Tag Archives: energy return on investment

Biofuel, Geothermal, Peak Oil, Renewable Energy Sources, Sustainability

Very Simple Explanation of ‘Energy Return on Investment’

March 4, 2013 Richard Ha 1 Comment

Richard Ha writes:

Every organism, organization and even civilization needs surplus energy or it goes extinct.

When a mama cheetah catches an antelope, for instance, she needs to get enough energy from consuming that antelope to take care of her kids.

Let’s say all the antelopes are very skinny, and the energy she gets from eating a skinny antelope only gives her enough energy to make one more sprint, and that’s all.

That would be described as an "energy return on investment," an EROI, ratio of 1-1. She has no excess energy available to do anything but catch her next meal. That would be a very scary existence: She would have to catch an antelope on every single sprint, or her species would go extinct.

But if the antelopes got fatter, and the cheetah could make two sprints from eating one antelopes, we would call this an EROI of 2-1.

When the cheetah could make five runs from eating one antelope, things would be starting to look better (EROI 5-1). She would have energy left over to do more than just survive. She could spend time washing and playing with the kids.

At an EROI of 10 to 1, she could send the kids to grad school; things would be wonderful.

At an EROI of 30 to 1, the cheetah population would start to grow. The cheetahs would move into condominiums and take vacations in Hawai‘i.

So what does this mean in real life? Here’s some history.

In the 1930s, we could extract 100 barrels of oil from the ground by using the energy we got from one barrel of oil. That’s an EROI of 100-1.

By 1970, we were only getting 30 barrels of oil from the use of one barrel (an EROI of 30-1).

And in 2013, it’s around 10 barrels of oil (EROI 10-1).

Tar sands is around 5-1.

And biofuels are less than 3-1. Some biofuels (for example, alcohol from corn) are barely more than 1-1. You can see why putting our money and efforts into biofuels hardly makes sense.

Especially when you realize that geothermal, as we have in Hawai‘i, appears to have an EROI ratio of 11-1. It’s also significant to note that this rate won’t change anytime soon. The Big Island will be over the “hot spot,” which creates our geothermal conditions, for 500,000 to 1 million years.

Here is an article about the minimum EROI a sustainable society must have, by Charles A.S. Hall, Stephen Balogh and David J. R. Murphy.

What don’t we understand about this?

Biofuel, Peak Oil

We Need More People With Cutting-Edge Energy Knowledge!

February 25, 2013 Richard Ha 1 Comment

Richard Ha writes:

Hawai‘i should be sending more people to the Association for the Study of Peak Oil (ASPO) conference. The folks at ASPO are on the leading edge of energy data interpretation. We need more people with cutting -edge energy knowledge.

For example, for several years now ASPO folks have been utilizing Energy Return on Investment (EROI) as a tool to evaluate energy
options.

If HECO had understood the concept and its parameters, it
may not have committed to Aina Koa Pono’s biofuel project so wholeheartedly.

Biofuels, in general, have very low EROI ratios (net energy). It takes a ratioof 3 to 1 just to maintain society’s petroleum infrastructure. Biofuels, except for cane ethanol, are lower than 2 to 1.

If we can’t make money in Hawai‘i now with cane ethanol, what makes us think we can do cellulosic biofuels, which are more costly and more difficult?

Despite spending hundreds of millions of taxpayer dollars, there are zero commercial competitive cellulosic biofuels in production
today. Zero. We wish AKP well, but it should use its own money, not that of the rate payers.

The shale oil and shale gas story is probably only be an interim solution. Aubrey McClendon, the fracking cheerleader of Chesapeake Energy, has been removed as its Chairman and will soon resign as CEO. The ASPO folks have known for several years that shale oil and gas is a bunch of financial smoke and mirrors.

When HECO responded to Consumer Advocate questions about how it justified its pricing, the utility used the Energy Information Agency (EIA) 2012 AEO report’s high-case scenario for its long-term forecast.

But the EIA’s short-term forecast, just a couple of weeks ago, estimates the 2014 price of oil at $101/barrel – while HECO estimates that oil will cost $180/barrel in 2015. The rate payer wouldn’t care about this if they didn’t have to subsidize the biofuels at $200/barrel.

Putting a secret $200/barrel biofuel surcharge on rate payers, and then telling them, “Trust us, this won’t hurt much” – while raising the pay of top executives – stands in sharp contrast to the CEO of Japan Airlines, who insists on being treated exactly like his workers. Watch that short (2:20) video for a very different approach than we are used to. Really interesting.

