The Australian Government has joined the global push to net-zero by 2050. Well, sort of global. But what does this really mean for us in practice? And is it even possible to achieve that goal?
Today, we focus on a particular part of the net-zero equation known as EROI. Energy Return on (energy) Invested is taken from the finance world, which uses the monetary equivalent of ROI, meaning return on investment. If your solar panel cost you $10,000 and produces $1,000 in energy savings per year, your ROI is 10%.
EROI considers the same idea but uses energy instead of money to count. It compares how much energy it took to build something which creates energy, and how much energy that thing then produces. The aim of the game is to include all the energy it took, from mining the resources needed to build the power plant through to operating it.
The trouble with renewable energy generation is how much power it takes to construct in the first place relative to what we can expect it to produce over its lifetime.
Here’s how scientist Michael Kelly explained the idea in a 2019 speech to The Global Warming Policy Foundation:
‘If a cheetah goes chasing a rabbit, and it ends up consuming more of its own energy than it gets by eating the rabbit when it catches it, its long term future is not assured. If that cheetah is supporting a family, then the ratio of energy [consumed relative to generated] had better not be 1 to 1 it had better be 5 or 6 to 1. […]
‘If we’re going to have nice to have things in society, we need to make sure that the amount of energy we use to produce a barrel of oil is 1/14 of the amount of energy in that barrel of oil. […] It’s called energy return on energy invested.’
There’s a great debate about what sort of EROI society needs from its power sources in order to function normally. Unfortunately, existing renewable energy projects can fall severalfold short of the threshold, including some that might use as much energy to create as they generate, depending on how you do the maths.
Simon Michaux, who wrote a series of reports analysing the resources required to meet net-zero, thinks wind turbines are sometimes an example of this negative EROI, once you consider the energy expended in the entire process of building wind turbines:
‘The energy to create the materials and then manufacture the wind turbine and then get it into place is actually more than what that wind turbine will generate across its life cycle, when it’s then taken away.’
Of course, the calculations depend immensely on assumptions made about how wind energy components are produced and where they’re placed. But the point is that it’s not entirely clear what the maths is, especially for a large-scale renewable grid. For example, such a grid needs a lot of spare capacity which stands idle, mucking up the calculations.
‘So we’re in this sort of phase at the moment where the true costs of everything that we do are not completely understood. And there is a reluctance to understand them, because we’ve got it easy at the moment. We’re depending on fossil fuels — this cheap abundant energy source and it’s allowing us to do all sorts of things.’
Of course, it’s important to note that while the energy that so-called renewable energy harnesses is indeed renewable, the actual infrastructure which harnesses that energy is not renewable, it is rebuildable.
Recycling, which is notoriously difficult for renewable energy infrastructure, ironically enough, only worsens the EROI calculation because recycling is energy intensive.
We better hope recycling works, though, because most of the renewable energy infrastructure put in place so far will face the end of its useful life right about when we hit our 2050 target, only increasing the difficulty of meeting net-zero.
Now, I’m not saying all renewable energy projects have a negative ROI. I’m saying that the typical renewable energy project may not have a high enough ROI to allow us to power civilisation.
We’ll need so much renewable energy just to maintain the renewable energy system that there won’t be enough left over for other uses to maintain our standard of living.
‘The EV battery, h-cell, solar panel, wind turbine, hydro plan is not viable as the final solution and basis of the next era of industrial ecosystem’, sums up Michaux.
And it’s only going to get worse. A good example of why comes from mining. The renewable energy transition will require a vast increase in mining. The IEA’s maths, which woefully underestimate the challenge according to some, is shocking:
‘However, a concerted effort to reach the goals of the Paris Agreement (climate stabilisation at “well below 2°C global temperature rise” […] would mean a quadrupling of mineral requirements for clean energy technologies by 2040. An even faster transition, to hit net-zero globally by 2050, would require six times more mineral inputs in 2040 than today.
‘Which sectors do these increases come from? In climate-driven scenarios, mineral demand for use in EVs and battery storage is a major force, growing at least thirty times to 2040. Lithium sees the fastest growth, with demand growing by over 40 times in the SDS by 2040, followed by graphite, cobalt and nickel (around 20-25 times). The expansion of electricity networks means that copper demand for grid lines more than doubles over the same period.’
Can we even increase mining that much? Depending on the expert you ask, this is either impossible or implausible in and of itself.
However, consider what’ll happen to EROI calculations under this scenario, even if the resources are found, permitted, developed, mined, and refined.
Mining’s an energy intensive business at decent ore grades. But those decent ore grades are largely used up. Mines are having to use even more energy intensive methods to crush out ever smaller amounts of metal per tonne of rock.
A huge increase in demand for resources would increase energy demand per kilogram of resource produced too. And that tips EROI calculations against resource-intensive forms of energy like renewables.
The UK is currently experiencing the consequences of this vague and theoretical idea. Gas shortages caused gas price spikes, which delayed greenhouse planting of vegetables. And so, supermarkets are rationing those vegetables today.
I suspect a rather long list of goods and services will have to be rationed in this way for as long as we strive for the goal of net-zero. Energy will be short supply, constraining what we can do with it. I can only hope that, like Germany and the UK more recently, Australia will have the backup coal power infrastructure ready to go back to.
Until next time,
Editor, The Daily Reckoning Australia Weekend