Energy Conservation More Effective With Rebound Policy

This article sketches the problem of indirect energy use effects, also known as rebound, of energy conservation. There is widespread support for energy conservation, especially when it is voluntary, as this seems a cheap way to realize environmental and energy-climate goals. However, this overlooks the phenomenon of rebound. The topic of energy rebound has mainly attracted attention from energy analysts, but has been surprisingly neglected in environmental economics, even though economists generally are concerned with indirect or economy-wide impacts of technical change and policies. This paper presents definitions and interpretations of energy and environmental rebound, as well as four fundamental reasons for the existence of the rebound phenomenon. It further offers the most complete list of rebound pathways or mechanisms available in the literature. In addition, it discusses empirical estimates of rebound and addresses the implications of uncertainties and difficulties in assessing rebound. Suggestions are offered for strategies and public policies to contain rebound. It is advised that rebound evaluation is an essential part of environmental policy and project assessments. As opposed to earlier studies, this paper stresses the relevance of the distinction between energy conservation resulting from autonomous demand changes and from efficiency improvements in technology/equipment. In addition, it argues that rebound is especially relevant for developing countries.