Peak Oil

Economics & a Hawaiian Way of Thinking

November 23, 2012 Richard Ha

Richard Ha writes:

It’s not whether or not the energy is green; it’s the price of
the energy that matters.

High price energy results in people having less
discretionary income. We know this to be true in our gut.

Professor Charles A. S. Hall explains how this works using
the concept of “Energy Return on Investment” (EROI). This concept takes the world of economics and ties it in with our physical world.

It’s a different way of understanding economics in that it
explains how things actually work, and it’s a way that Hawaiians can relate to
at a gut level.

Ancient Hawaiians had a gift economy that was land- and environment-based: The more one gave, the more one received. This traditional system is quite different from the modern market economy, where the more one receives, the more one receives.

Many modern-day Hawaiians can play in both worlds. But there
are many other Hawaiians that just don’t feel right. Me included.

Professor Hall will give a series of lectures at UH Hilo and
UH Manoa. At UH Hilo, he will speak on January 4, 2012 and at UH Manoa, on
January 9th and 10th. Details to follow.

He is retiring soon, and we have asked him to be a guest lecturer here during the Winter/Spring semester. He has agreed. He will be using his new book Energy and the Wealth of Nations.

This video, titled Peak Oil, Declining EROI and the New Energy-Economic Reality with Dr. Charles A.S. Hall, is very much worth watching. It’s 1:38:18. Watch it straight through, or jump straight to specific topics as follows:

Minute:

4:54 Importance of energy to economics

26:39 Peak Oil is not the focus. Cessation of oil and energy production is the problem

27:54 Energy Return on Investment (EROI)

33:35 U.S. has lots of coal – in an emergency

34:30 EROI is driving prices

38:55 The trouble is, we need high EROI. How do we do that?

45:15 Cheese slicer model. Higher energy price in, less discretionary income out

50:44 Conclusions for the U.K. The principles are the same everywhere

1:32:40 Charles Hall talks about guest lecturing in Hawai‘i

Geothermal, Renewable Energy Sources

What Is Our Energy Goal?

May 10, 2012 Richard Ha 1 Comment

The world has changed fundamentally in the last 10 years. The price of oil, which had been low-cost energy for as long as any of us can remember, doubled and then doubled again.

The cost of oil is out of our control; it’s determined by the demand from China, India and other developing countries. The U.S. is using a million barrels per day less than it used to, but the developing countries are now using 7 million barrels per day more.

What should be our overall goal? Net Energy analysis can help us make sense of things. That is the Energy Return on Investment (EROI). It’s the net energy left over from the energy spent to obtain it. Subtract, from that energy, the energy it takes to get food and that gives you your lifestyle. That is why energy and agriculture are inextricably tied together. EROI analysis can help us understand the basic elements at work.

The ancient Hawaiians, without metal ores, were able to manage a positive energy balance such that their civilization flourished. They did this by maximizing energy – sun, wind and waves. And they were extra observant of the environment. They had to be, because they did not have the tools available that others had.

They were good at what counts. They were survivors.

Now it’s our turn.

There is a limit as to how much solar and wind energy we can put into the grid as it’s presently configured. And we have not been able to demonstrate biofuel on an industrial scale. Biomass is limited by the supply of trees and fossil fuel inputs. Ocean energy and energy storage could be game changers in the future. But we are not there yet.

Our task is to figure out how we will achieve a positive energy balance for Hawaii in a future of rising oil price. Globalization has made the world very complicated. And it’s easy to confuse capital and technology for energy. A long time ago, a friend of mine from the mountains of Tennessee told me about a saying they had back home. He said, “You can’t squeeze blood out of a turnip.”

But we can get affordable geothermal energy – a proven technology – out of the ground.

Geothermal, Peak Oil, Renewable Energy Sources

EROI is our Common Energy Language

May 2, 2012 Richard Ha

We need a common frame of reference, and I think Energy Return on Investment (EROI) might be it.

It’s a simple concept: The energy you use to get energy, minus the energy it takes to get your food, gives you your lifestyle.

A mama cheetah needs to get enough energy from a rabbit to feed the kids, miss catching a few more rabbits and still have enough energy to catch another one, or else the species goes extinct.

All organisms, organizations and civilizations need surplus energy or they go extinct.

