2014 International Exergy Economics Workshop


19th-20th May, 2014
Weetwood Hall Conference Centre, Leeds
, UK

In 2014, more than 20 researchers from Europe and North America convened for the first International Exergy Economics workshop in Leeds, UK. The highly successful event sought to explore some of the newly emerging insights made possible within this nascent field.

The two-day workshop covered a wide range of topics relating to exergy use and economic development, as outlined below.

  1. Developing a common methodology for useful exergy accounting
  2. National accounts with a broader energy sector
  3. Impacts of exergy results on energy scenarios
  4. MRIO trade flows of exergy
  5. Determining technology-based maximum efficiencies
  6. Useful exergy as a factor of production
  7. Energy return on energy investment (EROI) and linkages to exergy
  8. Historical datasets for exergy analysis
  9. Econometric analysis of past exergy results


1. Developing a common methodology for useful exergy accounting

Session Convener: Tania Sousa (taniasousa@ist.utl.pt)

Points addressed:

a)      Why is or useful exergy at the national level an important variable? This answer will include the relationship with economic activity and energy scenarios. The answer to his question is relevant to emphasize the importance of having a methodology to compute it. Related with this issue it is important to address the differences between useful energy and useful exergy.

b)      A revision of the papers and references that have already done exergetic analysis to the useful stage of energy use at the country level. This revision should emphasize the difference in methodologies between the different studies and the importance of the results obtained. References include the papers by Robert Ayres and Benjamin Warr (Warr et al., 2008; Ayres, 2008 and Warr et al., 2010) and an improved version of this methodology that was applied to Portugal (Serrenho et al., submitted to Ecological Economics), to Mexico (Guevarra et al., submitted to Energy Policy) and to 15 european countries (Serrenho et al., submitted to Energy).

c)       A proposal for a common methodology to compute useful exergy.

  1. Some issues that still need some working: (1) the classes of useful exergy categories that should be considered; (2) the correct mapping between economic activities-energy vector and useful exergy categories – the most problematic being electricity, (3) the first and second law efficiencies that should be considered for each technology and their evolution in time. Also what are the best proxies for energy use when no statistical data is available?
  2. Some issues that were not yet considered in the existing methodologies: (1) how to compute primary exergy for renewable electricity if we want to enlarge our methodology to include all three levels of energy use (primary, final and useful) and (2) whether to include or not the exergy inputs related to non-energy use.

d)      A case study. I think it would be very nice to apply this at a large scale (IEA countries or world?) and for at least a 50 (100?) year period.

e)      Analysis of the results. The best way to analyse results depends on the question being addressed. Should we look at useful exergy by end-use, by economic sector or by energy vector?

Session outcomes: Sousa et. al., 2015 – Improving the robustness of societal exergy accounting: From primary energy to energy services (pdf).
Presented at the European Society for Ecological Economics Conference, University of Leeds 2015.

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2. National Accounts with a broader energy sector.

Session Convener: Tiago Domingos (tdomingos@ist.utl.pt)

No information available.

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3. Impacts of exergy results on energy scenarios

Session Convener: Peter Taylor (p.g.taylor@leeds.ac.uk)

This session discussed approaches to forecasting scenarios of future exergy and useful work demand, using IEA and other primary and final energy scenarios.

Session outcomes: Brockway et. al., 2015 – Understanding China’s past and future energy demand: An exergy efficiency and decomposition analysis.

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4. MRIO trade flows of exergy

No information available.

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5. Determining technology-based maximum efficiencies

Session Convener: Jonathan Cullen (jmc99@cam.ac.uk)

Key questions:

Is energy efficiency or exergy efficiency (or both) the best measure of the potential to save energy?

What can we say about different types of exergy losses from conversion devices, and how difficult it might be to reduce these losses?

How can we calculate practical efficiency limits for conversion devices, and account for the range of efficiencies across different device sizes?

How do the “exergy efficiency gaps” vary across regions, countries, wealth, user groups?

