EROEI Short #3: Price-Estimated EROEI
Posted by jeffvail on August 31, 2007 - 11:05am
Topic: Alternative energy
Tags: eroei, eroi, net energy, original [list all tags]
We have previously discussed the difficulty in accounting for all relevant energy inputs to a given energy production process. Drawing a boundary for what energy inputs will be accounted small enough to facilitate practical accounting necessarily excludes energy inputs that, I have argued, are quite relevant to the resulting EROEI ratio. Today I will argue that, while certainly imperfect and limited in application, it is possible to use a proxy calculation to resolve this problem: price.
This theory, what I am calling Price-Estimated EROEI, attempts to use the market’s ability to fix price as a representation of a huge mass of amorphous data. As with a complete EROEI calculation, price tends to account for more individual data than we can possibly consciously account for, identify causal relationships, and resolve by some formula. Price in a free-market solves a very similar problem to the accounting problem presented by a full and accurate EROEI calculation. So, at least according to my theory, we can use this price mechanism to create a proxy for EROEI. This methodology seems especially apt for evaluating the EROEI of things such as wind power, solar power, and biofuels.
How? Let’s consider solar photovoltaic panels. We begin with a fundamental assumption (and one that is certainly problematic, but more on that later): the price of the solar PV system is a proxy for the totality of energy used in its production, in terms relative to the price of its product—electricity. Assume that a 2KW solar PV system installed on a residential roof in Phoenix, Arizona, costs $16,000 (grid intertie, no battery). [1] Assume that this system, in Phoenix, will generate 4,000 KW-hours per year. [2] At prevailing Phoenix-area electricity prices of $.10/KW-hour, this is the rough equivalent of $400/year. What is the present value of $400/year for the 40-year life-expectancy of the array? Accepting the Treasury’s inflation adjusted rate of return, an annuity that will make 40 annual payments of $400 costs $8500 today. [3] That gives us an Price-Estimated EROEI of grid-intertie solar PV at 0.53.
Why bother? What does the Price-Estimated EROEI methodology do that a standard EROEI calculation not do? Let’s take a look at just one example—the “energy” component of the labor required to build, transport, and install the PV system. There is an obvious energy prerequisite to this—food, housing, health care, etc. for the individuals involved. If these people aren’t being fed, they certainly won’t be installing PV on your roof. Feeding, housing, etc. all requires energy. But how much? Calculating this energy requirement brings us right back to the devilishly difficult (or impossible) accounting problem discussed in the first installment of this series. But it can’t be ignored if we want to create a realistic EROEI for solar PV, can it? Price acts as an efficient proxy for these labor costs—enough money must be paid to provide for the needs of the people involved. When all the price components of installing the PV system are accounted for, the sum is a representation of the energy required to get that PV system intalled and operation on a residential roof. It has no meaning in Watts or Joules or other traditional means of measure, but it does have meaning in a ratio with the value of the energy produced. That’s Price-Estimated EROEI.
As I mentioned above, there are certainly weaknesses. Subsidies and tax-incentives (to both sides of the price-ratio) can greatly distort the result (especially evident, for example, with corn ethanol or nuclear power). Similarly, while free-markets may be more efficient than command-economies, they are by no means perfectly efficient. Nor are our markets perfectly free. Finally, there are elasticity and fungibility issues. But even with all of those problems, is Price-Estimated EROEI any less accurate than “traditional” EROEI calculations, with their limits on what energy inputs are accounted for and their varying methodologies for calculation? At the end of the day, I submit that Price-Estimated EROEI represents a valuable way of looking at the broader issue of EROEI. If nothing else, it certainly says something if investment in energy source A outperforms (has a higher Price-Estimated EROEI) investment in energy source B.
[1] http://www.solargenerations.com/faqs.html
[2] Id.
