Embodied Energy and Economic Valuation

Input-output analysis has been adapted to calculate the total (direct plus indirect) energy required to produce goods and services in the U.S. economy; this quantity has been termed the embodied energy. Usually, the energy required to produce labor and government services and the solar energy input to the economy are ignored by analysts. The former omission can be traced to the assumption that traditional primary factors of economic production-land, labor, and capital-are independent. A strong case can be made that these input factors are not independent and that energy is required for their production. Embodied energies can be calculated in this case by using input-output data. The results of such an analysis show that there is a strong relation between embodied energy and dollar value for a 92-sector U.S. economy if the energy required to produce labor and government services is included.