Abstract
Energy markets cannot be analyzed without discussing the relationship between energy and the natural sciences. Energy itself is a term with origins in physics. All types of energy conversion are based on physical, chemical, or biological processes. Professional statements regarding energy economics require an appropriate usage and correct interpretation of basic thermodynamic principles and properties.
The relationship between energy, the natural sciences, and engineering gives rise to several issues:
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What is the role of energy in physics, chemistry, and biology?
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How can different forms of energy be measured and how can they be converted?
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What information is contained in an economy’s energy balance?
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What is the relationship between primary, final, and useful energy?
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How does the energy balance relate to an economy’s national accounts?
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Why does a comprehensive measurement of a country’s energy requirements call for input-output analysis?
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Notes
- 1.
In the context of accounting and economics, the term ‘balance’ is used for stock quantities. Energy balances however represent aggregated flows per period, typically a year. Their equivalent in accounting is the income statement.
- 2.
In an institutional differentiation of sectors, companies are consolidated into sectors following their main focus of economic activity.
- 3.
Final consumption consists of private consumption, public consumption and investment, exports, and stock changes.
- 4.
Primary inputs consist of imports, cost of capital (depreciation, interests, and profits), cost for labor (wages and salaries, including surcharges for social security), and indirect taxes (excluding subsidies).
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Zweifel, P., Praktiknjo, A., Erdmann, G. (2017). Energy in Science and Engineering. In: Energy Economics. Springer Texts in Business and Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-53022-1_2
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