Energy return on investment (EROI) is a term used in the economics of energy production to help determine costs of an energy source based on the amount of energy that will be produced versus the dollar amount that is spent to extract and use the energy. This data is looked at by governments so that plans and goals can be evaluated for energy security, as well as by companies so that profits can be reached while still offering rates to customers that are competitive and fiscally accurate for the area it is being sold in.
Fossil fuels have historically had the highest EROI due to the amount of fuel that was easily available. However, due to a decrease in easy accessibility to these raw materials in the world, and an increase in government regulations, energy sources like coal, natural gas, and oil are becoming increasingly more expensive for these companies to access these energy sources.
This leads to alternative fuel sources, such as hydroelectric, solar, wind, geothermal, and nuclear. Hydroelectric has been used for many years, and is usually the highest EROI energy source, but increasing regulations on this source threatens its expansion. Nuclear has seen massive growth in the past couple decades and it provides consistent energy but at a high cost.
For the future, wind and solar are going to be the new cost drivers in energy. As technology improves the EROI of these sources will continue to rise. Both wind and solar are unlimited fuel sources, and only our own ability sets us back in developing these sources.
Electricity production is responsible for 37 percent of all carbon dioxide (CO2) emissions in the U.S, and transportation is responsible for 31 percent.These emissions should be calculated with traditional EROI, because there are health repercussions to the earth, animals, plants, and people from these emissions. Health repercussions that take more energy to try to fix. From a financial perspective, fossil fuels have been in the past great for EROI because it didn’t cost much money for these fuels to be extracted and used. Regulations that took emissions and health concerns weren’t as prevalent as they are today. However, those costs of extraction of increased, and those regulations have increased making the EROI less than it used to be.EROEI is then taking into account how much energy is needed to make more energy, and this supports the trend of fossil fuel production continuing to be more costly. From a full cost perspective, including the increased costs of healthcare over the year fossil fuels aren’t what they used to be. To learn more about energy and certificates needed, check out https://commercial-energy-performance-certificate.co.uk/.
Overall the battle between fossil fuels and green energy comes down to something that Jack P. Manno calls welfare returned on energy invested (WROI). According to him, “WROI is a useful concept that places emphasis on the underlying purposes of energy use and consumption: to improve quality of life.” Solar and wind energy do not produce CO2, no greenhouse emission, so if the do somehow lessen the welfare or quality of life of people on this planet, it’s simply because they do not like what they look like. WROI and the World Happiness Index are economic theories that could change the world if they were easily adaptable and quantified. Despite this, they are theories for a new business world, a business world that attributes the costs of more things than money.
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