Energy Return Ratio: Chief Criterion for a Non-Depleting Energy Future

摘要

If an investment is intended to produce energy or to save energy, it should be judged on the basis of the net amount of energy that it promises to produce or save. Yet, this seemingly obvious criterion is commonly ignored. This is one of the biggest flaws in analyzing energy investments today. To correct this situation, we recommend that the first criterion used in assessing any energy project should be a simple ratio, the Energy Return Ratio (ERR). It is the ratio of the energy produced by the project to the energy required to create and sustain the project. The Energy Return Ratio is determined by the laws of physics. It is immutable. It directly indicates the effectiveness of a project in doing what we want to achieve, which is to produce or to save net energy. In contrast, a calculation of financial return is subject to distortions that obscure the fundamental value of the project. These include interest rates, government subsidies, and business deals that occur in the background. Such factors can make the intrinsic worth of projects impossible for investors to judge. For example, the present growth of wind farms is largely motivated by government subsidies and utility mandates, which invites financial speculation that may occur at the expense of taxpayers and gullible investors. With only financial information available, we don't know whether wind energy is fundamentally a good thing or a sucker trap. Thus, the Energy Return Ratio also provides a check on the financial soundness of an energy project. If the ERR of a project is low, the financial rate of return is built over quicksand, and the project is likely to collapse.The ERR is a valuable first criterion for any kind of energy project. It is important for the production of conventional fuels, for derived or synthetic fuels, and for energy conservation projects. ERR analysis of such projects is simple, at least in principle. Applying the ERR becomes more complex and more interesting when applied to the transition from conventional energy sources to non-depleting energy sources. In this transition, an energy project has multiple generations, in which the energy from the first generation is used to build later generations. For example, a wind farm is built with conventional energy, harvests non-depleting energy from the environment, and uses all or part of the harvested energy to build additional wind farms. Analyzing this process on the basis of ERR yields important lessons that should guide investment and public policy in making the transition to nondepleting energy sources. Discovering those lessons is the subject of this discussion.