EROI of Global Energy Resources! Status, Trends and Social Implications
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! EROI of Global Energy Resources! Status, Trends and Social Implications October 2013 EROI of Global Energy Resources! Status, Trends and Social Implications October 2013 PREPARED FOR THE PRINCIPAL AUTHORS United Kingdom Department! Jessica G. Lambert! for International Development ! Charles A. S. Hall! Stephen Balogh! BY THE CONTRIBUTING CASE STUDY AUTHORS SUNY - Environmental Science & Forestry ! Ajay Gupta! Next Generation Energy Initiative, Inc.! Michelle Arnold! Alexander Poisson! N OTE FROM THE AUTHORS ! All forms of economic production and exchange involve the transformation of materials, which in turn requires energy. Until recently cheap and seemingly limitless fossil energy has allowed many to ignore the important contributions from the biophysical world to the economic process and potential limits to growth. ! The report that follows, commissioned by the United Kingdom’s Department for International Development (DFID) and developed by the State University of New York College of Environmental Science and Forestry (SUNY-ESF) and Next Generation Energy Initiative (NGEI), examines the energy used by modern economies over time. This work centers on assessing the relation of energy costs of modern day society and its connection to the quality of human life. A focus of this report is energy return on investment (EROI) and some important characteristics of our major energy sources over time.! We find the EROI for each major fossil fuel resource (except coal) has declined substantially over the last century. Most renewable and non-conventional energy alternatives have substantially lower EROI values than conventional fossil fuels. Declining EROI, at the societal level, means that an increasing proportion of energy output is diverted to getting the energy needed to run an economy with few discretionary funds available for “non-essential” projects. The declining EROI of traditional fossil fuel energy sources and its eventual effect on the world economy are likely to result in a myriad of unforeseen consequences. ! We offer this report as a window into the EROI of global energy sources, the effect of policy and world events on past, present, and future EROI values, the EROI of renewable, non- conventional and imported energy sources, and provide a brief discussion on how declining EROI values may influence the economies of select developed and developing nations. ! Countries Mexico Jamaica Haiti Included in Dominican Republic Honduras Guatemala El Salvador Costa Rica Venezuela the Study Panama Colombia Ecuador Peru The near- and long-term economic effects of declining EROI of Brazil our global fossil fuels are only just beginning to be assessed. This Bolivia document serves as a reference work for policy-makers and planners Paraguay in developing countries and international aid organizations. This Argentina report offers an analytical framework for understanding and assessing national-level socio-economic reactions to declining EROI values and possible impacts of declining EROI and energy availability. This report aggregates nations by income and energy trade. We examine three categories: low income energy importing countries, lower middle income energy importing countries and upper middle income energy importing countries. Countries that are net energy exporters are discussed within their income category. By design, there is a certain amount of overlap among the sections dealing with the three income / oil importing categories. EROI of Global Energy Resources | vii Georgia Armenia Belarus Azerbaijan Ukraine Kazakhstan Hungry Romania Bosnia and Herzegovina Serbia Uzbekistan Montenegro Bulgaria Kyrgyzstan Albania Turkey Turkmenistan Tajikistan Syria Tunisia Iraq China Morocco Jordan Iran Pakistan Nepal Algeria Libya Egypt Bangladesh India Thailand Senegal Cambodia Philippines Nigeria Ethiopia Sri Lanka Cameroon Côte d’Ivoire Malaysia Ghana Gabon Kenya Togo Indonesia Benin Tanzania Angola Zambia Namibia Mozambique Botswana South Africa Countries Included in the Study! Data: World Bank, 2013! Net Energy Exporting Countries! Low Income Energy Importing Countries ! Lower Middle Income Energy Importing Countries! Upper Middle Income Energy Importing Countries THE DEPARTMENT FOR INTERNATIONAL DEVELOPMENT (DFID)! SUNY - COLLEGE OF ENVIRONMENTAL SCIENCE AND FORESTRY! The Department for International Devel- The SUNY College of Environmental Sci- opment (DFID) leads the UK govern- ence and Forestry (ESF) is the oldest and ment’s fight against world poverty. largest college in the United States devot- Through its network of offices throughout ed solely to the study of the environment. the world, DFID works with governments Since it was established in 1911, the col- of developing countries, charities, non- lege has developed innovative programs governmental organizations, businesses in a broad range of academic areas related and international organizations, like the to biology, chemistry, engineering, man- United