Abstract
Public and private decision makers are increasingly confronted with more complex and far-reaching public policy decisions concerning energy. Examples include responsible development of energy resources, allocation of energy research and development funds, legislated restrictions or subsidies for energy production and use, land use restrictions, and government regulation of major energy-producing industries. Decisions regarding all of these require analysis of the many social, economic, environmental, and political options and the delicate balancing of disparate yet competing interests, goals, and values. Various concepts regarding net energy analysis are reviewed and limitations on its usefulness for public policy decisions are evident. Congress has mandated the use of net energy analysis in assessment of new energy resources. Net energy analysis represents a marked departure from economic theory. In this paper, an assessment of the important assumptions and concepts underlying net energy analysis and a comparison of the different conclusions reached by net energy analysis and economic analysis are presented. The concepts of net energy and its important assumptions are defined; net energy analysis is subjected to an economic assessment; and some observations are made concerning the uses and limitations of the technique in the public policy-making process. (MCW)
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