January 26, 2007

Ethanol and Net Energy - EROI

Energy return on investment (EROI) is the ratio of the energy delivered by a process to the energy used directly and indirectly in that process.

Many of the arguments against ethanol concern the hotly debated Energy Rate of Investment (EROI) of the fuel. Does it take more (mostly fossil fuel) energy to produce ethanol than the final fermented product contains?

Most experts agree that ethanol made from corn has a lower EROI than that made from sugarcane because sugarcane has more energy in it than corn and the energy to cultivate and harvest the crop takes less energy. They also agree that cellulosic ethanol, made from agricultural and forestry waste, would have a much higher EROI because the cellulosic feedstock does not include accounting for cultivation energy expense. However, the conversion process could be higher than sugar fermentation so it is hard to come up with real numbers.

Interestingly, while determining EROI is a fairly straightforward process of accounting for inputs and outputs, there are social factors that come into play when evaluating fuels and they are highly variable. The social cost we place on carbon emissions, for example, would impact the refining and infrastructure costs of the fuel. Can we put a price on disposal of uranium wastes or other process residues like pet-coke (which may grow as time goes along)? Should we factor in the hidden costs of oil or feedstock for a process?

Increasingly, it seems, EROI is becoming more of a fuzzy math affected by assessment of non-scientific military, employment, trade, and political variables.

Changing structure of final energy sold to consumers in the United States by energy form. Solids consist of fuelwood and other biomass and coal. Liquids consist of petroleum products. Grids consist of electricity, gas, and district heat.
The costs of energy transition may make the usefulness of one low-EROI fuel more attractive than one with a higher EROI. Is it realistic to expect to convert to a hydrogen-based energy economy when one considers that the historical trends of energy form do not even include compressed gas or fuel cells (see chart above)?

There is an excellent online reference called the encyclopedia of earth that helps define EROI in laymen's terms. Many of the topics come from the Environmental Protection Agency which is a pretty credible endorsement for the site.

The entry on EROI is fairly lengthy but I have listed the ten principles here:

Ten fundamental principles of net energy

The decline in cost for ethanol fuel produced from sugarcane in Brazil.

EROI is a tool of net energy analysis, a methodology that seeks to compare the amount of energy delivered to society by a technology to the total energy required to find, extract, process, deliver, and otherwise upgrade that energy to a socially useful form. Net energy analysis was developed in response to the emergence of energy as an important economic, technological and geopolitical force following the energy price increases of 1973-74 and 1980-81. Interest in net energy analysis was rekindled in recent years following another round of energy price increases, growing concern about energy's role in climate change, and the debate surrounding the remaining lifetime of conventional fossil fuels, especially crude oil.

The principles
1. Net energy and energy surplus are important driving forces in ecology and economic systems
2. The size and rate of delivery of surplus energy is just as important as EROI
3. The unprecedented expansion of the human population, the global economy, and per capita living standards of the last 200 years was powered by high EROI, high energy surplus fossil fuels
4. The principal economic impact of a shift to a lower EROI energy system is the increased opportunity cost of energy delivery
5. Energy quality matters
6. Market imperfections that distort prices and cost also affect EROI
7. The methodologies to perform net energy analysis are well established
8. The relation between “peak oil” and the EROI for world oil production is unknown
9. Technological change affects EROI just as it affects price and cost
10. Alternatives to the dominant energy and power systems show a wide range in EROI

On the power generation side, coal, and hydropower have the highest EROI among conventional power systems, although the latter has very limited potential for further expansion in most regions of the world. Nuclear power appears to have a lower EROI, but there are very few credible studies that are thorough and unbiased. We do not know what the EROI will be from the new generation of nuclear reactors that would be built if demand for them returns.

Wind has a very favorable EROI in the right conditions, while solar thermal and photovoltaic systems have lower EROIs compared to coal and hydropower. As outlined above, a key issue is the size of the surplus that can realistically be delivered by those renewable power technologies.

A final point for consideration: Carbon may trump EROI. The growing concern that climate change may impose swift and large costs on society may drive the next major energy transition. It is plausible that carbon intensity, as opposed to net energy, may be the principal attribute of future energy systems that determines the timing and pace of their adoption. Society may choose to forgo the benefits of a larger energy surplus to reduce its exposure to climate-related risks.

For more information, click HERE

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Anonymous said...

Another issue that should be placed in the EROI formula is energy output/acre/year.

without this added calculation, EROI is virtually useless. this concept comes to a head when ppl argue about ethanol EROI #'s but in the end they all admit that ethanol can only secure ~17% of all of USA's liquid fuel needs.

If i have 10 acres and make 10 gal of biodiesel from handpressed and hand collected, hand seeded and hand tilled soy. my EROI is huge but it doesnt mean squat because i just spent the last year and 10 acres growing 10 gal of fuel.

So, frankly, EROI doesnt mean anything without that added formula. efficiency of land use MUST be an important consideration.

Tom Konrad said...

Thanks for the excellent post. A lot of us (myself included) don't spend enought time defining our terms.... and now I just need to put in a link :).

In response to the last comment, there is no reason to confuse the issue by bringing in gallons per acre. EROI was never intended as a substitute for conventional cash-based ROI (return on investment), and conventional accounting is excellent for detecting the waste of unsubsidized resources... the only reason we even need to talk about EROI is because of the massive distortions by government intervention in the energy markets. As long as governments avoid massive (as opposed to the current moderate) subsidies to land prices and labor, conventional economics will prevent the use of 10 acres of land and 1 man-year to produce 10 gallons of fuel.

David said...

I’m very encouraged to see the energy question being discussed in more than general terms. I think a lack of financial calculus is a consistent problem in the environmental community.
As for the gallons/acre question, I’m inclined to agree with TK. While land-use (and in the broader sense, capacity) is clearly a huge consideration in biofuel production, the EROI is intended to allow for fairly fundamental apples-to-apples comparisons.