It is also the first post of a new 'channel' on The Oil Drum: TOD:EROI, where we will be posting essays, papers, and analysis on the biophysical aspects of energy

Great idea, glad to see it!

We have debated on calling it EROEI - Energy Return on Energy Invested, but have decided to keep it consistent with the acronym from the energy literature

Bad idea, please reconsider immediately!

EROEI vs EROI - what's the dif, right?

But the difference is huge . There is already a default meaning for "return on investment" in the english-speaking world, and it's about money. Really, ask anyone. It includes considerations of tax breaks and comparisons with other investments which may not even be tangible. It is an inhabited meme. (whacks dead parrot on counter). This is a former acronym.

Contrast that to EROEI, which refers to a ratio, ER/EI. That ratio is what embodies the revolutionary concept that there are real thermodynamic limits to the usable energy we may obtain. It's a game-changing Copernicus-level eye-opener and most people don't get it and never will.

When trying to educate the world to a new way of thinking, why intentionally hobble our own efforts by going with an inherently-confusing convention? If there were ever a time to move away from a needlessly confounding term, and a mission for TOD, this would seem to be a good time to put it into play. Man, academics will be the death of us yet. And I mean that in the very kindest way.

EROI has had a good run, but it is past time to retire it when what's being discussed is ER/EI. Do we want humans to understand the concept or not?

Alternately, if the mission here is to listen to ourselves talk back and forth while enticing newcomers to confuse and look down upon, we could just establish TOD:Phlogiston and continue rehashing every other misconception ad infinitum.

Just saying...

My apologies to the posters, but I think TOD should take this opportunity to change the debate in this minor way.

(edit) and of course, I'd prefer we actually substitute ER/EI, even though that would take a bit of effort to propagate into the world at large. Changing the debate, language and convention in that small but profound way may be exactly the level at which TOD can change the world. Indeed, it might be the most important thing TOD ever does.

greenish
you've made this point before and I happen to agree. But as you know, I'm not the guy who wrote the papers and you know how humans are...

And we do need an editor for TOD:Phlogistan if interested...;-)

Certainly, and I hate being a pain in the arse, but there's a real opportunity here. Indeed, this may be the last opportunity to change this piece of the debate, as it goes more mainstream.

My post isn't about these papers, of course; hence my apology to the posters; it's about the title of the TOD section. I don't suggest that there be any censorship, merely that TOD starts to exert its growing influence by making the terms of the debate clearer for the lay audience.

There's a real and valid question about any entity such as TOD: once it's established, what is it good for? I suggest that's it's good for exactly this: rendering abstruse-seeming concepts more easily accessible to non-academics. And if you do change it, it will be clear who changed it, and when it happened, and why.

This is good advice and should be taken.

I won't carp about it after this on TOD, I promise. Kudos for the concept of a dedicated TOD section on this, which is no small thing.

Acronyms should be made as simple as possible, and no simpler...

Oh, and I think the "Phlogistan" name already may be planned for use in a redivided Iraq. Kinda catchy...

Hi greenish,

Since your advice is good I don't see any reason why you should refrain from giving it at every opportunity. Anyone who has raised kids knows the value of repetition. Say it often enough and eventually you get through, and the lights go on.

If EROEI is the minimum accurate expression of the concept (and the truncated EROI fails to impart the necessary information) then EROEI it is!

Kindly go right on carping.

Nate and Greenish, I disagree. I believe the acronym should be shortened even further to ROI, Return on Investment. Oil is used for a lot of other things other than energy, asphalt and plastics for instance. It all boils down to; "Will this project be profitable?"

Quibbling over energy in verses energy out only confuses the issue. Energy is bought and sold but that is all too simple. Energy produces goods that are also bought and sold. It all comes down to economics and if any project is not profitable it will be scrapped. Unless of course it is a government project financed by taxpayers. And even these government projects must ultimately be financed by other projects by projects that are profitable operated by taxpayers.

No project can be operated at a loss, for very long anyway.

Ron Patterson

Ron, well said, but this rather goes to what I'm on about.

Are we talking about thermodynamics or economics? I see ER/EI as thermodynamic. You see ROI as economic. I'd agree with either, and think EROI is a confusing bastard stepchild.

ER/EI is a fundamental constraint for all life in the universe, wherever it may exist. Extraterrestrial aliens if they exist. Foraging strategies of bears on the tundra, etc. And humans, who ultimately must obey the same laws. That's a powerful concept, and has nothing to do with money.

Maybe it's just ME who's confused. If so, sorry....

all best...

(edit) a useful test for what we're talking about: can EROI be negative? ROI can be, ER/EI can't be. Yet more often than not, these terms are now conflated.

Re which see my below about more useful concept of
EG/EI (Energy Gain(loss)/Energy Invested).

Are we talking about thermodynamics or economics? I see ER/EI as thermodynamic.

