Declining Energy Quality Contributed to Recession?
Last month, on November 23, I wrote a post about Dr. Carey King’s recent publication in Environmental Research Letters where I discussed his definitions of Energy Return on Energy Invested (EROI) and Energy Intensity Ratio (EIR). These measures express what we get (in terms of energy and economic gains) from the energy we invest. The latter measurement – EIR – measures how much profit we (consumers) get relative to each unit of profit that suppliers (energy producers) get. The higher the EIR, the higher the “economic value” of a unit of energy for the consumer.
In his letter, Dr. King points out that the worst recessions over the past 65 years have followed significant declines in energy quality (measured by the EIR for each fuel). He indicates that energy quality (measured by EIR) might be a contributing factor in the current recession – another argument for maintaining cheap, abundant energy sources to ensure economic growth. Dr. King argues that “If we aren’t fundamentally changing the way we produce or consume energy now, don’t expect the economy to grow as much as the past two decades.”
Check out the figure below to see how EIR has changed over time.
Reference: C. W. King. Energy intensity ratios as net energy measures of United States energy production and expenditures. Environmental Research Letters, 2010; 5 (4): 044006 DOI: 10.1088/1748-9326/5/4/044006