Working Paper: NBER ID: w25172
Authors: Derek Lemoine
Abstract: Energy efficiency improvements “rebound” when economic responses undercut their direct energy savings. I show that general equilibrium channels typically amplify rebound by making consumption goods cheaper but typically dampen rebound by increasing demand for non-energy inputs to production and by changing the size of the energy supply sector. Improvements in the efficiency of the energy supply sector generate especially large rebound because they make energy cheaper in all other sectors. Quantitatively, improving the efficiency of U.S. non-energy supply sectors by 1% would reduce U.S. energy use by 0.58%, with rebound of 28%. General equilibrium channels increase those savings by 19%; however, they reduce the savings from improving the efficiency of the energy supply sector by 65%.
Keywords: Energy Efficiency; Rebound Effect; General Equilibrium; Energy Supply
JEL Codes: D58; O31; O33; Q41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Improvements in energy efficiency in the non-energy supply sectors (Q41) | Total energy resource use (Q40) |
| Improvements in energy efficiency in the non-energy supply sectors (Q41) | Rebound effect (E32) |
| General equilibrium channels (D59) | Savings from energy efficiency improvements (Q41) |
| General equilibrium channels (D59) | Savings from improving the efficiency of the energy supply sector (Q41) |
| Sectoral elasticities of substitution between energy resources and non-energy inputs (Q40) | Magnitude of rebound effects (Q51) |
| Elasticity > 1 (D11) | Rebound can exceed 100% (E32) |
| Improvements in energy efficiency in the energy supply sector (Q41) | Significant rebound effects (E65) |
| General equilibrium effects (D50) | Negative rebound or superconservation in sectors like construction and commercial real estate (R33) |
| Energy supply sector's responses (L94) | Changes in energy resource use in other sectors (Q49) |