Environmental rebound effect of energy efficiency improvements in Colombian households

Colombia aims to diversify and decarbonize its energy sector by encouraging the use of non-conventional renewable resources. Policies and/or measures to achieve this will presumably help to achieve national and international environmental goals, yet potential rebound effects may reduce its efficacy by triggering additional demand and environmental burdens. One of such rebound effects may take place as household demand rises in response to cheaper electricity prices due to the increasing shares of wind power. This study assesses the environmental rebound effect (ERE) in the household sector from increased shares of wind power into the Colombian power grid, across six environmental impacts and for the period 2020-2030. The method used combines life cycle assessment, input-output modelling, energy system modelling, econometrics, and re-spending modelling. The results show that the ERE has the potential to partially, and even completely, offset any environmental savings (backfire effect), depending on the specific impact, year, and modelling choices considered. The magnitude of the ERE (as the percentage of potential environmental savings that are offset) ranges highly across impacts, from a negligible 1% (eutrophication) to a staggering 9241% (photochemical ozone creation). The ERE has thus the potential to render decarbonization policies largely ineffective, which calls for rebound mitigation policies, such as environmental taxes.