A Microeconomic Framework for Evaluating Energy Efficiency Rebound and Some Implications

By S. Borenstein. 2013

263 citations recorded by the source corpus.

Abstract Improving energy efficiency can lower the cost of using energy-intensive goods and may create wealth from the energy savings, both of which lead to increased energy use, a “rebound” effect. I present a theoretical framework that parses rebound into economic income and substitution effects. The framework leads to new insights about the magnitude of rebound when goods are not priced at marginal cost and when consumers are imperfect optimizers, as well as the role of technological progress in rebound. I then explore the implications of this framework with illustrative calculations for improved auto fuel economy and lighting efficiency. These suggest that rebound is unlikely to more than offset the savings from energy efficiency investments (known as “backfire”), but rebound likely reduces the net savings by roughly 10% to 40% from these energy efficiency improvements.

View Paper: https://www.semanticscholar.org/paper/4c9cbc34dcb3cca65d19b5d4b255ebb2319a1508

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Citations in the corpus

• Two sides of the same coin: consequential life cycle assessment based on the attributional framework (2016, background): “The logic behind a more realistic, less than the one-to-one displacement is similar to that of the rebound effect (Borenstein, 2013), both due to the complexity of market mechanisms and human behaviors (York, 2012).”
• Circular Economy Rebound (2017, methodology): “Much of the rebound research has focused on its mechanisms (Borenstein 2013) and the size of the effect (Sorrell et al. 2009), which has varied widely.”
• Forecasting the Impact of Connected and Automated Vehicles on Energy Use: A Microeconomic Study of Induced Travel and Energy Rebound (2019, background): “, what is known in the literature as “backfire” [31].”
• From Cradle to Junkyard: Assessing the Life Cycle Greenhouse Gas Benefits of Electric Vehicles (2015, background): “Borenstein [2013] provides an excellent discussion of how rebound can lead only to private utility gains.”
• The need for national deep decarbonization pathways for effective climate policy (2016, background): “There is the potential for energy demand rebound (Borenstein, 2015) due to falling relative costs, but this new demand would be largely decarbonized.”
• Energy Efficiency and Household Behavior: The Rebound Effect in the Residential Sector (2014, background): “efficiency policies in addressing climate change (Borenstein, 2015).”
• Consumer End-Use Energy Efficiency and Rebound Effects (2014, methodology): “Borenstein starts with a model of consumer lifetime income, which can be spent on several goods and services, accounts for the lifecycle (embodied) energy consumption of the different goods and services consumed, and derives direct and indirect rebound effects, finding indirect rebound effects in te”