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Estimate of the Societal Energy Return on Investment (EROI)

Elise Dupont (), Marc Germain and Hervé Jeanmart
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Elise Dupont: Université catholique de Louvain
Marc Germain: Univ. Lille, CNRS, IESEG School of Management, UMR 9221 - LEM - Lille Économie Management
Hervé Jeanmart: Université catholique de Louvain

Biophysical Economics and Resource Quality, 2021, vol. 6, issue 1, 1-14

Abstract: Abstract Access to abundant and affordable primary energy resources has been recognised as an essential factor for the prosperity of human societies. To measure their quality, understood as the ease with which the energy system can extract and transform them into a form useful to society, the concept of energy return on investment (EROI) is widely used. Yet, so far, very few estimates of this indicator exist at a society level. This paper first aims at providing an estimate of the societal EROI using a simple macroeconomic model with two sectors, an energy sector and a final sector aggregating the rest of the economy. For the year 2018 and at a worldwide level, we obtain a gross EROI of 9.4, and a net EROI of 8.5. The estimation of the net energy ratio (NER), a second indicator more comprehensive than the EROI, allows assessing the energy embodied in the intermediate and capital consumptions of the entire economy. The NER calculation reveals that only 39% of the final energy produced contributes to total consumption (private and public) and economic growth, the remaining 61% being consumed within the economy. These intermediate energy consumptions (direct and indirect) are unevenly distributed between the two sectors: 11% of the production goes to the energy sector, while no less than 50% is consumed within the final sector. These figures proved to be very insensitive to variations in the value of estimated model parameters.

Keywords: Energy Return on Investment (EROI); Net energy analysis; Macroeconomic model; Intermediate consumption (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s41247-021-00084-9

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