Act: Resources

Energy Return on Investment: Review

June 12, 2017

Energy Return on Investment

A Unifying Principal for Biology, Economics, Sustainability.

Charles A.S. Hall

Springer International Publishing, 2017

As a child, I loved riding the merry-go-round – the cheerful music and flashing lights -the excitement of the horses magically rising and falling.  On one ride, my delight doubled when I discovered someone had removed the brightly painted covers hiding the inner mechanism.  Inside, a massive motor whirred, gears spun, and giant levers moved.  Not magic at all:  Mechanism!  Fascinating!  I would have loved a tour by a mechanic who could have explained the parts and pieces and their purpose and function.

My childhood fascination grew in scope to the vast merry-go-round of our human civilization.  My interest has shifted from idle to practical as that civilization has embarked on the herculean task of transitioning from fossil fuel to renewable power.  At the same time, I observe:  Economic and energy experts baffled by unexpected booms and startling busts.  Stagflation grips the world and resists what was once effective monetary policies.  Ideas abound for navigating our energy transition and yet which ones should we choose?  An insightful mechanic would be especially welcome right now.

To this end, Dr. Charles A. S. Hall has written a new book in which he has kindly offered to pop off a few access panels and explain some of the inner workings.  Or as he puts it,

This book is meant as a straight forward and relatively non-technical introduction to energy and its role in nature and in human-dominated systems, including economics.  It is a primer on how the world works, emphasizing commonalities in structures and processes obvious to one trained in systems science but to relatively few others (p. V).

With his tremendous breadth of experience, Dr. Hall is uniquely qualified to give us this tour.  He has measured the flows of energy through systems ranging in size from microscopic to huge – from stream ecosystems in New York State to the energy capture of tropical forests in Puerto Rico.  He has measured the flows of energy through the U.S. oil and gas industry and the national economies of the U.S., Argentina and Costa Rica.  He has written texts on energy and the economy, edited books on world development and helped found and nurture the growing field of biophysical economics.


Dr. Hall structures his primer on energy and how it drives common processes, patterns, and system structures visible at all scales into three major parts: Part I lays a foundation by explaining the role of energy and how our understanding of it has become clearer over the last 300 years.  In Part II, he explores how our insights into energy were applied to biology including the idea of energy return as a driver of evolution. And Part III, discusses energy’s relation to human economies and civilization.

Part I Energy and Investments

Dr. Hall begins his story of energy with investments.  We usually associate investments with money, e.g., by paying for an education, we gain a better job.  But he expands our view, and we come to see the value of money is actually delivered by using energy (money is a promissory note on energy). And by looking through the lens of energy, we can understand a much wider class of investments – and that all living things (and societies) must invest time and energy to keep up a flow of life-giving energy.  He uses the cheetah as a helpful example, “It…has to catch more energy in its prey than it takes to stalk it and run it down (and only about 10% of their chases are successful!), and considerably more to make it through lean times and also to reproduce and feed the kittens” (p. 67).

Life makes rapid use of new energy-capturing technology, such as photosynthesis or breathing oxygen. Human civilization has rapidly adopted new energy sources, too, such as wind power, water power and fossil fuels.

Dr. Hall traces humanity’s struggle to master the understanding of these new sources of energy:  we first believed fire was a fundamental element, then we learned to consider heat an invisible fluid (phlogiston, caloric) and eventually arrived at the modern understanding of heat as molecular motion.

He relates how early scientists discovered that as energy is consumed doing work, e.g., driving a steam engine, the quantity of energy remains the same, but the energy’s quality declines.  It eventually becomes scattered as waste heat and can no longer perform useful work; and because of this, we need a steady replacement flow of high quality energy to maintain the order that is life, buildings, machines and society.

Part II and III examine how individuals, species, and human societies must invest energy to capture a flow of more energy.

Part II Biology and Energy
Dr. Hall explains that organisms invest energy – like the cheetah chasing prey – to exploit their environment to capture even more energy.  The success of these investments can be measured as a ratio of Energy Returned / Energy Invested (EROI).  Those organisms that have the behavior, body shape, or internal makeup that maximizes EROI will have extra energy left over to thrive, grow and reproduce.  Those who have a lower EROI will be crowded out.

He introduces the Iron Law of Evolution: “Organisms must extract more energy by exploiting their environment than they expend in doing so” (p. 49).