Sheesh, you guys throw out all these high falutin terms and concepts like thermodynamics and stuff... I mean, next thing you know ya'll will be expectin us common folk to be able to understand the Krebs Cycle or sumthin.

Seriously though I wonder how many people of even college level literacy have any understanding of thermodynamics and are able to grasp why classical economic theory is pure bunk.

It seems obvious that there are two quantities here, and making sure they are obvious and separate is a sensible idea.

First there is EROEI talking in simplistic terms about energy and efficiency of extraction. Second there is ROI talking in simplistic terms about money. Now EROEI informs ROI, but so does location, market prices, shade of sky colour in your part of the world, etc.

EROI, energy returned on investment, is a bit of a muddle in the middle, conflating energy with finance. It doesn't really tell you anything and confuses the issue by being too close to ROI in the minds of economists. Don't confuse the poor dears.

Load up your spellchecker with EROI => EROEI and get rid of it from articles unless the author is really incorporating energy with finance. If they are, don't let them get away with the woolly thinking that so exemplifies economists and accounting - they need to define inclusions, exclusions and assumptions.

PS Plastics and fertilisers is a red herring on EROEI. What is output from the resource recovery process is potential energy. What you use it for is another question. Plastics, fertilisers, etc. have high 'energy' inputs because they can use feedstocks that could be energy.

can EROI be negative? ROI can be, ER/EI can't be

ER/EI never negative? On a strict thermodynamic basis this must be true, for energy can neither be created nor destroyed, thus each term must always be positive. (Unless they manage to harness Dark Energy, that is.)

But, to be practical, we are talking about useful energy here, so there is a subjective judgement in what precisely constitutes energy.

For instance, say I use a motorised winch to hoist a heavy weight. Neglecting friction, I have an EROEI of one because the potential energy gained is equal to the work done.

If the rope breaks and the weight falls and smashes my winch, I've ended up with net negative energy, because I've gained zero useful energy from burning my fuel, plus I've lost the energy used to make the winch.

Thus I can get negative EROEI in a catastrophe.

(I realise I have cheated in re-drawing the boundaries of the problem between start and finish, but I am prepared to argue that this is acceptable in a practical situation.)

It is my fault for including our honest indecision on EROI vs EROEI in the introduction to this piece, as it seems the folks at IEA and others around the world who happen to have read this might be missing the bigger message by the semantic bicker.

Briefly, there are all sorts of references to this concept in the literature. Mark Hatfield, Senator from Oregon and (successful) advocate of making net energy analysis part of public law in the 1970s did not call it EROI - just 'net energy'. EROI is a ratio. EROI-1 is the 'net energy' or energy surplus or energy gain. EROI is a dimensionless number so it needs to be multiplied times a scale to come up with a total energy surplus that can be compared. EROI X Scale per unit time is Power. If you add in what Odum called transformity and Tainter called quality, then you have qualified Power for a particular socio-economic system.

EROI can never be negative. The second law of thermodynamics assures that over long periods of time, EROI from fossil sources will decline (technology trumps depletion via heat loss during transforming to usable energy). The first law assures that EROI can't go below zero. Energy is neither created nor destroyed - (it just moves to less usable state).

In my opinion, the current EROI debate on this site is approaching a standstill, which is why we brought EROI guy in to focus as editor on this section. My own opinion is this needs to be expanded to maximum power principle, marginal vs fixed EROI, externalities, non-energy inputs, etc. This is a CRITICAL area of research, but not in the way most people think. I think net energy analysis will be the tool that really tells policy makers what our constraints are, not a tool to pick and choose between 2 competing energy technologies. The biggest lesson from declining net energy we can learn is what happens in nature, and that once on a net energy cliff, we will be grabbing from all corners to replace the power we have lost. Ergo, this limits our consumption options.

I see where you are heading with that.
One unit of energy at what total cost - not in dollar terms, but in terms of resources (water, steel, energy, environment, etc.) Dollars have done a good job of parsing this into one unit on an empty planet but as we have reached capacity and are running into source and sink constraints and lower energy gain, we ultimately will need a 'currency' with some physical backing. And Bretton Woods II will not be about gold, as some suggest...I don't know the answer. I don't know if there is one.

How about Quanta? Si, muchacho, Planck's constant times its frequency equals more energy for you mi amigo.
Que? quanto custa. No way, Jose...

Energy return on Energy invested or EROEI has huge implications beyond just its thermodynamic properties.

It also suggests that the economic models we use for extraction are wrong since they don't include declining EROEI.

Even though my original energy costs are low and thus generally investment cost if EROEI increases in time this means
you need a fairly significant sort of reverse deprecation to correctly price the "cheaper" original investment.

Thus the oil we extracted in the 1980's had far higher intrinsic worth then we assigned it since we did not back date peak
oil "appreciation" into the equation.

