Consumer End-Use Energy Efficiency and Rebound Effects

Abstract

Energy efficiency policies are pursued as a way to provide affordable and sustainable energy services. Efficiency measures that reduce energy service costs will free up resources that can be spent in the form of increased consumption—either of that same good or service or of other goods and services that require energy (and that have associated emissions). This is called the rebound effect. There is still significant ambiguity about how the rebound effect should be defined, how we can measure it, and how we can characterize its uncertainty. Occasionally the debate regarding its importance reemerges, in part because the existing studies are not easily comparable. The scope, region, end-uses, time period of analysis, and drivers for efficiency improvements all differ widely from study to study. As a result, listing one single number for rebound effects would be misleading. Rebound effects are likely to depend on the specific attributes of the policies that trigger the efficiency improvement, but such factors are often ignored. Implications for welfare changes resulting from rebound have also been largely ignored in the literature until recently.