Can we define energy-based metrics for the conversion of useful energy to services (i.e. beyond the passive systems)? Is there a good 2nd law efficiency definition for light and information?

Useful papers:

Ayres, Ayres, Warr – 2003 – Exergy, power and work in the US economy, 1900–1998

Carnahan et al. – 1975 – Efficient use of energy: a physics perspective, study report 399. New York: American Physical Society, January 1975.

Cullen, Allwood – 2010 – The efficient use of energy: tracing the global flow of energy from fuel to service

Cullen, Allwood – 2010 – Theoretical efficiency limits for energy conversion devices

Cullen, Allwood, Borgstein – 2011 – Reducing Energy Demand What Are the Practical Limits

Ford KW, Rochlin GI, Socolow RH, Hartley D, Hardesty DR, Lapp M, Dooher J, Dryer F, Berman SM, Silverstein SD, editors. Conference on the technical aspects of the more efficient use of energy, Princeton, NJ, July 8 – August 2, 1974. New York, United States: American Institute Institute of Physics; 1975

Hammond, Stapleton – 2001 – Exergy analysis of the United Kingdom energy system

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6. Useful exergy as a factor of production

Session Conveners: Benjamin Warr (benjamin.warr@gmail.com); Tiago Domingos (tdomingos@ist.utl.pt)

Session Outcomes: Santos et. al., 2015 – Aggregate production functions: How does the Solow Residual change when introducing quality-adjusted values for capital, labour, and energy?Presented at the European Society for Ecological Economics Conference, University of Leeds 2015.

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7. Energy return on energy investment (EROI) and linkages to exergy

Session Convener: Tim Foxon (t.j.foxon@leeds.ac.uk)


A biophysical view of the economy emphasises the dependence of economic activity on flows of energy, materials and energy services from the natural world (Hall and Klitgaard, 2012). Recent work has shown that the exergy input into the economy (largely from fossil fuels) and the efficiency of its conversion to useful work have been key drivers of economic growth (Ayres and Warr, 2009). Concerns have been raised that declining EROI (energy return on investment) from fossil fuel and alternative exergy inputs will constrain the ability of economies to continue to deliver economic growth and improvements in social wellbeing (Hall et al., 2008; Lambert et al., 2014). However, there has been little work relating EROI analysis to exergy-based analysis of economic growth. This paper will contribute to understanding how EROI analysis can be related to this type of analysis of physical constraints on economic growth. In particular, it will address the following questions:

  1. What are remaining conceptual and methodological issues relating to defining EROI (or related measures of net energy) for a national economy, based on annual flows of energy?
  2. How does this relate to conventional measures of national economic performance in environmental-economic accounting?
  3. What further data collection would be needed to measure EROI at a national level?
  4. How would this measure of EROI relate to analyses of efficiency of conversion of exergy inputs to useful work?


Ayres, R. U. and B. Warr (2009). The economic growth engine: How energy and work drive material prosperity. Cheltenham, UK and Northhampton MA, US, Edward Elgar.

Hall, C.A.S., Powers, R.C. and Schoenberg, W. (2008), ‘Peak oil, EROI, investments and the economy in an uncertain future’, in Pimentel, D. (ed.), Biofuels, Solar and Wind as Renewable Energy Systems, Springer: New York.

Hall, C.A.S. and Klitgaard, K. (2011), Energy and the Wealth of Nations: Understanding the Biophysical Economy. Springer: New York, NY, USA.

Lambert, J. G., Hall, C. A. S., Balogh, S., Gupta, A., & Arnold, M. (2014). Energy, EROI and quality of life. Energy Policy, 64, 153–167 http://dx.doi.org/10.1016/j.enpol.2013.07.001

Session Outcomes: Brand et. al, 2015 – Measuring EROI (energy return on investment) on a national level: two proposed approaches (pdf).
Presented at the European Society for Ecological Economics Conference, University of Leeds 2015.

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8. Historical datasets for exergy analysis

No information available.