Thus, evolutionary fitness can be defined as those heritable traits that can achieve the highest EROI.  And this EROI must be quite high if a species is going to survive the constant environmental changes and challenges the species will face.

Dr. Hall qualifies that the most efficient energy return is not the only criteria, “In a competitive world, it is important to not only “out energy” one’s competition but to do it fairly rapidly, that is before the resource is captured by another individual or species” (p. 73).

Thus, the organisms and societies that evolve optimize the rate of energy capture as well.  Too slow and the energy is captured by another –  too fast, and they waste too much energy to compete.  Seeking the ideal balance between rate and efficiency is explained as the concept of Maximum Power.

Part III Energy and Human Economies

Dr. Hall then applies the Iron Law of Evolution and concept of Maximum Power to human societies, which are also subject to thermodynamic decay and need a constant flow of energy to survive.  Societies that do not capture enough energy starve; if they cannot provide a large surplus, they cannot grow.

He begins with a fascinating exploration of the energy return on investment of early human societies.  The Kung! Bushmen manage a remarkable 10:1 energy return on energy invested (EROI) on hunting and gathering in an arid environment.  An analysis of agriculture as far back as 1300 A.D. was estimated at an EROI of 2.5:1. But while agriculture had a drop in EROI it had a large increase in the scale of energy capture and led to a large increase in population levels.  Large scale forestry in Sweden was reported to have an EROI of 7:1 which promoted early industrialization and metals production; however, this effort collapsed when overharvesting began and the forests were depleted.

This was the essential problem that early civilizations faced: they were limited to the tiny flow of sunlight that crops and trees could capture.  This limited energy flow capped human numbers and development.  If they took too much, they depleted the forests and soils and the advantage collapsed.  Dr. Hall notes that some vast regions have been deforested three or more times as the local civilization boomed and then collapsed until the natural world could recover (p. 92).

It was unlocking the technology of fossil fuels that broke the cap.  Fossil fuels are stores of ancient sunlight, captured by photosynthesis, but prevented from decay.  They accumulated over millions of years and were compacted by geology into dense concentrations.  These nearly perfect fuels offered EROI as high as 60:1 for oil and natural gas and a huge increase in the scale of energy usage – Dr. Hall reports a 12 times increase since 1900 alone.  This vast increase in EROI and scale of fossil energy allowed the exponential climb in human numbers and industrialized civilization.

Unlike a forest, fossil fuels do not regrow (except on geological timescales) and even though vast in scale they will eventually run out.  The EROI of fossil fuels has been falling, which indicates that depletion is winning over improvements in extraction technology – now the rate of extraction growth is slowing.  The net energy result is less energy to human society, which is also seeing dramatically reduced rates of economic growth.

So, what lies ahead after fossil fuels?  EROI can help us peer into the future. Dr. Hall first helps the reader understand how EROI is calculated and how to create apples-to-apples comparisons between different energy sources.  Then, in the final chapters, he explores calculating how much energy return we need to support an industrial civilization as well as the EROI of the renewable energy flows that will be available.

How Did He Do?

Dr. Hall undertook a very difficult challenge:  write an approachable and layman friendly introduction to energy and energy return on investment (EROI) and how they shape our world, bodies, ecosystems, and civilization.  That he managed to pack this into a very readable 174 pages is quite the editorial feat!  The chapters are by necessity brief, and yet I never felt rushed along.  Nor did I feel the treatment was too shallow.  There is a rich bibliography for those wanting a deeper understanding.

He clearly put quite a bit of thought into how to write this for a lay audience.  It has been a long time since my last course in biology or chemistry, and so I was grateful that he paused for a refresher on energy fundamentals.  He made these foundational chapters and abstract concepts very approachable with many easy-to-understand examples.  For instance, he uses gear shifting on a bike to explain maximum power: too low a gear and you go too slow, too high a gear and you stall.  The maximum acceleration is in the middle.  For those of us who have ridden a bicycle, we can relate.

I found the history of the science of thermodynamics fascinating, and I was inspired by the role that citizen scientists played.  An example is Benjamin Thompson, a military engineer who helped connect mechanical motion and friction with heat energy.  Or the brewer, James Joule, who invented careful experiments to show how a falling weight (potential energy) generated heat.  And the military engineer Sadi Carnot, who took major strides in formulating thermodynamics.  They all stepped outside of their day-to-day jobs to push our collective understanding of energy forward.  I think we will all be called upon to become greater than our present selves to help civilization through this energy transformation.

