Post on 17-Oct-2020
Energy-Return-On-Investment (EROI):
The accessibility of energy and its link with economic growth
Victor Court
BEIS Workshop on EROI, 30 June 2017
• Postdoctoral researcher at EconomiX, the research center in economics of the Université Paris Nanterre.
• Forthcoming position as a postdoctoral researcher of the Chair Energy & Prosperity.
• Personal website (research articles, Ph.D thesis, and data): www.victor-court.com.
• E-mail adress: victorcourt@free.fr.
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• Societies are based on the transformation of natural resources into final
goods that provide useful services (food supply, protection,
entertainment, etc.).
• Energy is needed to perform such changes from raw material to useful
infrastructures and goods.
• Humans cannot produce energy, they can only collect it from the
environment.
• It takes energy to extract primary energy from the environment (coal,
oil, gas, uranium, solar flows) and refined it into final forms (liquid
fuels, heat, electricity).
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Energy and the economy
• The EROI is the ratio of the quantity of energy delivered by a given processto the quantity of energy consumed in that same process.
• The EROI is a measure of the accessibility of an energy resource.
• The higher the EROI, the greater the amount of net energy delivered tosociety in order to support activities other than energy extraction.
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Definition of the EROI
𝐸𝑅𝑂𝐼 =𝐸𝑛𝑒𝑟𝑔𝑦 𝑜𝑢𝑡𝑝𝑢𝑡
𝐸𝑛𝑒𝑟𝑔𝑦 𝑖𝑛𝑝𝑢𝑡. (1)
𝑁𝑒𝑡 𝑒𝑛𝑒𝑟𝑔𝑦 = 𝐸𝑛𝑒𝑟𝑔𝑦 𝑜𝑢𝑡𝑝𝑢𝑡 − 𝐸𝑛𝑒𝑟𝑔𝑦 𝐼𝑛𝑝𝑢𝑡. (2)
𝑁𝑒𝑡 𝑒𝑛𝑒𝑟𝑔𝑦 = 𝐸𝑛𝑒𝑟𝑔𝑦 𝑜𝑢𝑡𝑝𝑢𝑡 ∗𝐸𝑅𝑂𝐼 − 1
𝐸𝑅𝑂𝐼. (3)
EROI boundaries: « mm », « pou », and « ext »
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𝐸𝑅𝑂𝐼𝑚𝑚 =𝑃𝑟𝑖𝑚𝑎𝑟𝑦 𝑒𝑛𝑒𝑟𝑔𝑦 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 𝑎𝑡 𝑡ℎ𝑒 𝑚𝑖𝑛𝑒 −𝑚𝑜𝑢𝑡ℎ
𝐸𝑛𝑒𝑟𝑔𝑦 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑡𝑜 𝑓𝑖𝑛𝑑 𝑎𝑛𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑒 𝑡ℎ𝑎𝑡 𝑒𝑛𝑒𝑟𝑔𝑦. (4)
𝐸𝑅𝑂𝐼𝑝𝑜𝑢 =𝐹𝑖𝑛𝑎𝑙 𝑒𝑛𝑒𝑟𝑔𝑦 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 𝑎𝑡 𝑡ℎ𝑒 𝑝𝑜𝑖𝑛𝑡 𝑜𝑓 𝑢𝑠𝑒
𝐸𝑛𝑒𝑟𝑔𝑦 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑡𝑜 𝑔𝑒𝑡 𝑎𝑛𝑑 𝑑𝑒𝑙𝑖𝑣𝑒𝑟 𝑡ℎ𝑎𝑡 𝑒𝑛𝑒𝑟𝑔𝑦. (5)
𝐸𝑅𝑂𝐼𝑒𝑥𝑡 =𝑈𝑠𝑒𝑓𝑢𝑙 𝑒𝑛𝑒𝑟𝑔𝑦 𝑒𝑛𝑗𝑜𝑦𝑒𝑑 𝑎𝑠 𝑎 𝑠𝑒𝑟𝑣𝑖𝑐𝑒
𝐸𝑛𝑒𝑟𝑔𝑦 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑡𝑜 𝑔𝑒𝑡, 𝑑𝑒𝑙𝑖𝑣𝑒𝑟, 𝑎𝑛𝑑 𝑢𝑠𝑒 𝑡ℎ𝑎𝑡 𝑒𝑛𝑒𝑟𝑔𝑦. (6)
EROI boundaries: an example
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5 MJ2 MJ 2 MJ 1 MJ
9 MJ
FOSSIL FUEL
REFINING & TRANSPORTExtracted
crude oil
100 MJ
Refined
products
95 MJCrude oil deposit
100 MJ
GOODS & SERVICES
PRODUCTION
FOSSIL FUEL
EXTRACTION
Embodied
energy in capital
goods
Upstream energy sector Downstream energy sector
Energy system
Energy-economy system
𝑬𝑹𝑶𝑰𝒆𝒙𝒕 = 𝟓. 𝟎
𝑬𝑹𝑶𝑰𝒎𝒎 = 𝟐𝟓
𝑬𝑹𝑶𝑰𝒑𝒐𝒖 = 𝟗. 𝟓
Methodology summary: a two-dimensional boundary
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Boundary for energy Inputs
Boundary for energy Outputs
1. Extraction
(mm)
2. Processing
(pou)
3. End-use
(ext)
1 Internal energy 𝐸𝑅𝑂𝐼1,𝑖𝑛𝑡𝐸𝑅𝑂𝐼2,𝑖𝑛𝑡 𝐸𝑅𝑂𝐼3,𝑖𝑛𝑡
2 Direct external energy 𝐸𝑅𝑂𝐼1,𝑑𝑖𝑟 𝐸𝑅𝑂𝐼2,𝑑𝑖𝑟 𝐸𝑅𝑂𝐼3,𝑑𝑖𝑟
3Indirect energy embodied in material inputs
𝐸𝑅𝑂𝐼1,𝑖𝑛𝑑 𝐸𝑅𝑂𝐼2,𝑖𝑛𝑑 𝐸𝑅𝑂𝐼3,𝑖𝑛𝑑
