The primary activities of the Institute are: research & research sponsorship; the development and dissemination of data standards, analytical tools to bring the natural sciences into economic analysis and decision making; education about these concepts and tools, leading to certifications of proficiency; and support for corporate officers and policymakers in the evaluation of projects and policies designed to promote energy efficiency and reduce CO2 emissions.
The investment management community, spurred by growing demands for responsible business stewardship, has gravitated towards a more holistic set of criteria to assess corporate performance. Environmental Social & Governance (ESG) criteria are useful as principles, but can be difficult to operationalize given varying standards of measurement, the inherent tradeoffs among criteria, and the subjective nature of many of these values. This reality is readily apparent from the wide divergence among ESG scores promulgated for the same companies by different rating agencies (see articles by Damodaran and Berg in the Resources page). Thus it can be difficult for investors to achieve clarity on these important considerations, and for companies to respond to legitimate investor concerns.
Figure 1: These are rough estimates of EROI values for various energy sources. For greater precision, please see the source publications below. It is important to realize that these are simplified representations of complicated situations. For example, there is tremendous variation for some of the energy sources such as dams, which involve large dispersion in the cost of construction & energy generated. The high value for coal reflects countries such as the United States or Australia where coal is abundant. Values are as low as 5:1 in England where the resource is mostly depleted. EROI values for renewable resources reflect the higher quality of electricity vs. inputs–so they have been “corrected” by a factor of roughly 3 to adjust for that. Since many of these sources are intermittent it’s important to consider additional costs in the denominator of EROI, to reflect the challenge of systems integration.
BioPhysical economics offers a structured approach that looks beyond financial criteria to examine the underlying economic and physical realities guiding corporate operations, to produce a more penetrating assessment of resource stewardship and sustainability. The Energy Return on Energy Invested (EROI) in different alternatives to fossil fuels varies widely, and is sensitive to assumptions regarding their underlying energy sources, which of their production costs should be considered in the analysis, and how these alternatives will be integrated into the grid. We translate an extensive body of biophysical economic research into practical standards and a common language to help investors peel back layers of corporate greenwashing and marketing spin.
– King et al. 20??
– Hall, Charles A.S., Jessica G. Lambert, Stephen B. Balogh. 2014. “EROI of different fuels and the implications for society Energy Policy Energy Policy.“ 64,: 141–152.
The BioPhysical Economics Institute has developed a set of analytical tools (data & measurement standards, computational methods and boundary criteria) that will allow corporate executives and investment analysts to draw their own conclusions about which projects and companies are the best stewards of scarce energy resources. We are synthesizing these methods, research materials and case studies into a rigorous curriculum and certification course that will establish a set of “best practices” for EROI/ESOI analysis.
BPEI membership events bring together interested individuals and groups to learn from one another and advance the Institute’s educational mission.