[3] http://www.uic.edu/classes/actg/actg500/pfvatutor.htm
See also, http://www.jeffvail.net/2006/11/energy-payback-from-photovoltaics.html
Jeffs piece on EROI (or EROEI as TODers prefer), alludes to an Energy Theory of Value. Essentially we need something to evaluate scarce resources that are currently measured in infinite resources (dollars). This concept has a rich history over many decades dating back to Howard Scott and the Technocrats who stated that “A dollar may be worth –in buying power – so much today and more or less tomorrow, but a unit of heat is the same in 1900, 1929,1933 or 2000”.
An excellent overview of this topic can be downloaded at:
From Technocracy to Net Energy Analysis: Engineers, Economists and Recurring Energy Theories of Value" (pdf warning)
Here is another good piece on Value Theory by Charlie Hall that explains these concepts.
My advisor, Robert Costanza has also offered empirical evidence for an energy theory of value using a parallel method to the one Jeffs suggests in order to explain relationships between GDP and energy. His phd thesis 25 years ago was actually on this precise topic Embodied Energy and Economic Valuation"
A main problem in the assumptions of EROI analysis is it keeps all inputs constant. For example, if a biofuel has a 3:1 EROI then water, land, labor, soil, etc are all assumed to be equivalent ratios in the input. In reality this is far from the case. This assumption doesnt matter as long as ENERGY is the primary limiting input. The problem the planet faces now is that there are potentially MANY limiting inputs, as we attempt to scale energy production to meet growing human demand.
At some point in the not to distant future, we may run into a shortage of a central good that has no ready substitute. Using net energy analysis, or something similar, will give us a better head start to this event, and more holistic plan alternatives. EROI has many problems. Conventional economics has more.
Unfortunately, concepts like the X theory of value - for example Henry George's land theory of value - also have a rich history of deep problems, inasmuch as individual commodities of whatever sort, even patently finite ones like land or oil, pose individual and idiosyncratic problems. Among other things, these X theories neglect substitution. The unavailability of perfect substitution is not the same as the unavailability of any substitution, a point I think some hard-core doomers tend to miss.
And yet, for the purpose at hand, so what? We call the variation in buying power inflation or deflation, and as long as the variation is not so severe as to convert the dollar into pure noise, we can readily apply a 'deflator'. And for evaluating whether ethanol really produces a return, inflation hardly matters unless it reaches Zimbabwe levels, as many of the key issues seem to play out within a single harvest season.
I can't parse this, can you elaborate just a little? For example, even the Dutch have pretty much stopped making more land, so the notion that anyone with a functioning brain cell would be assuming that there is a 3:1 return of land on land is patently incomprehensible. I suppose they might be assuming 3:1 on something to do with land, but what could that something possibly be?
We'll probably need a whole toolbox, not just a wrench or a voltmeter. However, I'm not fully in sync with the hatred of economics often expressed around here. Like all viewpoints it has intrinsic limits, but at least it examines the world more broadly than through the lens of a single commodity. And even economics can tell us, for example, that if substitutes for oil - a central good for aviation at the moment - become highly problematical, business people will simply need to pick up the phone more often, and physically travel less often. Well, duh.
I mean that when a net energy analysis is undertaken, they dont adjust for other inputs. So the movement from a 3:1 to a 5:1 EROI assumes a concomittant increase in non-energy inputs, like land, labor etc from 3:1 to 5:1 as well. A 3:1, 5:1 20:1 EROI all say nothing about labor, time, land, etc. WHich is why even the low EROI numbers on ethanol are too favorable - there is a huge land input needed for biofuels that is not needed for most conventional fossil fuels, or wind.
.
I donthate economics as its part of my doctorate studies. Conventional economics has been a great allocation mechanism on an 'empty' planet. But by definition, the pursuit of 'utility' through growth,and concomittant allocation mechanisms will not work on a planet full of people and high quality resources already spent - some tweaks are needed as a minimum, and a total overhaul might actually be in order.
Ah. In other words, for the purposes at hand, we can only regard an energy analysis (EROEI, net, or other), as useful if it takes scalability into account. And this remains so if I use price as a proxy for energy, which is an additional viewpoint that may shed light on the matter. Or, to put it another way, if someone manages to put together a magical 'zero point energy' device that extracts one nanowatt-hour per year from the volume of the Earth, we can, for our purposes, disregard it absolutely and utterly. Yup, I'm OK with that.
