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> The high cost of source A from your example indicates that this source requires some expensive fuel. No. It indicates that there are other factors of product

> The high cost of source A from your example indicates that this source requires some expensive fuel. No. It indicates that there are other factors of production than input energy that causes the high price, and that EROEI is incapable to take those into account. To put this into more concrete (while still absurdly unrealistic to illustrate the point) numbers, assume we have a weird nuclear reactor, that is going to produce 1 kW of electricity for one million hours (somewhat more than 100 years). To create this generator, you need precicely two things. One kWh of energy, and because this is a bit unsafe reactor, you need to buy land worth one billion dollars to create a safe zone around the reactor. Now, this reactor has pretty much exactly the numbers of my original example A, this has EROEI of one million with investment costs of one million per Watt. So, a project with good ROI on properly priced (not subsidized) factors of production must have a decent EROEI. But there is no guarantee the other way round, a project with decent EROEI can have completely unfeasible ROI, so I still not understand why I should care about EROEI. It just produces zero value over ROI (with the usual disclaimer of correct prices) > I really recommend to stop thinking about economics in terms of money and start thinking in terms of means of production (which is where EROEI comes in) But if you want to think in terms of all means of production, not just some arbitrarily chosen ones, you end up with ROI.

js8 10y ago
> EROEI is incapable to take those into account EROEI is capable of it, but you must be willing to do it. Why don't you figure out, in your example world, what makes the land for the reactor so expensive? Eventually, there is going to be an energy cost to having so much land dedicated for it (either that or there is only a finite amount of land that you're willing to use - which is akin to infinite cost, as I already explained in my previous comments); and you omit that from your EROEI calculation. (Also technically speaking, in your example, I could build more reactors next to each other, so I would need less land, it's only a fixed cost, but that's not so important here.) > But there is no guarantee the other way round, a project with decent EROEI can have completely unfeasible ROI, so I still not understand why I should care about EROEI. It just produces zero value over ROI (with the usual disclaimer of correct prices) I disagree, the same is true vice versa (if you exchange EROEI and ROI), if you correctly calculate the energy cost needed. EROEI is just ROI in different units, and all the same advantages and disadvantages apply (that's why I predicated my post on you accepting ROI). So whatever disadvantage you see in EROEI I can find analogue of (and I did in fact) in ROI. But the point of using EROEI is, nature cannot be fooled - if a process has a given EROEI, then nobody can cheat that number. But with ROI, individual investors can still cheat other people (society at large), if they have reason to use incorrectly priced ROI (it is incorrectly priced from society's perspective, but from their perspective it's correct), for example when subsidies are involved. > But if you want to think in terms of all means of production, not just some arbitrarily chosen ones, you end up with ROI. You are not doing it correctly for EROEI - you're not assigning price in energy for those additional means of production (as pjc50 already noted).
- beefield 10y ago
  > if you correctly calculate the energy cost needed. I thought EROEI was supposed to be fudge-free? If you really calculate EROEI as the nature wants it, you are never reaching EROEI of one unless you are breaking thermodynamic laws. > - you're not assigning price in energy for those additional means of production There are non-energy factors of production. If you disagree with that, there is no point continuing this discussion. If you agree, don't you see that your argumentation is flawed, because I was specifically arguing about non-energy production factors and now you claim that I do not assign correctly the energy cost of a production factor that does not have energy cost?
  - js8 10y ago
    > If you really calculate EROEI as the nature wants it, you are never reaching EROEI of one unless you are breaking thermodynamic laws. This is actually true for ROI too, if you price everything correctly (so that all the participants would agree), there could hardly be any income from investment alone. > There are non-energy factors of production. If you assume something is in large enough supply, then it's always, from physics, a matter (pun intended) of having enough energy to obtain it. But OK, let's say there are non-energy factors. It's really not that different from the claim of some economists (which I agree with) that there are things that you cannot put monetary price on, such as human life. So I say again that ROI suffers from the same problem, if you have investment that for example kills people, you cannot calculate its monetary ROI in a meaningful way. Really think about it, EROEI and ROI is a similar concept, with similar flaws, just different units.
- deleted 10y ago
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js8 10y ago

> EROEI is incapable to take those into account EROEI is capable of it, but you must be willing to do it. Why don't you figure out, in your example world, what makes the land for the reactor so expensive? Eventually, there is going to be an energy cost to having so much land dedicated for it (either that or there is only a finite amount of land that you're willing to use - which is akin to infinite cost, as I already explained in my previous comments); and you omit that from your EROEI calculation. (Also technically speaking, in your example, I could build more reactors next to each other, so I would need less land, it's only a fixed cost, but that's not so important here.) > But there is no guarantee the other way round, a project with decent EROEI can have completely unfeasible ROI, so I still not understand why I should care about EROEI. It just produces zero value over ROI (with the usual disclaimer of correct prices) I disagree, the same is true vice versa (if you exchange EROEI and ROI), if you correctly calculate the energy cost needed. EROEI is just ROI in different units, and all the same advantages and disadvantages apply (that's why I predicated my post on you accepting ROI). So whatever disadvantage you see in EROEI I can find analogue of (and I did in fact) in ROI. But the point of using EROEI is, nature cannot be fooled - if a process has a given EROEI, then nobody can cheat that number. But with ROI, individual investors can still cheat other people (society at large), if they have reason to use incorrectly priced ROI (it is incorrectly priced from society's perspective, but from their perspective it's correct), for example when subsidies are involved. > But if you want to think in terms of all means of production, not just some arbitrarily chosen ones, you end up with ROI. You are not doing it correctly for EROEI - you're not assigning price in energy for those additional means of production (as pjc50 already noted).

beefield 10y ago
> if you correctly calculate the energy cost needed. I thought EROEI was supposed to be fudge-free? If you really calculate EROEI as the nature wants it, you are never reaching EROEI of one unless you are breaking thermodynamic laws. > - you're not assigning price in energy for those additional means of production There are non-energy factors of production. If you disagree with that, there is no point continuing this discussion. If you agree, don't you see that your argumentation is flawed, because I was specifically arguing about non-energy production factors and now you claim that I do not assign correctly the energy cost of a production factor that does not have energy cost?
- js8 10y ago
  > If you really calculate EROEI as the nature wants it, you are never reaching EROEI of one unless you are breaking thermodynamic laws. This is actually true for ROI too, if you price everything correctly (so that all the participants would agree), there could hardly be any income from investment alone. > There are non-energy factors of production. If you assume something is in large enough supply, then it's always, from physics, a matter (pun intended) of having enough energy to obtain it. But OK, let's say there are non-energy factors. It's really not that different from the claim of some economists (which I agree with) that there are things that you cannot put monetary price on, such as human life. So I say again that ROI suffers from the same problem, if you have investment that for example kills people, you cannot calculate its monetary ROI in a meaningful way. Really think about it, EROEI and ROI is a similar concept, with similar flaws, just different units.
deleted 10y ago
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