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How large is the economy-wide rebound effect?

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  • David Stern
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.

Suggested Citation

  • David Stern, 2020. "How large is the economy-wide rebound effect?," CAMA Working Papers 2020-70, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2020-70
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Third Francqui Lecture
      by noreply@blogger.com (David Stern) in Stochastic Trend on 2021-04-04 21:39:00
    2. Annual Review 2020
      by noreply@blogger.com (David Stern) in Stochastic Trend on 2020-12-19 07:18:00

    Citations

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    6. Rocha, Felipe Freitas da & Almeida, Edmar Luiz Fagundes de, 2021. "A general equilibrium model of macroeconomic rebound effect: A broader view," Energy Economics, Elsevier, vol. 98(C).
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    8. Zimmermann, Michel & Vöhringer, Frank & Thalmann, Philippe & Moreau, Vincent, 2021. "Do rebound effects matter for Switzerland? Assessing the effectiveness of industrial energy efficiency improvements," Energy Economics, Elsevier, vol. 104(C).
    9. Brantley Liddle, 2022. "What Is the Temporal Path of the GDP Elasticity of Energy Consumption in OECD Countries? An Assessment of Previous Findings and New Evidence," Energies, MDPI, vol. 15(10), pages 1-12, May.
    10. Huntington, Hillard G., 2024. "US gasoline response to vehicle fuel efficiency: A contribution to the direct rebound effect," Energy Economics, Elsevier, vol. 136(C).
    11. Jia, Zhijie & Lin, Boqiang, 2022. "Is the rebound effect useless? A case study on the technological progress of the power industry," Energy, Elsevier, vol. 248(C).
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    14. Soojin Jo & Lilia Karnizova, 2021. "Energy Efficiency and Fluctuations in CO2 Emissions," Staff Working Papers 21-47, Bank of Canada.
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    Keywords

    Energy efficiency; technological change; survey; review;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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