So we add scalability analysis as a criterion or requirement to examine when refereeing energy-source analysis.
Precisely
Perhaps a start would be to examine the possibility that resource constraints (i.e. a non-'empty' planet) introduce significant correlations between some variables currently treated as uncorrelated in statistical and/or econometric models... ?
YES !!!!!!!
And correlations lead to positive feedback loops.
Thats the problem once you start looking at a finite system driven by a decreasing critical resource you get correlation and thence positive feedback.
Think of the microphone feedback case right before they go into exponential feedback their is a correlation event where the inputs and outputs become shared then boom you go positive feedback. So increasing amounts of correlation implies positive feedback. So if your concerned about correlation your really talking about positive feedback loops forming.
This is why strained complex systems tend to crash too many routes exist for positive feedback as the system becomes highly correlated.
Yes. I totally agree with this but I don't know how to do it. I think the classic example are economists who think the long term price for oil will tend to around $40 per barrel because that was the cost of CTL produced Oil when Oil cost $20 per barrel.
As memmel says above, there are almost certainly feedback effects that cause the general price of all inputs to rise so that $40 CTL Oil in a world where Oil from from the ground costs $20 is unrealistic where Oil from the ground costs $100.
The escalating costs of the Oil Sands projects are another.
Another is here in Australia where we are benefiting from a mining boom which is inducing massive investment in projects all over the place. However the costs of the these projects keep rising because they're driven by the rising costs of the commodities that is inducing the investment in the first place... etc.
How does one go about scaling input costs to projects that will increase supply to meet the demand for the commodities?
I dunno. Seems like a good Ph.D. project to me.
The Henry George link is broken. I was surprised to learn that georgism (which is apparently not so much the idea that land is the fundamental unit of value, as the idea that land ownership, and possibly only land ownership, should be taxed) is apparently quite appreciated by theorists. A bunch of liberal and quite respected economists even sent a public letter to Gorbachev arguing that he should keep land government-owned, in order to implement this idea!
I can't see that land or energy have even poor substitutes. Whatever you want to do, you need a place to do it, right? And a substitute for energy does not make physical sense.
Nate, thanks for posting that link to the Berndt's summary paper about the Technocrats. I studied Georgescue-Roegen, Howard Odum, Bruce Hannon, Herman Daly, Robert Costanza and others in the 1970's and early 1980's, but was not aware that such ideas had been discussed much earlier. It was quite an eye opener to learn that Hubbert was so active before WW II. I guess I'm a Technocrat in the sense that I think the U.S. will need to ration transportation fuel, once Peak Oil kicks in. I thought I had some profound "new" idea, but it's just another of my re-inventions of the wheel, as we engineers say (note oblique reference to Hermann Hesse's "Beneath the Wheel"). Looks like I need to do more reading...
E. Swanson
Thanks - Ive had many similar 'light bulbs' go off in my head in the last few years - thinking Ive stumbled on some new important synthesis, I google it and many of the ideas are 30 years old. And alot of them lead back to Herman Daly or Howard Odum.
The good news is, that if independent thinking minds come to these conclusions on their own (without being taught), it lends robustness to the concepts.
An energy theory of value is true - its just how to make it practical is the problem - as Schlesinger said - we have two modes towards energy - complacency and panic
"Why bother? What does the Price-Estimated EROEI methodology do that a standard EROEI calculation not do?"
Well, what if the price of electricity doubles every 3 years when NG and coal get more expensive? That will change the equation dramatically.
Also, you may be able to untie your PV's from the grid eventually, to run, say, a freezer, which may come in handy with permanent blackouts. This makes price-estimated EROEI irrelevant.
If the price of electricity doubles in three years, are you getting back double the energy when you pay that higher price? Of course you are not, so if you introduce an adjustment for future price changes, you are only fooling yourself.
