Is the rebound effect useless? A case study on the technological progress of the power industry

The paper innovatively divides technological progress's actual emission mitigation effect into technical emission mitigation effect, rebound effect, and substitution effect. Then, taking the power sector as an example, the paper applies a dynamic recursive multi-sector computable general equilibrium model to simulate technological progress and explore its effects. The results indicate that the level of the rebound effect somehow is the trade-off between emission reduction and economic growth and social welfare. Price regulation in the power sector can significantly reduce the rebound effect, economic growth, and social welfare. We find that technological progress could affect economic indicators through commodity and factor markets in mechanism analysis. If the commodity market is distorted/regulated, the factor market will be the only market that directly reacts to the progress. We cannot hold that technological progress has been offset because of the rebound effect. To some extent, the benefits of technological progress may not just be emissions mitigation. Based on our conclusion, several specific implications are proposed.(c) 2022 Elsevier Ltd. All rights reserved.

Automated summary

This paper innovatively divides the emission mitigation effect of technological progress into different types and simulates the effects of technological progress in the power sector using a dynamic computable general equilibrium model. The results show that there is a trade-off between emission reduction, economic growth, and social welfare due to the rebound effect. Price regulation in the power sector can reduce the rebound effect as well as economic growth and social welfare. The study also finds that technological progress can affect economic indicators through commodity and factor markets.