Nuffield scholar Solis Norton acknowledges the area of energy return on investment (EROI) is not top of mind for many but his year’s study found the field holds important tools for one of this country’s most pressing demands – getting to net zero carbon emissions by 2050.
“Mapping out the transition to carbon zero using economics is a good starting point but mapping our true energy use during the transition is critical too. This is what EROI does. Our path to carbon-zero economic prosperity will collapse if we run short of energy along the way.”
He is intrigued by how cheap and incredibly energy-dense fossil fuels have underpinned the world’s ability to feed an ever-growing population.
“Just how hard will it be to continue doing so while uncoupling to renewable options?”
EROI weighs up the impact of that uncoupling. It measures the amount of energy invested into a system and the energy that comes out of it, expressed as a ratio of energy output to energy input.
The renewable energy systems appear to return a lot less energy over their lifespan than their fossil fuel counterparts relative to the energy invested in running them. The EROI ratio is, for example, around 20:1 for diesel made from a fossil source but around 3:1 for diesel made from biomass.
Another important comparison is coal and biomass, both fuel options for a milk drying plant. The ratio for coal is about 45:1 but the ratio for woody biomass is about 10:1.
The exact ratios have not yet been accurately established but available estimates suggest some big differences.
“The question is, what are the financial implications of this for the rural sector? And, given the whole country is making this transition, what is the financial impact to the nation?”
He found Fonterra, at least, has begun to see this challenge from a financial perspective. He is sure an EROI perspective will make its situation far clearer and help with an efficient transition.
“What I drew from my study was that if we are making a transition to different energy sources, that ratio is essential to find the most efficient mix of them and we simply have not looked at that as a society when discussing a transition to lower carbon emissions.”
He sees that lack of analysis as a glaring flaw in the recent Productivity Commission report on transitioning to a low-emissions economy.
Norton works with many farmers through his work as project manager of DeerPRO, which is a part of Deer Industry New Zealand. He believes farmers are the most likely to understand the EROI concept and be capable of responding to it.
“They are very aware of the balance of inputs and outputs in a complex farm system. They have a practical view of things and they’re innovative – they’re the perfect group to get this.”
But he maintains it is an understanding needed across the entire primary food production chain, from behind the farm gate to processing, transport and consumers.
“There is little point in creating optimally managed dairy farms if emissions regulations make drying milk impossible.”
“From an energy density view, organic and less intensive farm systems tend to have a proportionally lower inputs and outputs than their conventional counterparts, often by a considerable margin, even 15-25%. So a nationwide shift to lower-intensity farming systems will reduce our total production.”
He reckons the old value-add chestnut will take on a new shape and urgency as we seek greater financial return from products with lower energy and emissions footprints.
Beyond the rural sector his study also looked at what Zero Carbon 2050 will look like for a kiwi citizen from an energy perspective.
The EROI ratio for our national economy is around 20:1 today, in the 2050 projection its about 10:1.
Yet GDP is projected to double in the same period, which he feels is overly optimistic.
“Let’s break it down to the average person on the street. In the 2050 projection their energy use is 37% lower so the same as what the average person used in the late 1970s.
“There is no comment on how efficiently we use that energy. It is possible we may be able to get more out of it than we did in the 70s, if you put your rose-tinted glasses on.
“Take them off and look at our expectations today compared to the 70s. Flying to Fiji for the mid-winter break and that big new SUV are just not going to get us the emissions result we need.”
Norton recommends a transition institute to link the energy ratios with the economics for the Climate Change Commission to ensure goals are realistic and attainable within physical energy constraints.
“It is in line with other efforts to better link and value the non-economic aspects of things like water quality, biodiversity and other ecosystem services in final policy.”
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The Nuffield Scholars’ reports can be found here: https://ruralleaders.co.nz/nuffield-scholar-reports/