As far as thinking the EROEI is irrelevant, what if you did this price estimated analysis and it showed you how to pick an alternative that would cost half initially and keep your freezer running after permanent blackouts? Would not the analysis have been relevant? The whole point of EROEI estimates is to help conserve resources by using them in the most wise manner. Just looking at the benefit (keeping your freezer running) without looking at the cost can result in poor choices in using up resources today. And in a world with limited resources, if you remove from the resource base twice what you needed to remove (even if you are willing to pay the money price) then the excess you remove is not available to someone else so your considering EROEI to be irrelevant could deny someone else having a freezer running in the blackout future your anticipate.
I asked the following question a few months ago:
I used this analogy in regard to the Texas oil production peak and decline. From 1972 to 1981, nominal oil prices went up by about 1,000% and the industry responded with the biggest drilling boom in history, which resulted in a decline in production from 3.5 mbpd in 1972 to 2.5 mbpd in 1982.
In other words, how fast did Texas have to drill in order to keep oil production rising? The answer is that it appears to be physically impossible.
We have seen a similar situation in the North Sea, where we have seen a crude oil production decline rate of about 5% per year since 1999 while oil prices have increased at about 18% per year.
IMO, Saudi Arabia--which is currently showing lower crude oil production in response to higher oil prices and increased drilling activity--is at about the same stage of depletion as Texas in the Seventies.
While we can make money finding smaller oil fields, the case histories and mathematical models suggest that we will not be able to increase our aggregate conventional oil production, i.e., the function of oil companies in post-peak regions is to slow the rate of decline.
So, an interesting question would be to determine what energy sources will show increasing flow rates of net energy, with more investment.
BTW, in my opinion, we are looking at years, probably decades, declining aggregate net energy flow rates, until such time that the rate of increase in alternative/non-conventional energy production equals the rate of decline (BTU's per year) in conventional energy production.
Well Uranium Mining looks pretty good.
Rio Tinto plans to double output over the next decade
http://www.iht.com/articles/2007/08/05/business/sxrio.php
BHP-Billiton will triple output from Olympic Dam
http://odx.bhpbilliton.com/expansion/index.asp
Just for a start.
I think this is a valid approach. Money is a medium of exchange and the "value" measured in money, while subject to some imperfection, is the best way going to compare apples and oranges.
One question I have about the present analysis is the future cost of maintaining the system which further reduces the return. If you think you are going to have a system last for 40 years without maintenance, you are ignoring an obvious reality. Even with maintenance, I think 40 years is overly generous, so the paltry EROEI of .53 maybe is closer to .25. Anything less than and EROEI of 1 is an obvious loss; remember that oil is estimated to currently have an EROEI of 6, which translates into a 500% gain.
Since resources are limited, it is critical to direct those remaining resources into the best return. It should be a clue that if a subsidy is needed to justify an action, like building an ethanol plant, or installing solar panels, the action is not justified and the resources are being misdirected.
I agree that I think my .53 figure is conservative. But, as suggested above, there is a fundamental problem of using the price of fossil-fuel generated electricity as a metric, as that will likely dramatically increase in price (or at least scarcity) in the future. This measure also cannot incorporate the likelihood or lack thereof of technological improvements that will make a technology "cheaper" (a big argument from Solar PV advocates). Just my opinion, but the best use of this "price-estimated" methodology is to get a current snapshot comparison between two non-fossil fuel, "renewable" resources. I don't have the numbers because pricing seems so erratic at this point, but I'd be interested in the price-estimated EROEI (using this methodology) between thin-film solar and concentrating solar power.
Also worth noting that variable pricing (value) of electricity at different times of day and year further complicate this... just because, at the moment, most public utilities don't charge a 24/7/365 variable rate for electricity doesn't mean there is no variation...
This is why the big wind farm project in New York has just been scrapped (or about to be scrapped). Because people did an economic analysis as opposed to an energy analysis. The committee concluded that it was just uneconomical to put that many tens of millions into the wind projects, when coal, nat gas and nuclear electric were so cheap. I seriously doubt they did much sensitivity on what happens when electricity prices triple.
