Energy, Vol.21, No.6, 483-491, 1996
Can different energy resources be added or compared?
The practice of directly adding and comparing Btus of energy from different energy resources may yield misleading conclusions in economic and policy studies. Economic aggregation indices (e.g., Divisia indices) are preferable to a heat-content index. Under some circumstances, an energy aggregate may fail to exist. We review the conditions necessary for aggregation or comparison, contrast different approaches, describe the form-value attributes that affect the relative economic values of different energy resources, and derive the microeconomic foundations of the Divisia approach. The development of an energy-technology Divisia aggregate is suggested when separability between energy and other inputs is not present.
Keywords:NONPARAMETRIC APPROACH