E.R.O.E.I.

NASA, NYSE, IRS, WYSIWYG. Just a few of the acronyms we’ve come to know and love, or hate. Perhaps not actual acronyms in all cases. For NASA we say “na-sa” which is a true acronym. The IRS is “eye are ess” and not “erz” or something. Whether or not they are true acronyms is unimportant. The point I want to make is there is no acronym as important as EROEI, Energy Returned On Energy Invested. The effects of EROEI trump the others. EROEI effects the micro and macro, from people to entire civilizations. It works on short timeframes and long ones.

EROEI applies to everything about life, work, business, the economy, government, civilization, you name it. Functioning systems require work. Work requires energy. Anywhere work is done energy is used and so EROEI applies. Work can be done by people, animals or machines. The source of energy for people and animals is solar, in the form of food. The sources of energy for machines are many and varied. But in all cases productivity depends on EROEI.

The reason EROEI trumps all others is because it is not dependent on there being people at all. It’s more like the laws of thermodynamics. If an animal burns more calories than it eats, it dies. That’s negative EROEI. An ecosystem, person, business, economy, government, or civilization goes under if EROEI is negative. Spend more than you make, you go bankrupt. That’s also negative EROEI. It may not seem like it, but overspending money is overspending energy. Money buys work either directly as labor, or indirectly as a product which was produced with work. All work requires energy.

Which is all to say, price matters. The more you spend on energy, the less you have to spend on something else. Money, in the end, represents energy. Without energy nothing happens. If nothing happens, what’s the point? To paraphrase Vince Lombardi, energy is not the most important thing, it’s the only thing.

The modern industrial age began with the conquest and exploitation of new energy. Combustion energy starting with wood and coal and moving to petroleum and natural gas. These fuels contained vastly more energy than you could ever get in a pre-industrial society. This allowed vastly more work to be done, and vastly more prosperity. Without the input of this new supply of energy almost all of the new technology of the last several hundred years was undoable. While industrial civilization seems to be about technology and innovation, it all revolves around energy.

Now we come to the nub of things. Energy sources aren’t free, it takes energy to extract them, refine them, and transport them. How useful, how profitable the energy is depends on one over-riding factor, EROEI.

A simple analogy might help explain it. Say you have a coal digging machine that runs on coal. This machine can dig up 100 times the coal it needs to fuel itself. (100-1 EROEI) The machine has a coal profit, it has positive EROEI. Say the vien runs out and the machine switches to digging lower grade, harder to dig coal where it can only produce 50 times as much coal as it takes to run. (50-1 EROEI) It now has a lower EROEI. Since it produces less coal profit than before, less of whatever the coal profit was powering before can be done. The energy doesn’t exist for it any more. As EROEI declines, productivity declines.

Should you ever get to the point where the machine can only dig up enough coal to supply itself (1-1 EROEI) there is no coal profit. EROEI is net zero. The coal mine is no longer an energy source, it’s just a hole in the ground. Should EROEI go negative, the machine needs more coal than it can dig up. To continue digging you must consume any surplus coal you might have accumulated. When the surplus runs out, no matter how much coal there is left in the ground you can’t dig it up.

As long as you have positive EROEI you can make up for decreasing EROEI by adding machines. At 100-1 EROEI one machine nets 99 coal units profit. At 50-1 EROEI two machines net 98 coal units profit.

As you can see, as EROEI goes down it gets harder and harder to meet your energy demands. At 2-1 EROEI half your total energy output goes to getting more energy. That’s a lot of machines and a lot of coal mines. At 2-1 EROEI you need to produce double the amount of total energy to net the same as at 100-1 EROEI. And that’s using 100 times the machines. At 1-1 EROEI it doesn’t matter how much you produce there’s no energy left for anything else. N can be 1 or 1 million, the net is still zero.

Let’s return to the real world. About 40 years ago petroleum EROEI was 100-1, spending one barrel of oil returned 100 barrels of oil. Today EROEI is 10-1, one barrel returns only 10 barrels. This is what peak oil is really about. It isn’t that we are running out of oil, we are running out of easy to extract oil. The peak is not in reserves but in EROEI. For oil, EROEI peaked at 100-1 and has been going down ever since despite having more known reserves.

This leads us to our million dollar question. (Though through inflation a million dollar question ain’t what it used to be.) What level of EROEI is required to power the industrial system we have built?

The world as it exists today was built when we went from a pre-industrial EROEI of maybe 3-1 to an EROEI of 100-1. EROEI is now heading the other direction, instead of going up it is going down. Unless we find a way to increase, or at least stop the decline of EROEI, the build-up and wind-down of the easy energy era may be a once in a planetary history event, an unrepeatable anomaly. The world in 100 years might be a very different place. A world of lost technology. Not because they won’t know how, because they simply won’t have the energy.

Terry Colon