Energy return on investment. In accordance with the second law of thermodynamics, the continuous flow of oil coal, and other fuels used to run society is converted into low quality, unavailable energy. This means that society must continuously extract new energy from the environment, an activity that itself requires energy to accomplish. Energy is used to lift oil to the surface, excavate coal pits, manufacture wind turbines, etc. Surplus or net energy is the term that describes the amount of energy delivered to society, net of the energy used to deliver it. Energy return on investment (EROI) is the ratio of theses quantities: the amount of energy delivered to the amount used in the delivery process.

Economies with access to energy sources with a large energy surplus have greater potential for economic expansion and/or diversification than those with access to lower quality fuels. They history of the expansion of human civilization and its material standard of living is directly linked to successive access to and development of fuel sources with increasingly greater energy surpluses. The transitions from animate energy sources such as plant biomass, and draft animals, to wind and water power, to fossil fuels and electricity enabled increases in per capita output due to increases in the quantity of fuel available to produce non-energy goods. The transition to higher surplus fuels also enabled social and economic diversification as increasingly less available energy was used in the energy securing process, meaning more fuel was available to support non-extractive activities.

An EROI = 1 is an absolute cutoff point for an energy source, the point at which as much energy is used to deliver a unit of energy as that unit yields. The EROI for crude oil has declined over time, and may continue to do so as the resource base is depleted. Smaller, deeper, and more remote fields require more energy to develop. Alternatives to crude oil such as ethanol from corn and coal liquefaction deliver a significantly lower EROI because a significant amount of energy is needed to process the feedstock itself (corn or coal). Economic growth and rising standards of living may be more difficult to maintain than they were 50 years ago when wealth was produced by the massive energy surplus associated with the discovery of the Earth's great oil fields in the first half of the twentieth century.

Sources

• Cleveland, Cutler (Lead Author); Robert Costanza (Topic Editor). 2007. Net energy analysis. In: Encyclopedia of Earth. Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and the Environment). [First published in the Encyclopedia of Earth September 14, 2006; Last revised February 26, 2007; Retrieved March 11, 2008].
• Cleveland, Cutler (Lead Author); Peter Saundry (Topic Editor). 2007. Ten fundamental principles of net energy. In: Encyclopedia of Earth. Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and the Environment). [First published in the Encyclopedia of Earth January 4, 2007; Last revised January 8, 2007; Retrieved March 11, 2008].