Abstract
Energy efficiency is often identified as the single most important strategy for climate change mitigation. For example, the IIASA-WEC “ecologically driven” scenarios presume global reductions of energy intensities (energy/GDP) by 1.4% per year for the next 50 years, which results in more than twice as large reductions of carbon dioxide emissions as the substitution of fuels in these scenarios (Nakićenović et al. 1998). However, doubts have also been raised on to what extent energy efficiency can reduce environmental impacts since efficiency improvements may “rebound” through increasing consumption. The magnitude of such effects is crucial to whether energy efficiency can play its projected role and whether it should be a strategy for environmental policy or not.
The main part of this paper has previously been published in Nässén and Holmberg 2009: Quantifying the rebound effects of energy efficiency improvements and energy conserving behaviour in Sweden, Energy Efficiency, Vol. 3, No. 2, 221–231. In this version comments on materials efficiency have been added. Funding from the AES programme of the Swedish National Energy Administration, and the Swedish Research Council for Environment, Agricultural Sciences and Spatial Planning is gratefully acknowledged. Thanks also to Anders Wadeskog at the Environmental Accounts of Statistics Sweden for contributing with energy intensity data.
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Notes
- 1.
See Alcott (2005) for a discussion of Jevons’ arguments.
- 2.
In reference to these two authors, Saunders (1992) coined the so-called “Khazzoom-Brookes postulate” which states that “energy efficiency gains will increase energy consumption above where it would be without these gains”, i.e. that the rebound effect is higher than 100%.
- 3.
Schipper and Grubb (2000) emphasized that the rebound effect may be more pronounced in low-income countries were energy costs often constrain activity.
- 4.
Allan et al. (2007) identify rebound effects in the order of 30–50% for energy efficiency improvements in the production sectors of the UK. However, in the sensitivity analysis of the paper they also test to include a cost for energy efficiency improvements. In this case rebound effects drop to zero.
- 5.
q/q BE = 1 means that the annuity of the capital cost of the additional energy efficiency improvement equals the annual reduction in energy cost (break-even). q/q BE = 0 means that the additional capital cost is zero.
- 6.
Transport studies have shown that adjustments in energy service demand constitute about half of the long-run energy demand adjustment to changes in energy prices (e.g. 46% in Goodwin (1992) and 52% in Small and Van Dender (2007)). This is also reflected in the asymmetries of energy price elasticities found by for example Walker and Wirl (1993) and Haas and Schipper (1998). At least in the short-run, technology does not change under decreasing energy prices and thus the price elasticity is lower than under increasing energy prices.
- 7.
With this definition we look only at the amount of vehicle transportation and not other services related to a vehicle such as comfort, safety or performance of acceleration.
- 8.
These figures are from single family dwellings. In multi-dwelling buildings where tenants often do not pay variable heat costs, the average indoor temperature was 22°C. These tenants have no economic incentive to respond to changing energy prices.
- 9.
R Price ≤ −α for all β and R Price ≈ −α for β → 0.
E.g. for α = −0.2: β = 0.1 ⇒ R Price = 0.19; β = 0.3 ⇒ R Price = 0.17.
- 10.
High rebound in itself does not mean that such measures are inferior to high-tech solutions. The goal must be to reduce total energy use or emissions.
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Nässén, J., Holmberg, J. (2011). Price and Income Induced Rebound Effects of Improved Energy Efficiency in Swedish Households: With Comments on Materials Efficiency. In: Bleischwitz, R., Welfens, P., Zhang, Z. (eds) International Economics of Resource Efficiency. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2601-2_11
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