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Living up to expectations: estimating direct and indirect rebound effects for UK households
‘Rebound effects’ are various economic responses to improved energy efficiency that reduce the anticipated energy and emission savings. Most studies focus solely upon the direct rebound effects that result from increased consumption of cheaper energy services – such as driving further in fuel-efficient car. But a full accounting of the impact of energy efficiency improvements must also include various indirect rebound effects. For example, savings on fuel bills may be put towards increased consumption of other goods and services that may be viewed as ‘embodying’ emissions from different stages of their global supply chains. This study estimates the magnitude of both direct and indirect rebound effects following the adoption of energy efficiency measures by an average UK household. It identifies the relative contribution of income and substitution effects to these results, together with the relative contribution of 12 categories of goods and services. Rebound effects are measured in terms of GHG emissions, using data from a multi-regional input-output model. The method involves estimating a system of equations for UK household expenditure from annual time-series data for the period 1964-2012 and deriving estimates of the own- and cross-price elasticities of different categories of goods and services. Energy efficiency improvements are then simulated as reductions in the price of the relevant energy carrier (electricity, gas or road fuels) and the change in consumption and emissions are calculated. The results suggest that rebound effects may be as large as ~47% for measures affecting road fuel consumption and 58-61% for measures affecting electricity and gas consumption. The rebound effects for measures affecting road fuels are mostly indirect and mostly derived from income effects, while the rebound effects for measures affecting electricity and gas are mostly direct and mostly derived from substitution effects. The results demonstrate the importance of accounting for rebound effects in policy appraisals.
Funding
Research Centre on Innovation and Energy Demand; G1020; RCUK-RESEARCH COUNCILS UK; EP/K011790/1
History
Publication status
- Published
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Presentation Type
- paper
Event name
ECEEE 2015 Summer Study: First fuel nowEvent location
Toulon/Hyères, FranceEvent type
conferenceEvent date
01-06 Jun 2015Department affiliated with
- SPRU - Science Policy Research Unit Publications
Notes
ISSN 2001-7960 ISBN 9789198048278Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2016-11-22Usage metrics
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