The article describes and discusses to some detail a method for computing the cost of a commodity in terms of its resource-base equivalent value (as opposed to its monetary cost). The method is called the extended exergy accounting technique (EEA), and its proper application enables the analyst to perform more complete and meaningful assessments of a complex production system, including of course energy conversion processes. The novelty as well as the decisive advantage of EEA consists in its being entirely and uniformly resource-based: the so-called externalities (labor, capital and environmental remediation costs) are included in the system balance by means of their equivalent exergetic fluxes, which represent the gross amount of primary exergy required to locally generate the specified amount of capital, the specified number of work-hours, or to reduce the emissions below a certain specified level. EEA owes some of its structural formalism to Sraffa’s “network” representation of the economic production of commodities by means of other commodities, which it extends by accounting for the unavoidable energy dissipation in every productive chain. The method has also borrowed several definitions, concepts and procedures from Georgescu-Roegen’s classical work on the economic implications of irreversibility on production chains, from Daly’s pioneering work in resource-oriented economics and from Szargut’s “cumulative exergy content” method. The representation of a general energy conversion process by means of its extended exergy flow diagram is discussed in this article, and it is argued that some of the issues that are difficult to address with a purely monetary approach can be properly resolved by EEA. It is also shown how EEA, being intrinsically “localized” both in time and in space, can account for the non-uniformity of societal conditions without the need of patching the theory with artificial features external to its paradigm. In the conclusions, some indications are given as to the possibility of using the extended exergy accounting technique to supplement and substantially improve Thermo-Economics on one side and Life-Cycle Assessment or Environmental Footprint Analysis on the other side.

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