4 Indirect energy embodied in labor 𝐸𝑅𝑂𝐼1,𝑙𝑎𝑏 𝐸𝑅𝑂𝐼2,𝑙𝑎𝑏 𝐸𝑅𝑂𝐼3,𝑙𝑎𝑏
5Auxiliary services and environmental
externalities𝐸𝑅𝑂𝐼1,𝑎𝑢𝑥 𝐸𝑅𝑂𝐼2,𝑎𝑢𝑥 𝐸𝑅𝑂𝐼3,𝑎𝑢𝑥
• 𝐸𝑅𝑂𝐼1,𝑖𝑛𝑑 is also called 𝐸𝑅𝑂𝐼𝑠𝑡𝑛𝑑 for « standard ».
Source: Murphy et al. (2011).
EROI values for fossil fuels at the mine-mouth (« mm »)
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0
20
40
60
80
100
120
ER
OI at
the m
ine-m
ou
th(w
ell-h
ead
)
BEIS Workshop on EROI, Victor Court
Source: author compilation from literature, see Court (2016).
EROI values for electricity at the point of use (« pou »)
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0
10
20
30
40
50
60
70
80
90
100
ER
OI p
ou
for
ele
ctr
icit
yp
rod
ucti
on
BEIS Workshop on EROI, Victor Court
Source: author compilation from literature, see Court (2016).
Order of magnitudes
10
• Pre-industrial energy systems based on solar energy had EROIs around10-20.
• Conventional fossil energies have higher EROIs around 40-80.
Switch from biomass (low energy density) with low EROI, tofossil energies (high energy density) with high EROIs, seems tobe a key factor to enable a regime of sustained high economicgrowth.
• EROIs of conventional fossil fuels seem to be decreasing in recentdecades.
• Non conventionnal fossil fuels and modern renewable energies have,for now, lower EROIs around 5-20.
Crucial to take into account a third dimension: time.
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EROI as a function of the exploited resource ratio
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• For a given energy resource, the EROI represents the struggle betweentechnological progress and physical depletion.
• Exploited resource ratio, 𝜌 ∈ 0,1 :
Non renewable: cumulated production divided by Ultimately Recoverable Resources(URR).
Renewable: annual production divided by par Technical Potential (TP).
𝜌𝑛𝑜𝑛 𝑟𝑒𝑛𝑒𝑤𝑎𝑏𝑙𝑒,𝑡 =𝐶𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛𝑡
𝑈𝑅𝑅. (7)
𝜌𝑟𝑒𝑛𝑒𝑤𝑎𝑏𝑙𝑒,𝑡 =𝐴𝑛𝑛𝑢𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛𝑡
𝑇𝑃. (8)
Theoretical model of the EROI
• The exploited resource ratio 𝜌 ∈ 0,1 is a proxy measure of both:
experience, i.e. technological learning,
physical depletion of the resource.
• So we can define:
12
𝝆
Technological component 𝑮 Physical component 𝑯 Complete function 𝑭
EROI
𝝆
EROI of virgin resource
Strictly positive asymptotic value𝚽
EROI
𝝆
Technological limit
Initial EROI with immature technology
1
𝚿
EROI
𝝆
Maximum potential EROI
Break even limit (EROI = 1)
𝛆
1
1 11
1
𝐻 𝜌 = 𝑒𝑥𝑝 −𝜑𝜌
and
𝜑 = 𝑙𝑛(𝜀)
𝐺 𝜌 = 𝛹 +1 − 𝛹
1 + 𝑒𝑥𝑝(−𝜓(𝜌 − 𝜌))
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𝐸𝑅𝑂𝐼 𝜌 = 𝜀 𝐹 𝜌 = 𝜀𝐺 𝜌 𝐻 𝜌 . (9)
Implication 1: Maximum EROI of global oil already reached
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0
10
20
30
40
50
60
70
80
1860 1880 1900 1920 1940 1960 1980 2000 2020
EROI (dmnl)
Time (year)
Global EROI of oil (1860-2011)
0
5
10
15
20
25
30
35
40
2000 2025 2050 2075 2100 2125 2150
EROI (dmnl)
Time (year)
Global EROI of oil (2000-2150)
Historical estimation with price-based method
Historical estimation with new model
Prospective estimation with new model
Deviation range
BEIS Workshop on EROI, Victor Court
Source: Court & Fizaine (2017).
