A Thermodynamically Correct Treatment of Externalities with an Exergy-Based Numeraire

The concept of sustainable development implies that the environmental externalities unavoidably generated by human activities be reduced to a minimum: In fact, the very definition of sustainability leads-as it will be briefly discussed in the paper-to a physically measurable upper limit for untreated discharges. Since the current state of affairs on Earth is far from being sustainable, any proposal for a future scenario that is not substantiated by an accurate assessment of the effects of the environmental externalities is devoid of real sense and ought not to be pursued. The present paper illustrates the application of Extended Exergy Accounting (EEA) to the quantification of such externalities. The exergy flow diagrams of EEA include non-material and non-energetic production factors like labor, and capital and environmental remediation costs, providing a quantitative measure of the amount of primary resources that are cumulatively used in the production of a good or service, and it is shown to provide a wealth of quantitative information to energy managers and planners.