General Equilibrium Rebound from Energy Efficiency Innovation

Derek Lemoine

No 25172, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Energy efficiency improvements “rebound” when economic responses undercut their direct energy savings. I show that general equilibrium channels typically amplify rebound by making consumption goods cheaper but typically dampen rebound by increasing demand for non-energy inputs to production and by changing the size of the energy supply sector. Improvements in the efficiency of the energy supply sector generate especially large rebound because they make energy cheaper in all other sectors. Quantitatively, improving the efficiency of U.S. non-energy supply sectors by 1% would reduce U.S. energy use by 0.58%, with rebound of 28%. General equilibrium channels increase those savings by 19%; however, they reduce the savings from improving the efficiency of the energy supply sector by 65%.

JEL-codes: D58 O31 O33 Q41 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-ene and nep-ino
Note: EEE
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Citations: View citations in EconPapers (11)

Published as Derek Lemoine, 2020. "General Equilibrium Rebound from Energy Efficiency Innovation," European Economic Review, .

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