Energy Quality and Shifts in Composition of Energy Input

Energy quality is the relative economic usefulness per heat equivalent unit of different fuels and electricity. One way of measuring energy quality is the marginal product of the fuel, which is the marginal increase in the quantity of a good or service produced by the use of one additional heat unit of fuel. These services also include services received directly from energy by consumers. Some fuels can be used for a larger number of activities and/or for more valuable activities. For example, coal cannot be used directly to power a computer whereas electricity can. The marginal product of a fuel is determined in part by a complex set of attributes unique to each fuel: physical scarcity, capacity to do useful work, energy density, cleanliness, amenability to storage, safety, flexibility of use, cost of conversion, and so on. But also the marginal product is not uniquely fixed by these attributes. (more…)

The Economics of Energy Efficiency

economics energy efficiency

Energy efficiency is defined here to mean energy services provided per unit of energy input (for example, gallons of water heated to a specified temperature per British thermal units of natural gas input). Within this framework, energy efficiency is conceived primarily at the disaggregated, product level, rather than at a more aggregated sectoral level. (more…)