Nations, the European Commis- agement, design and planning. The col- sion and the World Bank, to eliminate lege focuses on educating problem solvers global poverty and its causes. DFID’s who will help develop the science and work forms part of a global promise, the technology for a sustainable future. ESF eight UN Millennium Development offers degrees ranging from the as- Goals, for tackling elements of global sociate’s degree in forest technology to the poverty by 2015. DFID’s Climate and En- doctor of philosophy. ESF students leave vironment Department (CED) is helping the college equipped to pursue careers to establish DFID as a world leader in aimed at improving the quality of life in demonstrating results, impact and value an ever-changing world.! for money from supporting developing countries to tackle climate change. CED’s goal is to demonstrate that low-carbon, climate resilient and sustainable devel- opment is necessary and achievable.! ! NEXT GENERATION ENERGY INITIATIVE, INC. (NGEI)! ! Next Generation Energy Initiative is a non-governmental organization (NGO) ! composed of education and energy pro- ! fessionals devoted to improving our world by combining research, education ! and practical energy solutions in a way ! that integrates energy, ecology and eco- ! nomics in support of a sustainable planet. ! ! ! ! ! ! EROI of Global Energy Resources | ix ABOUT THE AUTHORS! new field, biophysical economics, as a supplement or alternative to conventional Principal Author! neoclassical economics, while applying Jessica G. Lambert is Co-Chair and CIO of systems and EROI thinking to a broad se- Next Generation Energy Initiative, Inc. ries of resource and economic issues.! (NGEI). In addition to her work at NGEI, Ms. Lambert’s research focuses on re- Principal Author! source availability trends and their effect Stephen Balogh is a Doctoral Candidate on societal well-being. She is an active and visiting instructor at the SUNY Col- member of the Biophysical Economics lege of Environmental Science and community. From 2010 to 2012 Ms. Lam- Forestry (ESF) where he teaches courses bert was a Research Associate at the Pale- about Urban Ecology, Energy Systems, ontological Research Institute in Ithaca, and Renewable Energy. His research con- NY where she performed and managed centrates on food and energy flows in ur- National Science Foundation (NSF) fund- ban ecosystems. His PhD dissertation is ed research on the anthropogenic effects entitled "Feeding and Fueling the Cities of observed in ecosystems affected by the the 21st Century." He has published pa- 2010 Gulf Oil Spill. Prior to her appoint- pers and book chapters on various topics ment at NGEI, Ms. Lambert served as an related to energy, including socio-ecologi- intern for the White House Council on cal systems, the importance of high quali- Environmental Quality's (CEQ) Land and ty energy to societal development, the Water team and as a White House Intern nexus of energy and the economy, the en- for the Office of Energy and Climate ergetic efficiency of agricultural systems, Change. ! and trade-offs involved in creating an ur- ban green economy.! Principal Author! Charles Hall is a professor emeritus at the ! SUNY College of Environmental Science and Forestry (ESF). He received his PhD ! under Howard T. Odum at the University of North Carolina at Chapel Hill. Dr. Hall is the author or editor of eleven books and more than 300 scholarly articles. His re- search focusses on how organisms, in- cluding humans, invest energy in obtain- ing additional energy to improve biotic or social fitness. He has applied these ap- proaches to fish migrations, carbon bal- ance, tropical land use change, and the extraction of petroleum and other fuels in both natural and human-dominated ecosystems. Presently he is developing a Table of Contents Abbreviations . xiii Units of Measurement . xiv List of Figures . xv List of Tables . xvii Executive Summary . xix 1. Introduction . 3 1.1 Energy and the Economy . 5 1.2 Economic Cost of Energy. 7 1.3 Aims and Research Questions . 7 1.4 Methodology. 8 1.4.1 Defining EROI . 8 1.5 History of EROI Concept. 8 1.6 Approach to Deriving EROI . 11 1.7 Timing of Costs and Gains for EROI . 12 1.8 EROI and Energy Quality. 13 1.9 Historical Occurrences of Changing EROI. 13 1.9.1 1900-1939 . 14 1.9.2 1940-1979 . 14 1.9.3 1980-Present. 14 1.10 Conclusion . 14 2. Methods . 17 2.1 Energy Return on Investment . 19 2.2 Standard EROI (EROIst) . 19 2.3 Point of Use EROI (EROIpou). 20 2.4 Extended EROI (EROIext). 20 2.5 EROI for Domestic Oil . 21 2.6 EROI for Imported Oil (EROIIO). 21 2.7 Societal EROI (EROISOC) . 22 2.8 Lambert Energy Index (LEI) . 25 EROI of Global Energy Resources | xi 3. EROI of Fuels . 29 3.1 Introduction . 31 3.2 Coal . 34 3.3 Oil and Gas . 37 3.3.1 Global Oil and Gas . 38 3.3.2 United States Oil and Gas . 40 3.3.3 Canadian Oil and Gas . 41 3.3.4 Norwegian Oil and Gas . 42 3.3.5 Mexican Oil and Gas . 42 3.3.6 Chinese Oil and Gas . 43 3.3.7 US Shale Oil . 43 3.3.8 Oil Shale . 44 3.4 Dry Natural Gas . 44 3.5 Wind .