I quickly came to appreciate the great breadth of Dr. Hall’s view – from the smallest to the largest scale – nature and human economics. He was equally comfortable relating how oxygen-based-respiration allowed about four (4) times more energy capture for species consuming carbohydrates – which led to an explosion of animal life – to train locomotives gaining 4% more efficiency by switching from steam engines to diesel powered generators driving highly efficient electric motors.

The EROI Concept

I think EROI is one of those watershed concepts.  Once you get it, you cross a divide and your thoughts run in new directions.  I was first introduced to EROI on The Oil Drum, and through linked academic papers from that site.  It took a lot of time and effort to do all that reading.  Dr. Hall does a very good job leading the reader to a useful, deep understanding in a very short book.

While he illustrates many useful implications of the EROI concept, I want to highlight two that are worth reading the whole book to understand:  The first is that EROI puts a hard limit on the amount of fossil fuels that can be exploited as energy sources.  The second is that the minimum EROI that a modern society needs is well above break even.

We can all understand that if gasoline cost $1000 per gallon to produce, very few people could afford to drive and very little of that expensive oil would be produced.  But what is a realistic maximum price for oil?  At what point does oil get so expensive to extract that it is left in the ground?  This is a very hard question to answer using dollars. It is much easier to answer if we switch from dollars and measure the investment in energy instead:

EROI analysis is important for many reasons but perhaps especially because it puts a limit to the often stated economic principal that as oil (for example) gets scarcer the price will go up and then lower quality reserves will become economic -indefinitely.  Instead at some point it will cost a barrel of oil or its equivalent to get a barrel of oil, and then no matter the price, those reserves will not be worth exploiting for energy.  In the meantime as EROI declines there will be less and less energy available to run every other component of economies (p. 116).

Just like a cheetah, to survive a society must get far more energy out of a fossil fuel than it takes in energy to extract it.  No matter the price, there is a breakeven point where output energy = input energy (EROI 1:1).  Below this breakeven point a resource becomes an energy-sink pulling energy out of society instead of flowing into society.

Also like a cheetah, society must get an energy return much higher than EROI of 1:1. This brings us to the second essential point worthy of understanding: It does not just take energy to get energy; it takes energy to use energy.  Society must spend energy to transport oil via pipeline and tanker, pay yet more energy to refine the oil, and pay the energy cost to build the machines that use the energy.  These energy payments cut down the energy surplus.  Thus, the energy source must have a high enough EROI to cover these costs too:

Think of a society dependent upon one energy resource: its domestic oil.  If the EROI for this oil was 1.1:1 then one could pump the oil out of the ground and look at it.  If it were 1.2:1 you could also refine it and look at it, 1.3:1 also distribute it to where you want to use it but all you could do is look at it.  Hall et al. (2014) examined the EROI required to actually run a truck and found that if the energy included was enough to build and maintain the truck and the roads and bridges required to use it (i.e., depreciation), one would need at least a 3:1 EROI at the wellhead to put one unit of gasoline into the truck (p. 154).

Unfortunately, I find these concepts are not widely understood and a lot of investment is thrown away on low EROI energy sources.  I remember a local university presentation discussing how research money into renewable energy was being spent.  Sadly, biofuels (EROI near 1:1) received most of the funding while building efficiency improvements (much higher EROI) received the lowest funding.  A better understanding would reverse these priorities.

For those motivated to learn how to calculate EROI, Chapter 11 is a good jumping off place with links to how-to papers and cutting edge 2016 references.

Cultural Evolution

Unexpectedly the chapters on EROI and biology had the strongest impact on me.  Here I found the essence of the energy transition work that lays ahead of us, as Dr. Hall explored the question: why are there so many different species?

Why are not firs found from the bottom to the top of the Smokey Mountains?  Why are oaks found only on drier sites, instead of also where soil water is more abundant? (p. 64).

He discusses how each species has tuned itself to capture a high energy return in a relatively narrow set of circumstances.  The tradeoff is a lower energy return in other circumstances:

Explicitly, Hall et al. (1992) found that varying energy costs and energy gains in response to environmental gradients explained where each species could, or could not, make a sufficient energy profit to survive and reproduce.  This provides a non-circular definition of fitness: fitness is greatest where and when the difference between energy costs and energy gains is greatest, providing a large energy surplus that can be, and usually is, translated into survival and reproduction (p. 65).

