Developing an Input-Output Based Method to Estimate a National-Level Energy Return on Investment (EROI)

Concerns have been raised that declining energy return on energy investment (EROI) from fossil fuels, and low levels of EROI for alternative energy sources, could constrain the ability of national economies to continue to deliver economic growth and improvements in social wellbeing while undertaking a low-carbon transition. However, in order to test these concerns on a national scale, there is a conceptual and methodological gap in relation to calculating a national-level EROI and analysing its policy implications. We address this by developing a novel application of an Input-Output methodology to calculate a national-level indirect energy investment, one of the components needed for calculating a national-level EROI. This is a mixed physical and monetary approach using Multi-Regional Input-Output data and an energy extension. We discuss some conceptual and methodological issues relating to defining EROI for a national economy, and describe in detail the methodology and data requirements for the approach. We obtain initial results for the UK for the period 1997–2012, which show that the country’s EROI has been declining since the beginning of the 21st Century. We discuss the policy relevance of measuring national-level EROI and propose avenues for future research.