself and my colleagues. Continue reading

Overview of Our Energy Modeling Problem

We live in a world with limits, yet our economy needs growth. How can we expect this scenario to play out? My view is that this problem will play out as a fairly near-term financial problem, with low oil prices leading to a fall in oil production. But not everyone comes to this conclusion. What were the views of early researchers? How do my views differ?

In my post today, I plan to discuss the first lecture I gave to a group of college students in Beijing. A PDF of it can be found here: 1. Overview of Energy Modeling Problem. A MP4 video is available as well on my Presentations/Podcasts Page.

Many Limits in a Finite World

We live in a world with limits. These limits are not just energy limits; they come in many different forms:

2 We are reaching limits in many ways

All these limits work together. We can work around these limits, but the workarounds are higher cost–for example, substituting less polluting energy resources for more polluting energy resources, or extracting lower grade ores instead of high-grade ores. When lower grade ores are used, we need to process more waste material, raising costs because of greater energy use. When population rises, we must change our agricultural approaches to increase food production per acre cultivated.

The problem we reach with any of these workarounds is diminishing returns. We can keep increasing output, but doing so requires disproportionately more inputs of many kinds (including human labor, mineral resources, fresh water, and energy products) to produce the same quantity of output. This creates higher costs, and can lead to financial problems. This phenomenon is one of the major things that a model of a finite world should reflect.

Continue reading

Two Energy Books of Interest

Today, I’d like to write about two fairly different books related to limited energy supply. Both are excellent, but intended for fairly different audiences, and focusing on different aspects of our dilemma.

1. “Power Plays: Energy Options in the Age of Peak Oil” by Robert Rapier.

This book is written at a fairly introductory level, giving information about the many energy options we have, and the trade-offs we make as the result of our choices of energy options. The book is not about peak oil per se, but includes a chapter on peak oil as well as a chapter on climate change. The book ends with the chapter, “The Road Ahead”. The book is inexpensive–$16.15 from Amazon.

2. “Energy and the Wealth of Nations: Understanding the Biophysical Economy” by Charles Hall and Kent Klitgaard

This book is focused on energy and economics. This book seems to be aimed as a text book, or at an audience who is already familiar with some of the issues, and wants to dig deeper. This book is in two column format with questions at the end of each chapter to facilitate classroom discussion. It covers in depth a wide range of topics, from energy’s role throughout history, to the relationship of energy to wealth production, to energy return on investment, to how to do biophysical economics, to peak oil. It ends with the chapter, “Living a Good Life in a Lower EROI Future.”

Below the fold, I will talk a little more about each. Continue reading