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9. Econometric analysis of past exergy results

Session Convener: Julia Steinberger (j.k.streinberger@leeds.ac.uk)


Exergy analysis highlights the technical efficiency with which useful energy (useful work) is delivered to the economy. Useful work can be interpreted as high quality energy required for economic activity, and the efficiency of its supply chain, from primary exergy inputs extracted from nature, may thus constitute a key aspect of the functioning of modern economies (Ayres & Warr 2009). Exergy analysis thus may be used to provide better insights into the role that the energy supply chain plays in enabling, or hampering, economic growth. In this article, we explore econometric methods which have been demonstrated to yield important insights into the role of energy in economic growth (Stern 2011). This article will apply standard econometric methods, such as co-integration and Granger causality tests, to new and consistently-developed national time-series data of exergy and useful work (Serrenho et al, 2014, Brockway et al 2014). Including exergy and useful work alongside more standard factors of production, such as labour and capital, is expected to yield important insights into the role of technical energy efficiency in economic growth.

Questions/comments for session team:

  1. David is key as someone who knows how to judiciously use econometric methods & correctly interpret the results given his expertise in this domain. Can anyone else help with this (Hint: Marco)? If the analysis is entirely up to David, the analysis used will be limited to his capacity alone.
  2. Helping with data collection & compilation:
    1. EXERGY CHAIN: Paul B, Andre S. can provide time series for Porgutal, UK, US, China, for primary (hopefully), final exergy & useful work. Is technical sectoral breakdown helpful?
    2. GDP, Labour, Capital, other factors I am not aware of: Can anyone help with this? I know something about GDP, but labour can be measured several different ways, presumably so can capital. Any experts in this area?
  3. Application of method(s):
    1. should same years be chosen (then limited to 1970-2010 because of China), or total time series available for each country (over 100 years for Portugal)?
    2. Test changes in GDP due to exergy chain contributions, but also maybe changes (or lack thereof!) for energy/exergy intensity metrics?
  4. Quite a bit of David Stern (and others) past work has included energy prices, partly to define metrics of energy quality, for instance through the Divisia method (well described in Cleveland et al 2000). Is this something that could be applied to exergy/useful work analysis, given the lack of pricing data for useful work categories? This may be a question to raise with the group led by Roger Fouquet and Peter Pearson, because of their work on historic pricing of energy services may help us find ways to progress on this (see Fouquet & Pearson 2006).

Important references

Ayres, R. and V. Voudouris (2014). “The economic growth enigma: Capital, labour and useful energy?” Energy Policy 64(0): 16-28. External Link  . EP_AyresVoudouris_2014_GrowthUsefulEnergy

Bruns, S. B., C. Gross and D. I. Stern (2014). “Is There Really Granger Causality Between Energy Use and Output?” The Energy Journal 35(4).   EJ_BrunsGrossStern_2014_GrangerReviewEnergyOutput

Cleveland, C. J., R. K. Kaufmann and D. I. Stern (2000). “Aggregation and the role of energy in the economy.” Ecological Economics 32(2): 301-317.  External link.      EE_ClevelandEtal_2000_AggregationEnergyEconomy
Fouquet, R. (2014, forthcoming) ‘Long run demand for energy services: income and price elasticities over 200 years.’ Review of Environmental Economics and Policy 8(2). LRDemandREEP2014

Fouquet, R. and Peter J.G. Pearson (2012) ‘The long run demand for lighting: elasticities and rebound effects in different phases of economic development.’ Economics of Energy and Environmental Policy 1(1) 83-100. eeep_0101DemLight2012

Fouquet, R. (2012) ‘Trends in income and price elasticities of transport demand (1850-2010).’ Energy Policy 50: 50-61.  TranspLRElasticites2012

Kumhof, M. and D. Muir (2012). Oil and the World Economy:Some Possible Futures, International Monetary Fund (IMF). External Link.

Stern, D. I. and K. Enflo (2013). “Causality between energy and output in the long-run.” Energy Economics 39(0): 135-146. External Link. .EE_SternEnflo_2013_CausalityEnergyOutputSweden

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