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Do energy efficiency improvements reduce energy use? Empirical evidence on the economy-wide rebound effect in Europe and the United States

Tijdschriftbijdrage - Tijdschriftartikel

Increasing energy efficiency is often considered to be one of the main ways of reducing greenhouse gas emissions. However, efficiency gains that reduce the cost of energy services result in energy use rebounding and potential energy use savings being eaten up. Empirical research that quantifies the economy-wide rebound effect while taking the dynamic economic responses to energy efficiency improvements into account is limited. We use a Structural Factor-Augmented Vector Autoregressive model (S-FAVAR) that allows us to track how energy use changes in response to an energy efficiency improvement while accounting for a vast range of potential confounders. We find economy-wide rebound effects of 78% to 101% after two years in France, Germany, Italy, the UK, and the US. This implies that energy efficiency innovations alone may be of limited help in reducing future energy use and emphasizes the importance of tackling carbon emissions directly.
Tijdschrift: Energy economics
ISSN: 0140-9883
Volume: 110
Pagina's: 105939
Jaar van publicatie:2022
Trefwoorden:Energy efficiency, Economy-wide rebound effect, Climate change, Climate policy, Structural FAVAR, Independent Component Analysis
Toegankelijkheid:Open