The Upside of Renewables

By Kolby Hoagland | September 27, 2013

When crude oil reserves were first tapped on a commercial scale in the 19th and 20th Centuries, the oil was relatively close to the surface and needed less energy to pump and refine than is currently demanded to carry out the same practice. As oil has become scarcer, deeper wells and more energy intense retrieval practices are needed to produce the energy products our economies hinge on. In spite of efficiency gains in recovery and refinement processes, the ever increasing effort required to produce usable energy from it continually decreases the ultimate return on the energy invested for oil. The energy returned on energy invested (EROI) of any energy product fundamentally affect its economics and sustainability as a viable energy source. This week’s DataPoints blog will briefly look at the predicament of fossil energy’s finite nature and the upside of renewables.

When oil reserves were first tapped the EROEI ratio was 100:1. This means that for the equivalent amount of energy in one barrel of oil was needed to pump and refine the early oil barons were returned one hundred barrels of oil, an EROI ratio of 100:1. As the easily accessible oil near transportation hubs dried up, wildcatters traveled to more distant locations in search of oil, driving up EROI because more energy was required to get the oil to its destination. Later and more recently, oil companies are drilling deeper wells in more remote locations while employing energy intense practices simply to pump the oil. By 1999, the world average EROI for oil was 35:1, and in 2006, it had dropped to 18:1. Even though EROI estimates can easily be contested because of variability in defining input parameters and production longevity of a well, the finite nature of fossil fuels makes perpetually decreasing EROIs for oil, gas, and coal undeniable.

Coal, as an energy feedstock, has an excellent EROI of around 80:1 delivered to a power plant. After losses are accounted for in the production of electricity, coal remains one of the soundest energy sources with an estimated EROI between 24:1 and 12:1. Additionally, the energy density and hydrophobic nature of coal further affirm reasons behind its historic dominance as the economically wisest option among energy sources. Unfortunate for coal and those that are invested in it, concerns around toxicity and carbon emissions have driven regulation to protect health and the environment. Installing emissions control technologies to achieve acceptable levels of toxins and carbon emissions the EROEI of coal (and natural gas) decreases considerably. Carbon capture and storage (CCS) along with other emission control technologies requires energy and reduce the ultimate EROI of the energy product upwards of 40%.

Considerable hype has pushed shale gas to the forefront of energy speculations. Power producers are converting and building plants to operate on natural gas as prices have declined and remained low over the last five years. With increasing environmental concerns surrounding fracking and potential price volatility of natural gas, regulation is likely to fetter its current hype. With environmental regulations and its finite nature, natural gas EROI will ineviatably decrease.

A precipitous decrease in EROI of fossil energy sources poses a serious threat to modern society. This threat, however, opens considerable opportunities for the renewable energy industry, particularly for biomass because of their drop-in nature to existing fossil energy assets. Renewable energy, by nature, is not bound by limited resources as are fossil supplies. The EROI of renewable energy remains constant and will increase considerably from the efficiency gains as the industry and technologies mature.

Bioenergy critics will cite the low EROI of some bioenergy products, such as corn ethanol at around 2:1. The infancy of the bioenergy industry and its production systems provides opportunities for significant efficiency gains that will strongly affect their ultimate EROI in the production of biofuel, electricity, and heat. Fossil energy sources are precluded from much of the EROI gains from improvements to efficiency because of penalties to their EROI from their finite existence.  Corn ethanol was built on the foundations of agriculture, which put a greater impetus on food calories than purely energetic calories. Currently available technologies and potential advanced in cellulosic ethanol contribute to varying EROI estimates that reach upwards of 40:1. The potential to improve the EROI of cellulosic ethanol is far greater than the potential with oil.

Efficiency gains within the renewable energy sector will have a greater impact on their long-term EROIs because renewables are inherently renewable. The nascent state of the bioenergy energy industry offers a great potential for long-term economic growth and sustainability. The upside of bioenergy is that it is meant grow.