Buying wind power as a utility is like buying long maturity bonds as a pension investor in anticipation of interest rates going down. Wind has a HUGE 'duration', and will make the MOST economic sense if energy prices go up dramatically. Yes, if energy prices stay where they are, wind will underperform. But we all know government forecasting records on energy.
(I'll try to find the link on the scrapping of this wind project - if anyone has it - please post)
The question that always bothers me is whether wind will really prove to be sustainable. I think wind turbines need a moderate amount of maintenance. In order to do this maintenance, one needs roads, fairly big equipment, replacement parts, and workers who can drive (or otherwise be transported) to the location. If the replacement parts are currently made overseas, one needs to either be able to continue importing them, or one needs to be able to make replacements here. I don't know about the finer points. Does one also need diagnostic equipment? If so, that has to be manufactured someplace and transported to the place where it is used.
There seem to be so many tie-ins of wind turbines with the current oil industry (and the financial system) that assuming that there is huge duration for wind seems like a moderately big assumption. It really seems to assume that we will be able to maintain technology at our current level. I would feel better if our replacement energy system were smaller and had fewer moving parts - more like solar thermal.
You are correct about wind turbines, and the same can be said for solar etc.
of course the whole discussion here is on will full ignorance of these facts cause they can't make things work otherwise.
"The question that always bothers me is whether wind will really prove to be sustainable. I think wind turbines need a moderate amount of maintenance."
Wind turbines need constant maintenance in fact and the Godzilla turbines , 125m high, will never be able to be replaced in an energy starved economy. Wind farms at best produce at 35 % of their rated output over time and their constant variabilty of output means that thermal backup is essential, thus virtually cancelling out the "benefits" of carbon emmissions savings. Der speigel has some interesting images here :
http://www.spiegel.de/fotostrecke/0,5538,24219,00.html
Article here :
http://www.spiegel.de/international/germany/0,1518,500902,00.html
More here:
http://www.energytribune.com/articles.cfm?aid=509&idli=1
http://www.energytribune.com/articles.cfm?aid=588
Gail,
There may or may not be problems 30 years in the future getting replacement parts. The wind farms tend to be large, at least in Texas with a hundred turbines or more, so I don't anticipate that there will be much of a shortage of labor available locally for maintinence on either wind or solar in commercial size applications.
Engineering should always be prudent, and design needs to incorporate consideration for our descendents. But, if we do nothing we assure the future won't be nice-its a suicide through neglect. It will be their problem to solve along with a bunch of other 21st century problems. But, its their problem, not ours just as we have inherited erosion and deforestation from the past. Does it provide any part of the solution to know which clan leader ordered the last trees cut down on Easter Island?
Bob Ebersole
The price mechanism is the best we have for estimating EROEI. In a perfact world, there would be no subsidies of anything (save perhaps basics for people, such as food, shelter, education).
A few caveats. The price signal does not capture externalities. If we have to maintain a $600 billion a year military to gain access to oilfields, that reality is not captured in the price signal. Nor is environmental damage. Nor vulnerability to future cutoffs of oil.
Lastly, there is the oddity of world oil markets, and that is the short-term inelasticity. A minor surfeit of demand to supply (at least perceived) can shoot prices to the moon. So, investment in liquid feul sources whch replace some portion of demand might actually be worth it, if we can bring demand fossil oil down a notch or two.
And maybe lastly (unless I think of something else), when we engage in production (such as ethanol), we learn things. New and better ways of doing it. The E3 plant is talking about 5-1 EROEI. This is sometimes known as the infant industry argument.
So to wrap it up, free markets and price signals are best, unless the situation calls for taxes (on pollution) and subsidies (for alternative fuels).
Free markets, taxes and subsidies: The American Way!
Maybe not.
Value is in the eye of the beholder. Maybe to the music mad mobs, one crooner on American Idol is far more "valuable" than the other, but as far as Mother Nature is concerned, they are all crazed apes who intake carbohydrates at one end and output noise at the other.