Professor Charlie Hall is the father of the EROI concept, and he has influenced me a lot. This is the Charles Hall paper that got my attention.

Professor Hall and his colleagues have been calculating the EROI of many energy sources. They’ve found that in the 1930s, you could use the energy in one barrel of oil to get you 100 more barrels of oil. By the 1970s it became 30-1. Now it is around 10-15 to 1. It is taking more energy to get energy.

The tar sands in Canada have an EROI of around 6-8 to 1. Shale oil, an incompletely cooked oil, is around 2.5 to 1. Biofuel is less than 2-1.

The EROI for geothermal is about 10-1, and because the Big Island will be over the geothermal “hot spot” for 500,000 to a million years, geothermal costs will remain stable.

Professor Hall estimates that it will take an EROI of 3-1 to maintain our present infrastructure – and that’s not counting the food we eat.

The significance of EROI analysis is that it applies to all of us, from ancient times to now. It’s the common thread that runs through the gift economy – such as the type the ancient Hawaiians had – as well as today’s market economy. It is about surplus energy. This is the common language we all can speak.

Some who are off the grid already have surplus energy, and others are on the grid and need time to transition. What energy source, under what conditions, can we use to help ourselves – and future generations of us?

This is the common language we need to be speaking, combined with Patrick Kahawaiola‘a wisdom: “It’s about the process.” He’s saying that if we follow the process, then everyone who contributes to the process makes for a better end result. Therefore, we must aloha everyone, no matter on what side of the issue they are on.

We must also incorporate Kumu Lehua Veincent’s wisdom: “What about the rest?” This is about all of us, not just a few.

This is why I am so encouraged by the meetings that have been taking place. We are moving toward common ground.

Biofuel, Geothermal, Renewable Energy Sources

Mopping the Deck of the Titanic

May 23, 2011 Richard Ha 1 Comment

In October 2008, the Hawai‘i Clean Energy Initiative (HCEI) – which aims for 70 percent of the State’s energy needs to be met by renewable energy by 2030 – was outstanding for its ambitious approach to the challenges facing Hawai‘i’s future. It anticipates a 30 percent reduction in oil dependency through efficiency improvements, plus a 2 percent/year reduction in fossil fuels over 20 years.

Now we are realizing that 40 percent less oil dependency in 20 years is not ambitious enough. And as we move to implementation, we are finding that some of our assumptions may not work out as planned. A key question is whether or not we are flexible enough to react to the rapid changes taking place.

It is clear to me that we are furiously sweeping and mopping the deck of the Titanic.

The Hawai‘i Clean Energy Initiative was enacted into law in April 2010. But by then, the world oil supply situation was changing rapidly. Two months later, Lloyd’s of London advised its business clients to be prepared for $200/barrel oil by the year 2013. Economists at the University of Hawai‘i Economic Research Organization told me that $200/barrel oil would devastate our tourist industry.

I asked, “Is it fair to say that if we used geothermal as our primary base power, Hawai‘i would become relatively more competitive to the rest of the world as the price of oil rises?” The answer was “yes.”

In a report last week, the Economic Research Organization at the University of Hawai‘I (UHERO) pointed out that the State’s current weak recovery is being fueled by the tourism industry—which is dependent on future oil prices.

Hawaii has liquid fuel, transportation and electricity problems. The mainland fixed its liquid fuel electricity problem, after the oil shocks of the 1970s, by switching to natural gas and coal.

This past October, when I attended a Peak Oil conference in Washington D.C., they pointed out that the U.S. mainland is less than 9 percent dependent on petroleum oil. A large part of that 9 percent, they then said, was due to the Hawaiian Electric Company (HECO) in Hawai‘i. I was shocked!

To think that we have done nothing about this for the last 20 years. And now we hear the excuse that, since nothing has been done, it will take 10 years to ramp up geothermal, so we cannot wait for geothermal.

Here is a comparison of Energy Return on Investment (EROI) for fossil fuels: In the 1930s, to get 100 barrels of oil, it took the energy of just one barrel. In the 1970s, one barrel would get you 30 barrels. Now, the average EROI is that one barrel will get you 10. Clearly, the trend is not good.

The ratio for geothermal is also around 10 to 1. The difference, though, is that this ratio will not decline for a very long time. Jim Kauahikaua, Scientist-in-Charge of the Hawaii Volcano Observatory, told me that the Big Island will be over the hot spot for 500,000 to a million years.

