Energy Return on Capital Invested


BNP Paribas’s Global Head of our Sustainability Research, Mark Lewis, has introduced a new concept called Energy Return on Capital Invested (EROCI). It focuses on the energy return on a USD 100 billion outlay on oil and renewables where the energy is being used to power cars and other light-duty vehicles (LDVs). For a given capital outlay on oil and renewables, how much useful energy at the wheel do we get?

In a recent White Paper he wrote:Our analysis indicates that for the same capital outlay today, new wind and solar-energy projects in tandem with battery electric vehicles will produce 6x – 7x more useful energy at the wheels than will oil at USD 60/barrel for gasoline-powered light-duty vehicles, and 3x – 4x more than will oil at USD 60/barrel for light-duty vehicles running on diesel.

Accordingly, the research calculates that the long-term break-even oil price for gasoline to remain competitive as a source of mobility is USD 9 – 10/barrel, and for diesel USD 17 – 19/barrel.

He wrote that: “The speed with which the competitive landscape of the European utility industry has been reshaped over the last decade by the rollout of wind and solar power – and the billions of Euros of fossil-fuel generation assets that this has stranded – should be a flashing red light on the oil industry’s dashboard.

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