Rejecting measurement in terms of money just because of some failures of economists, seems to me to be a case of throwing the baby out with the dirty bathwater.
Decisions about resource use are complex. Some people would have us all living with a subsistence level use of resources, while others want to party on, living to the hilt. In either case, I think it is prudent to consider alternatives for achieving the same objective and to make choices bases of efficient, rather than wasteful use of resources, if both produce the same end result. Generally, higher EROEI is a better use of resources than lower EROEI since fewer resources are consumed to produce the same result.
Money measurement certainly has a place in evaluating alternatives. I think you will find that results between traditional financial analysis and EROEI accounting give similar indications when considering alternative choices, and certainly both approaches can highlight the weakness of the other, hopefully with the end result of a logic based decision.
All I'm saying is that "price" is set by the mob (a.k.a. the market).
Sometimes the mob is mad rather than being a wisdom driven crowd.
We need to be wary.
Can I interest you in some sell-you-lossic ethanol (a.k.a. corn-shine)?
Henry,
It depends on the subjective value that any person puts on the resources and the product whether the resouces are misdirected or not. Say the corn for ethanol results in a prairie pot hole being plowed up and therefore fewer pintails in a marsh in Texas next winter. Are the ducks more important than the jobs of the people making the ethanol? Seems pretty clear to a guy making ethanol and the field hand farming, and also pretty clear to the ducks and the duck hunters, and the guys making shotguns and shells.
So what's the deciding vote? Whose job is more important? Whose values are more important, the values of a Ducks unlimited hunter, an ecologist vegan, a documentationally challenged farmworker driving a tractor in Iowa? Or even just the poor old duck? And while we're at it, we might as well throw in God's will.
Bob Ebersole
Arthur Robey
I like it. Everything is free. Gold is free. Expences start when you pay someone to extract it. This is the true value of money. It is an equivalent of labour. Period.
The way to magnify labour is to use another scource of energy. Eg. a Dozer to magnify the power of your muscles. This is the conection between energy and the dollar.
No energy and our ability to produce collapses.
This is all an attempt to measure things by physical principles. But when economics and politics are the drivers of a system, almost nothing in that system is purely physical.
Take corn ethanol for example. Let's take an aggressive claim of 1.6 EROI. A good 33% of this energy return is because the coproduct dry distiller grains is given an energy credit, thus reducing the energy input going straight for the ethanol. However, what if everyone was vegetarians, and we had no use for dry distiller grains to feed cattle? Then the EROI, supposedly a physical measure, would shrink by (about) a third.
Similarly, the EROI of sugarcane goes up because we increase the non-energy inputs (labor) compared to US agriculture. With 10 people working on a crop instead of 1, we get a higher energy return on ENERGY invested, but no one does an analysis on energy return on LABOR invested, because labor is not scarce. Again, EROI is more physical a statistic than dollars, but it is still influenced by them
I think people inherently know that net energy analysis is important (except the diehard neoclassical economists). It has so far eluded full time operationalization because its unwieldy and people talk apples and oranges in their EROI discussions. In my opinion, it serves well as a blunt instrument, but cannot carve our way to energy independence with the accuracy of a surgical tool.
Bingo. All viewpoints about these matters are approximations. It cannot be otherwise. Deal with it.
All viewpoints are approximations. The very fact that it is necessary to split hairs to this degree tells me that cornstarch ethanol is overwhelmingly likely a fool's errand. Politicians mostly exist to self-arrogate fame and power, not to carry out the fine words of the Constitution and the Declaration of Independence, nor even to care about the distant future.
That can go down as an understatement of the century. It's the core reason why every "planned economy" ever devised has ultimately been dumped onto the ash heap of history. The dataset of millions or billions of people making decisions, and countless thousands of goods, services, commodities, and even the order of a dozen major sources of energy, plus the uncountably multiplicative interactions between all those items, makes for a rather non-analytical wad. Which inevitably leads us to the approximations of economics, EROEI, and so on.