Instead of fossil fuel, HECO wants to use biofuels to generate the electricity for most of its base power. The problem is that the EROI for biofuels is close to 1 to 1. And it should also be a warning that SunFuels, a company that actually knows about green diesel, is closing up shop in Hawai‘i. Not to mention that farmers knew three years ago that they would not grow biofuels, because it was obviously a money loser for them.

I am not against biofuels, but I think if we are to grow liquid fuel it should be used for jet fuel or transportation fuel—not electricity. I support biofuels through Pacific Bioldiesel. These folks use waste oil to support their capital costs. To the extent they can integrate feedstock from farmers, I think that their model has a reasonable chance of success. I also support UH Hilo’s College of Agriculture and Forestry’s initiative to study palm oil cultivation. This, too, is proven technology.

Geothermal is cheap, proven, gives off no carbon emissions and occupies a very small footprint. And through the generation of NH3 from its off peak power, which can fuel internal combustion engines, geothermal can put future generations into a position so they can win.

NH3 can also help with food security. Eighty percent of NH3’s present use is as fertilizer.

Furthermore, electricity generated from geothermal to power electric cars is clean and cheap.

So geothermal both takes care of us today and can take care of future generations. To farmers, this is not rocket science. It’s just common sense.

We can and must use every renewable energy option available to us, and to its maximum potential. By diverting excess electricity production to alternatives such as NH3 (ammonia), geothermal offers a safety valve that can allow more renewable energy in.

Can we imagine prosperity, instead of doom and gloom? Not, no can. CAN!

The Hawaii Clean Energy Initiative:

On October 20, 2008, an Energy Agreement was signed by the State of Hawai’i, the Hawaiian Electric Companies, and the State Consumer Advocate to accelerate the accomplishment of Hawai’i’s energy objectives in the regulated electric utility sector.

In April, 2010, the Hawaii Clean Energy Initiative Program was added to State law, in Chapter 196 of the Hawaii Revised Statutes.

The Challenge

Hawai’i relies on imported petroleum for nearly 90% of its primary energy

Up to $7 billion flows out of the state annually to meet Hawai’i’s energy needs

Hawai’i’s economy is extremely vulnerable to fluctuations in global oil prices

Hawai’i residents pay among the nation’s highest prices for electricity and fuel

The Solution

The Hawai’i Clean Energy Initiative is helping transform Hawai’i from the most fossil-fuel dependent state in the nation to one run on Hawai’i Powered clean energy within a generation

Its goals and objectives:

Hawaii is the most fossil fuel dependent state in the nation.

This can be explained in large part because of our dependence on tourism and the military – together, they make up roughly 50% of our total economy. That’s a dangerous scenario for the future because of the finite nature of fossil fuel and the fact that our state is more and more vulnerable to fluctuations in oil prices and availability.

Biofuel

What’s Up With Biofuels?

March 15, 2010 Richard Ha

What’s up with biofuels?

All biofuels are not the same.

Biofuel like the kind Pacific Biodiesel makes is made from used kitchen grease. It is actually recycling; they don’t need to grow the stuff they use to make the fuel. Recycling is good.

But there just isn’t that much waste kitchen grease. In an emergency that biodiesel would be valuable, and reserved for public safety vehicles and for food production.

What about farmer-grown biofuel? Two years ago, farmers sat in discussions that HECO sponsored on the Big Island and Maui. Farmers quickly figured out their return and stopped going to the meetings.

Farmers knew that a barrel of oil weighed 286 pounds. When oil was $80 per barrel, 1 pound of that oil was worth 28 cents. They figured they would have to squeeze at least 4 pounds of stuff to get 1 pound of liquid.

That meant that the most they could get for growing any kind of biofuel stock would be 7 cents per pound. No sense lose money. Better plant cucumber. Small farmers wouldn’t do it.

If they did do it, it would have to be very expensive—more than $320 per barrel expensive. And as oil prices rise, the cost of growing the biofuel would rise too.

What about cellulosic ethanol? It is still just an idea. Lots and lots of federal money went down the drain trying to force this to work. And as fossil fuel prices go up, the cost of this process goes up too.

And how about algae-to-biofuel? We all hope this will work. But it is still very far off and may never be scalable. “Wishing” and “hoping” is not an energy policy.

Biofuels, except for the kind made from kitchen grease, have an Energy Return on Investment of less than 2 to 1. Dr. Chas Hall says that a modern society needs an EROI of more than 3 to 1 to sustain itself.