How large is the economy-wide rebound effect?

David Stern

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: The size of the economy-wide rebound effect is crucial for estimating the contribution that energy efficiency improvements can make to reducing greenhouse gas emissions and for understanding the drivers of energy use. Economy-wide rebound from an energy efficiency improvement includes changes in the use of energy to produce complementary and substitute goods or inputs and other flow-on effects that affect energy use across the economy as well as the direct rebound due to energy users using more of an energy service that has become less costly as result of improved energy efficiency. Jevons first argued in 1865 that improvements in energy efficiency increase total energy use, and in recent decades researchers have argued for and against this “backfire†hypothesis. Theory provides some guidance on the factors affecting rebound but does not impose much constraint on the range of possible responses. Historical evidence suggests that the improved energy efficiency of recent technology has not reduced energy use because consumption has shifted to more energy-intensive goods and services. Simulations and econometric research have produced mixed results. Some recent general equilibrium studies find large rebound, around 100%, but more research is needed to confirm or refute these findings.

Keywords: Energy efficiency; technological change; survey; review (search for similar items in EconPapers)
JEL-codes: Q43 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2020-07
New Economics Papers: this item is included in nep-ene and nep-reg
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Citations: View citations in EconPapers (22)

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Journal Article: How large is the economy-wide rebound effect? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2020-70

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