Well, for the purposes at hand, it is and it isn't. In the absence of large distortions caused by taxes, subsidies, and inadequately regulated monopolies (including government, the granddaddy of all inadequately regulated monopolies), a supposed source of energy that isn't much of a net source simply won't fly. EROEI and price study will give us roughly the same answers. For example, cornstarch ethanol would wither away in a heartbeat without massive subsidies and massive tariff walls. In a sense, we need EROEI and other tools to clarify our understanding by correcting for the effects of these and other distortions, just as we need, in long-term analyses, deflators to correct prices for the effects of inflation.
So perhaps, in this context, a "diehard neoclassical economist" is one who would not need energy analysis on the assumption that distortions do not exist? But I find this hard to parse, because, in ordinary discourse, I tend to think of "diehard neoclassical economists" as railing against distortions caused by excessively meddlesome government, such as corn ethanol subsidies, even though I might also suspect them of not railing enough against inadequately regulated private monopolies. But the very fact that they are railing exposes at least a tacit assumption that distortions exist, and surely, if they exist, they need to be corrected for in any reasonable analysis.
I don't think our takes on the situation are too different.
You are the king of the "blockquote" I might add...
(though that is an approximation)
PaulS,
Your cliche metaphor "ashheap of history" is an old revolutionary Communist metaphor. The very fact that you use it at all, along with the Federal Reserve notes in your pocket which we are discussing as a possible utitilitarian description of EROEI shows that at least some parts of a planned economy do exist and are very long lived, even if they're not effective. The company towns with credit and company script of the sugar plantations in Brazil have analogs going back to ancient Roman plantations at least, and to the Sumerian theocratic city states. So I don't see how you can make such sweeping statements about free market theology.
The question really raised by this post is how well does financial cost of the various subsidies reflect the actual costs? How do we describe the problem better? And, this is a venerable topic on The Oil Drum, if you can have a venerable topic on a site that is 2.5 years or so old in the medium of the internet which is only about 20 years old itself.
A couple of Keyposts ago of Jeffs I really jumped on a guy who was going into high shreik because Jeff was a philosopical anarchist, which may or may not be true, but is irrelevant to the discussion at hand. I really enjoy jeffvails work, it makes me think, and I don't have to agree or disagree with somebody's position to enjoy what they've worked on, thought about and shared. I really think this question is unanswerable. Too many subjective evaluations. But its damn interesting! Bob Ebersole
I wish more people had this attitude.
I have a lot of reservations about price based EROEI calculations (and about looking at solar PV but not considering thin film solar or solar CSP) but I'm always gald Jeff takes the time to explore these ideas.
And there is nothing wrong with a bit of ideological diversity (Jeff probably is a philosophical anarchist but who cares ?).
Not necessarily!
It is possible to gasify the distiller grains, and use the synthesis gas as a substitute for the natural gas which is used in distillation and in drying the distillers grains. If this is done there is a big win, because the energy of the natural gas will be removed from the denominator of the EROEI calculation. So why wasn't this done in the first generation of refineries? The gasification equipment has substantial capital cost, and it was cheaper to buy natural gas instead. That situation will change as the price of natural gas rises. In spite of the capital cost, gasification is already being implemented in some ethanol refineries. What EROEI would you get with this technology? AFAIK, the only web page which discusses this issue is a dKos diary on 2007-03-05 by somebody with the alias "deb9":
Anybody who is seriously interested in the future EROEI of ethanol refineries should read that dKos diary, because it discusses many other technical options for refineries. My conclusion from reading it is that corn ethanol refineries are likely to achieve EROEI greater than 5 eventually.
Perhaps you will say that only about one-third of the distiller's grains are needed for distillation energy, so what should we do with the remaining two-thirds? "deb9" did not discuss this question, but the answer is obvious: add a Fischer-Tropsch unit and produce liquid fuel from the synthesis gas not needed for the boilers! An interesting question here is how much diesel fuel for tractors, harvesters and trucks could be produced by a refinery with this technology? Certainly it could offset yet more of the fossil fuel inputs to the entire corn ethanol process, and thereby raise EROEI even higher.