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Quantifying the rebound effects of energy efficiency improvements and energy conserving behaviour in Sweden

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Abstract

Doubts have recurrently been raised on the extent to which energy efficiency can reduce the demand for energy. Improvements in efficiency may cause so-called rebound effects by reducing the prices of energy services as well as by increasing the budget for consumption of other goods and services. The magnitude of such effects is crucial to whether energy efficiency should be a strategy for environmental policy or not. This paper aims to derive a general expression of the rebound effects of household consumption in a parameterised form where available data can be tested. The paper analyses how different parameter assumptions affect the quantification of rebound effects and what may be reasonable ranges. Income effects are quantified using data from the Swedish Household Budget Survey of different goods and services split on income classes. The changes in consumption patterns with increasing income are used to establish the composition of marginal consumption. Combined with energy intensities derived from input–output analysis, this gives a model of how money saved on energy use in one sector may lead to increased energy use in other sectors. The total rebound effects of energy efficiency improvements appear to be in the range 5–15% in most cases, but these results are fairly sensitive to assumptions of energy service price elasticities. Cases with low or negative capital costs for energy efficiency improvements may also result in much higher rebound effects as the income effects become more important. Energy-conserving behaviour (reduced energy service demand) affecting direct energy use such as heating and transport gives rise to rebound effects in the order of 10–20%, depending on the household expenditure per primary energy for different fuels and energy carriers.

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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) emphasised 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 at 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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Acknowledgements

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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  1. Division of Physical Resource Theory, Department of Energy and Environment, Chalmers University of Technology, SE-412 96, Göteborg, Sweden

    Jonas Nässén & John Holmberg

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  1. Jonas Nässén
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Correspondence to Jonas Nässén.

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Nässén, J., Holmberg, J. Quantifying the rebound effects of energy efficiency improvements and energy conserving behaviour in Sweden. Energy Efficiency 2, 221–231 (2009). https://doi.org/10.1007/s12053-009-9046-x

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