The EROI Chain is as Strong as its Weakest Link. A Rebuttal to Art Berman's Criticism of the High EROI of Renewables

  

It is a very good thing that Art Berman, well-known expert in oil and fossil fuel matters, has intervened in the EROI debate on renewables with a recent post . It means that the EROI is becoming the focus of the debate, as it should be. And the most recent data indicate that the EROI of renewables significantly surpasses that of oil when examined at the "point of use" rather than at the "well mouth." And, of course, as users of energy, the point of use is what we are interested in.

First of all, a note: nowadays, the debate on the energy transition is almost purely political. As such, it is based on slogans, and we know that slogans are not based on data or facts. In this sense, the typical anti-renewable slogan "Renewables will never be able to..." is as fact-based as older ones such as "All the Power to the Soviets" (and maybe even worse).

So, it is a pleasure to see that Art Berman, a well-known expert in matters related to oil and fossil fuels, engages in a fact-based debate. That allows me to respond with a different interpretation, still remaining within the boundaries of what a debate should be; with the discussants respecting each other.

This said, let me go to Berman's criticism which is specifically directed to a recent paper by Murphy et al., where the authors make the point that the EROI of renewables is now significantly larger than that of fossil fuels. Here is how Berman expresses his viewpoint.

 

This statement from that paper was a huge red flag for me.

“Even if crude oil were measured to have an EROI of 1000 or more at the point of extraction, the corresponding EROI at the point of use, using global average data for the energy “cost” of the process chain, would still only be a maximum of 8.7.”

This means that the supply-chain energy costs for refining and product distribution create a permanent penalty that prevents oil from reaching an EROI of more than 8.7. It furthermore implies that refining must be a marginally profitable business at best which it is not.

At first sight, the statement by Murphy et al, looks strange, even unreasonable. But it is not. It is the way EROI works -- which may be tricky to understand (and, not for nothing, the authors of Murphy's et al. paper have been working on the subject for more than a decade). 

So, it is perfectly reasonable that the EROI of oil at the "mine mouth" or "well mouth" may have no importance in determining the EROI at the point of use (POU). It is because a multi-stage EROI chain works like a metal chain: it is as weak as its weakest link. In this case, the smallest EROI determines the EROI of the whole chain.

Of course, energy transfer is something different from an ordinary chain; so let me show you a simple example of how it works using a hydraulic system.

 

You have a tank that you fill from a large reservoir (mine mouth), and you use a tap to bring this water where you need it ("point of use"). Let's assume that the tap at the mine mouth is perfect; it has no losses (EROI very large). But the tap at the point of use has a leak (EROI small, intended as the ratio of the water you use to the water you lose). Then, what you pay to the water utility company depends on the losses at the POU, not on the negligible losses at the MM. This is a qualitative example. For a more detailed explanation with some equations included, look at the appendix. See also our paper (mine together with Ilaria Perissi and Alessandro Lavacchi) on this subject 

Once this point is clarified, we see that it is perfectly reasonable (although a little unexpected) to propose that the EROI of oil is mainly determined by refinery, processing, and transportation losses. It could be the reverse; the point is that in the chain of energy flow from resource extraction to point of use, the overall EROI is determined by whatever bottlenecks are encountered in the chain.

From this point, we may go forward. Having established that Murphy's et al.'s proposal that oil's EROI is no more than 8.7 is not a mistake, but a correct interpretation of the data, we need to examine whether it is a likely interpretation of the current situation. Berman criticizes it on the basis of several observations; for instance, that it would mean that refining would be at best an unprofitable business, which is not. I trust Art completely if he says that refining is profitable. But we don't have a precise correspondence between profitability and EROI. For what we know, an EROI of 8.7 may be more than sufficient to run a refinery, although when we discuss this matter we run into a tangle of factors, including subsidies, taxes, financial factors, politics, and more. It is just because of these factors that EROI is a much more reliable and direct measure of the efficiency of financial 

Berman also makes some more interesting points that would deserve a discussion, but let me stop here. I mostly wanted to clarify that Dale et al. had made no mistake and provided a perfectly correct interpretation of the EROI of fossil fuels on the basis of the available data. Unfortunately, Twitter is buzzing with comments that claim that they made a "glaring mistake" or a "mathematical mistake" and, unfortunately, when everyone starts saying that someone made a mistake, then it becomes common knowledge; even though it is not true. It already happened with the "Limits to Growth" of 1972, accused to have made "wrong predictions" that the authors never made, but legends fly, while Truth plods onward.  

________________________________________________________________

Appendix: a simple System Dynamics model of the EROI of a two-stock system. This diagram illustrates the flow of energy in a two elements system depending on flow constants ("ks") and loss constants ("ls"). It is not meant to be run; just to illustrate how the EROI is a rate of two flows. The partial EROIs are simple to understand; while the global (sys) EROI is the ratio of the actual flow of useful energy at the point of use (POU) divided by the sum of the losses. Note how in the formula EROI=k2/(l1+l2) if l2 is much smaller than l1, it has no effect on the EROI of the system. This is the point that Murphy et al. are making in their paper. For a detailed explanation of how to represent EROI using system dynamics, see the recent paper by myself and my coauthors Ilaria Perissi and Alessandro Lavacchi.