The EROI energy multiplier hypothesis

A common narrative in EROI discourse is the energy multiplier hypothesis. The reasoning is that it doesn’t matter what the EROI is, providing it’s greater than unity. From this reasoning, it follows that even very low EROI’s (say 1.2:1) aren’t a problem because you can multiply sources to give the required net-energy. The problem with this hypothesis is that it doesn’t account for the difference between consumption and investment. The multiplier hypothesis implicitly assumes that we reinvest 100% of our production. If that were true, then very low EROIs may be workable in a subsistence economy.

But we don’t reinvest 100% of production. We eat, commute, consume health care, education, go the movies, etc. As a modern society, we choose to reinvest 20 or so percent of our production. Energy industries exist to support society, not themselves. So if we take the 20% that is surplus energy (for an EROI of 1.2:1) and multiply it by the 20% that is available for reinvestment, we get only 4% that is available to ‘grow’ the energy source.

Consider the example of teachers. Let’s say that a university-employed teacher only teaches 0.2 new graduate teachers over their entire 30-year career (i.e. it takes 5 qualified teachers to create 1 graduate teacher over a 30 year period). This is an education ‘EROI’ of 1.2:1, and clearly this is ridiculous. For example the overall University of Melbourne student/staff ratio is about 18:1. Assuming a 3 year average program equates to a crude ‘EROI’ of education of about 6:1 over 3 years. Therefore a university career of 30 years gives a lifetime ‘EROI’ of about 60:1 (30/3 x 6). These are the sort of numbers we expect. We train teachers so that they can go out and teach students not teacher’s teachers. Even with this high ratio, Australian higher education is facing enormous challenges.

Consider the example of a pre-industrial farm. Say it produces 1000 kg of potatoes per annum and the farmers consume 1000 kg. This is an annual EROI of 1:1. That would be called subsistence farming and the family could not purchase anything from the local market. If the farm produced 2000 kg, it could eat 1000 and sell 1000kg and use the money to buy something useful – maybe tools to improve the on-farm productivity but not much more. The problem with 2:1 is that half the community would need to be farmers. It wasn’t until around 1840 that the UK reached an EROI of 5:1 for energy, marking a key milestone in the Industrial Revolution. But by modern living standards, 1840 Britain is hardly the sort of society most of us would aspire to. Modern Australia employs around 2% of the population to produce all the food plus much more for export. How does it do this? With high-EROI fossil fuelled farm equipment and modern agriculture technology.

The point of all this is that most of the energy we produce is for consumption, not for reinvestment. It’s hard to pin down a firm number, but modern society is likely to require an EROI of at least 10:1 to maintain living standards and probably higher. For those of us pursuing EROI, there is still a risk in returning to a type of classical economics objectivist energy-as-value theory of production. The key is that energy is an enabler of economic activity but often not the primary driver. At high-EROI energy systems are not EROI-constrained and other factors will dominate the viability of the energy source.

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