Reflecting upon this I was struck with the idea that fossil fuels had such high EROI that our cultures have abandoned past energy capture strategies in order to maximize our use of fossil fuels.  So now the windmills and water wheels are replaced by the same coal power plants everywhere.  The same cars.  The same houses.  The same strip malls.  The same restaurants and clothing stores.  Work is the same summer or winter.  Hot or cold.  Wet or dry.  Day or night.  Fossil fuels create the sameness.

As we attempt to transition to a non-fossil powered economy there are concerns about the limitations of wind (in scale) and solar photovoltaics (in EROI) and the intermittent nature of both to support a civilization that has any resemblance to the one we currently live in.

The low EROI of solar power may stop us from using solar power as a direct replacement for coal fired electricity: as large centralized plants would have to use expensive storage to provide 24/7 supply.  Perhaps the EROI would be high enough if we reshaped our society around the unique features of solar.  Perhaps our factories would only run when the sun was shining?  Perhaps once again we would work long on summer days and during the dark of winter we would study and take holidays. Perhaps industries that need 24/7 energy, such as steel mills, would move to be near geothermal or hydro power.

This is the essence:  each location will have a unique mix of renewable energy resources and energy costs.  No one solution could work everywhere.  Our civilization must split and become like the millions of unique species, each fragment hand crafted by clever and insightful people to maximize what is local and available and to come up with coping strategies for that which is scarce.  Each location must evolve its culture to create the greatest difference between energy costs and energy gains for its environment.

Interestingly, Dr. Hall discusses that evolution often happens as a shift in genetic variability within a population.  Perhaps those who still plow with horses, or those who keep old trains, steam tractors, or woolen mills running, are humanity’s cultural “genetic diversity.” They are waiting for the day when the knowledge they have been preserving will return as the highest EROI solution, and mainstream culture will again embrace these ideas.

Already we are starting to see changes here in the U.S. with the rapidly growing urban living and tiny house movements.  People are choosing simpler and smaller.  They are choosing walkable neighborhoods over auto-intense living.

One of the things I enjoy most about this book is how Dr. Hall brings up the very large questions to ponder, even if we do not have all the answers.  There are fascinating ideas about culture – past and future – and ethics throughout the book for those who enjoy contemplating “the big picture.”


In Energy Return on Investment, Dr. Hall has written an approachable and short introduction to how energy flows through and structures our world, ecosystems, and society.  In doing so he reveals how all species – including ours – must have a flow of high quality energy and must invest energy to get it.  This drive to capture energy creates some of the big mechanisms (such as evolution) that drive our actions and shape our lives.  He demonstrates how these mechanisms work at all scales from microbe respiration to human civilization.  These abstract ideas are explained with concrete and readily understood examples.  I wish I had read his book in college as these concepts tie together physics, chemistry, biology, history and economics in a way my standard course work never did.

Our industrialized culture has become optimized for an environment rich in fossil fuels.  Our task then is to evolve our infrastructure and culture to take advantage of renewable resources and natural energy flows.  To do that we must learn to recognize, measure, and understand the flows of energy that move through our society.  Energy Return on Investment is an excellent primer with which to understand the world around us and make good investment choices for ourselves and the generations to come.


Teaser photo credit: By Profberger at English Wikipedia, CC BY 2.5,

Jon Freise

Jon Freise co-founded the Corcoran GROWS Transition Initiative in Minneapolis Minnesota and helped transform it from a group of neighbors meeting in a living room into a 501c3 organization. Corcoran GROWS (Grass Roots Opens Ways of Sustainability) has put on fairs, hosted speakers, held neighborhood dances, created huge public art projects, and organized permaculture and reskilling courses. Jon now works city-wide raising awareness, helping new initiatives get up and running, forming partnerships, locating funding, and cross connecting people passionate about Transition- with a good dose of celebrating mixed in! Jon brings an engineer's problem solving perspective to the coming energy transition. He enjoys learning and sharing ideas and innovations for powering down our need for fossil fuels. Jon has written articles for The Oil Drum on natural gas supplies and EROeI (energy returned on energy invested). Jon's pre-transition career has focused on robotics and the design of commercial color printers. He holds a B.S. in Computer Science.

Tags: energy transition, EROEI