77 comments on EROEI Short #1: Boundaries & Calculations
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Here's the seat of the pants/shoot from the hip calibration factor for EROEI:
When people do an activity ostensibly to produce energy and after a while, they either quit or go bankrupt, the EROEI is less than 1.
But that calculation is not prospective! It doesn't advance the science, although it might be valuable data and of historical interest.
You are wrong, the ROI is less than 1, there is no information about EROEI.
Remember that the biggest costs nowaday tend to be labor, capital and energy, on that order. If the net energy isn't enough for paying the labor and capital, the company goes bankrupt. And no, energy isn't the main factor determining those labor and capital costs, far from it.
Of course, the reciprocal is normaly true (out of irrational behaviour of the market and government subsides). If the EROEI is less than 1, the company will go banckrupt.
It could well be larger than one and even larger that that of the source against which it is competing. The failure may merely reflect the advantage that past subsidies have given the competing source. In energy, all sectors get some subsidy so following the money does not always lead to physics but rather to an address on K Street.