Implication 2: Maximum EROI of global gas already reached
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0
25
50
75
100
125
150
175
200
1890 1910 1930 1950 1970 1990 2010
EROI (dmnl)
Time (year)
Global EROI of gas (1890-2012)
0
10
20
30
40
50
60
2000 2025 2050 2075 2100 2125 2150
EROI (dmnl)
Time (year)
Global EROI of gas (2000-2150)
BEIS Workshop on EROI, Victor Court
Source: Court & Fizaine (2017).
Implication 3: Maximum EROI of global coal not yet reached
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0
15
30
45
60
75
90
105
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020
EROI (dmnl)
Time (year)
Global EROI of coal (1800-2012)
Historical estimation with price-based method
Historical estimation with new model
0
20
40
60
80
100
120
2000 2020 2040 2060 2080 2100 2120 2140
EROI (dmnl)
Time (Years)
Global EROI of coal (2000-2150)
URR = 105 000 EJ
URR = 29 500 EJ
BEIS Workshop on EROI, Victor Court
Source: Court & Fizaine (2017).
Implication 4: EROI of modern renewables are probably increasing
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• No way to confirm that in our article.
• Recent studies on PV are consistent with this idea:
Meta-analysis from Bhandari et al. (2015): « The mean harmonizedEROI varied from 8.7 to 34.2 ».
Leccisi et al. (2016): « quality-adjusted energy return on investment(EROIPE-eq) values ranging from over 60 to ~10 ».
• Negative side: storage at grid-level is not included in such studies.
• Positive side:
Last barrel of oil will have an EROI equal or below 1.
Last installed wind turbine will have an EROI of 1 but the globalwind farm will have an EROI above one.
What is the minimum EROI that a society must have?
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• Depends on:
society’s complexity,
society’s energy intensity.
• Hall et al. (2009) postulate that a minimum EROI of 12-14 isprobably needed to have growth in moder economies.
• With an indirect approach based on energy expenditures, Fizaine& Court (2016) show that the US economy requires a primaryenergy system with an EROI above 11 in order to enjoy apositive rate of growth.
Decreasing EROIs for oil and gas have already impacted the economy ?
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• Average rate of growth of GWP of 2.7%/year between 1950-75, compared to1.8%/year between 1975-2010.
Energetic determinism not only through EROI but also the efficiency ofprimary-to-useful exergy conversion (see forthcoming article).
• Moreover, be carefull with the non-linearity between EROI and netenergy:
Consequences of a 50% EROIdecrease from 15 to 7.5 are notproportional to a 50% decreasefrom 30 to 15.
EROImin
Source of graphic: Lambert et al. (2013).
Conclusion
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• EROI represents the evolving struggle between technologicalprogress and physical depletion to get energy from the environment.
• EROI of oil and gas will most likely continue to decrease in thefuture.
• EROI of coal should be maximum in a few decades and decreaseafter that.
• Currently, modern renewables have lower EROI than fossil fuels butprogress is expected.
• Uncertainty remains on the compatibility between a full renewablemix including high storage capacities and the minimum EROI of 11required to have growth in a modern economy.
Thank you for your attention.
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References
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• Cited in this presentation:
Court, V., 2016. Energy, EROI, and Economic Growth in a Long-Term Perspective. Ph.D thesis, UniversitéParis Nanterre.
Court, V., & Fizaine, F., 2017. Long-term estimates of the energy-return-on-investment (EROI) of coal, oil,and gas global productions. Ecological Economics, 138, pp. 145–159.
Fizaine, F., & Court, V., 2016. Energy expenditures, economic growth, and the minimum EROI of society.Energy Policy, 95, pp. 172–186.
Hall, C.A.S., Balogh, S. & Murphy, D.J.R., 2009. What is the Minimum EROI that a Sustainable Society MustHave? Energies, 2(1), pp.25–47.
Lambert, J., Hall, C. & Balogh, S., 2013. EROI of Global Energy Resources. Status, Trends and SocialImplications. State University of New York College of Environmental Science and Forestry (SUNY-ESF),Syracuse, USA/Next Generation Energy Initiative (NGEI), Marcellus, USA, xxii + 136 pp.
Murphy, D.J. et al., 2011. Order from Chaos: A Preliminary Protocol for Determining the EROI of Fuels.Sustainability, 3(10), pp.1888–1907.
• Other articles of the author:
Court, V., Jouvet, P.-A., & Lantz, F., 2018. Long-term endogenous economic growth and energy transitions.Energy Journal, 39(1), pp. 29–57.
Fizaine, F., & Court, V., 2015. Renewable electricity producing technologies and metal depletion: a sensitivityanalysis using the EROI. Ecological Economics, 110, pp. 106–118.