A interesting approach to balancing this is to force any use of a depleting resource to be balanced with retaining a renewable resource.

For example say every thousand barrels of oil equals 1 acre of prime forest or farmland thats left fallow for 20 years. Thus the energy used
in burning oil and even the C02 is banked via setting aside a renewable resource for later use. You could also match to PV and wind etc.

Slightly harder than conserving but same result. As you can see by balancing this way it seems that we do a really good job of ensuring continuous energy and thus we have balanced the EROEI equation. And its a easy way to correctly price oil to include EROEI increasing.

Also it seems obvious by burning oil for a century without attempting to balance has left us in dire straits.

And yes for the most part this means we probably have sold oil at ridiculously cheap prices for some time.

It seems clear to me that attempting to balance the equation when oil itself "costs" the same as renewable using
our normal economic constraints is wrong. Using my approach to make up for the deficit we would have to price oil
at say its projected price in 20-30 years. My best guess would be 500 dollars a barrel.

This makes intuitive sense since if we correctly repriced oil to 500 then we would see a huge burst in renewable energy
development. This would be funded by the difference in EROEI / investment in oil today vs what it would be in 30 years.

Assuming my logic is sound this gives you some idea of what we would really have to do to handle oil depletion correctly.
If we had done it right over the last 100 years then we would not be faced with this huge tax right now and we would
have a stable society. Either we pay the tax or we dramatically reduce our societies energy usage and probably complexity.

EROEI is intrinsic in making it clear that you cannot get out of this situation.

ROI would be my choice too. One could discuss rebuilding the auto fleet under ROI but it would seem a bit out of place under EROI. That's the "goods" darwinian mentions. And where energy substitutes for lower grades of other resources - low concentration copper for example - resource depletion in general would fit.

All topics are going to get mashed in anyway. Categorization is hard work.

cfm in Gray, ME

Greenish

You highlight key point of the debate. We will see what the consensus is soon enough, and maybe your thoughts will prevail. I believe it is important to separate ERO[E]I analyses as distinct from 'return on investment'.

Thanks for the gracious comment and for your excellent work.

My point, if point there be, is that I don't believe in consensus as the best policy-setting tool. I believe in trying to actively steer things based on the logic of the situation. I hope you'll weigh in on this!

The path-dependency of evolutionary biological and social change now has us in a real existential pickle. Lets perturb this for the better, here and now.

Just my two cents, I think its better to avoid using ROI, but EROI as an acronym may be (it seems to me) still quite open for detailed definition, at least to non-economists. So who's your target audience, economists or others?

A bit of further, I note that on the web,

a) Wikipeadia offers for EROI "This article is about Eastman Rochester Organ Initiative. For the concept of Energy Return On Investment, see EROEI."

b) TheFreeDisctionary - Acronyms section, at http://acronyms.thefreedictionary.com/EROI defines EROI = "Expected Return on Investment"

the first of which argues for the dissenter(s) above, eg. EROEI

the second of which appears to argue for the use of EROI, as the thread initiators propose.

I like EROI because it seems adequate, but if you choose to stick with it then DO claim its definition by making the proper entries at at least these two sites, and likely several others.

I, for one, think TOD needs to speak out on organ initiatives, and I'm sure it will be doing so frequently once TOD:EROI is set in cement. I've been wanting to know how I can get "organ donor" off my driver's license since the cannibalism expose at the Kaiser morgue in Honolulu.

But to the matter at hand, it seems that BOTH your examples (a) and (b) are other than what is intended by TOD:EROI; certainly neither of them are based in thermodynamic considerations, one being about organs and the other about money.

I DO support the establishment of TOD:ELOI as a sub-forum, to facilitate a perhaps-inevitable demographic schism and place anthropophagy in a useful energy and environmental context.

I surrender %-O

I don't surrender ;-)

I am more for BOOBI

Barrels of Oil On Barrels Invested.

As soon as that goes negative we will no longer pump oil.

and as Hubbert showed us, once a resource is extracted, we have a ramping-up period until we reach the highest extraction rate, and from that point forward we have a ramping-down period.

Therefore, we can state with conviction that BOOBIs will grow, reach their peak, and then sag.

Mash

(sorry, I could not help myself)

-Father, Farmer, Doomer, Engineer, Drummer

greenish -

Very well stated. And I agree emphatically with your point. EROEI or ER/EI or ER:EI are all clear, precise, limited (in the sense that both the investment and the return are measures of the same factor), and most importantly represent the crux of the real issue; EROI is none of that, at least without further elucidation.

People are so very confused about so many things that any opportunity to lessen that confusion should be seized forthwith and with great enthusiasm.

IMO.

I prefer the concept of net energy because it clearly shows how much is left over for uses other than obtaining more energy. For instance at best ethanol available to society would only be 1 unit out of every 4 units distilled if all the energy used by the farmers, transporters, and distillers was from ethanol.