I subscribe to the Institute of Actuaries' Resource and Environment Group. This was set up to investigate the effect on growth and the environment of resource usage.
The most recent newsletter has an interesting piece about Energy Return on Investment, which I thought some might be interested in. I reproduce it below.
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EROI is defined to be the ratio of energy returned from energy extraction and
production compared to the energy invested in those energy gathering processes.
Historically, energy sources like oil have provided a massive return on energy invested,
but this is now reducing as more difficult sites are being tackled. This clearly increases
energy costs and constrains economic growth. A recent preliminary report by the State
University of New York, College of Environmental Science and Forestry, (sponsored by
the UK Department for International Development - DFID) assesses EROI for various
global energy resources. See: http://tiny.cc/a4eqrw
As a statistic, it will be appreciated that EROI involves extensive data, a number of
assumptions and complex calculations, so a range of results is considered. Also, “EROI
analysis does not assess the complex combination of physical, technical, environmental,
economic, and social attributes that determine a fuel’s usefulness to society.” Such
factors could possibly be worked into even more comprehensive EROIs.
The report states that if the trend towards higher cost extraction continues, and
non-conventional sources do not provide sufficiently high EROIs, “we may be moving
toward the ‘net energy cliff.”:
The low EROI from corn-based ethanol, and the loss of land for food production
which results from the increased use for biofuels, shows why these policies are
being questioned. The report notes that, while wind and photovoltaic energy are
argued to have substantial environmental benefits, factors such as the fossil fuels
used in the creation, transport and construction of turbines and panels need to be
adequately represented in the analysis. Additionally, the energy costs pertaining to
intermittency of the resource need to be considered (the need for back up energy
generation or storage mechanisms). The report does not appear to contain any
significant analysis of shale gas and oil (from fracking ) which has already made a
huge impact on the US energy position.
The most recent newsletter has an interesting piece about Energy Return on Investment, which I thought some might be interested in. I reproduce it below.
**
EROI is defined to be the ratio of energy returned from energy extraction and
production compared to the energy invested in those energy gathering processes.
Historically, energy sources like oil have provided a massive return on energy invested,
but this is now reducing as more difficult sites are being tackled. This clearly increases
energy costs and constrains economic growth. A recent preliminary report by the State
University of New York, College of Environmental Science and Forestry, (sponsored by
the UK Department for International Development - DFID) assesses EROI for various
global energy resources. See: http://tiny.cc/a4eqrw
As a statistic, it will be appreciated that EROI involves extensive data, a number of
assumptions and complex calculations, so a range of results is considered. Also, “EROI
analysis does not assess the complex combination of physical, technical, environmental,
economic, and social attributes that determine a fuel’s usefulness to society.” Such
factors could possibly be worked into even more comprehensive EROIs.
The report states that if the trend towards higher cost extraction continues, and
non-conventional sources do not provide sufficiently high EROIs, “we may be moving
toward the ‘net energy cliff.”:
The low EROI from corn-based ethanol, and the loss of land for food production
which results from the increased use for biofuels, shows why these policies are
being questioned. The report notes that, while wind and photovoltaic energy are
argued to have substantial environmental benefits, factors such as the fossil fuels
used in the creation, transport and construction of turbines and panels need to be
adequately represented in the analysis. Additionally, the energy costs pertaining to
intermittency of the resource need to be considered (the need for back up energy
generation or storage mechanisms). The report does not appear to contain any
significant analysis of shale gas and oil (from fracking ) which has already made a
huge impact on the US energy position.
