The Rebound Effect and Energy Efficiency Policy

37 Pages Posted: 17 Jan 2015

See all articles by Kenneth Gillingham

Kenneth Gillingham

Yale University

David Rapson

University of California, Davis

Gernot Wagner

Columbia University - Columbia Business School, Economics

Date Written: January 15, 2015

Abstract

What do we know about the size of the rebound effect? Should we believe claims that energy efficiency improvements lead to an increase in energy use? This paper clarifies what the rebound effect is, and provides a guide for economists and policymakers interested in its magnitude. We describe how some papers in the literature consider the rebound effect from a costless exogenous increase in energy efficiency, while others examine the effects of a particular energy efficiency policy — a distinction that leads to very different welfare and policy implications. We present the most reliable evidence available quantifying the energy efficiency rebound, and discuss areas where estimation is extraordinarily difficult. Along these lines, we offer a new way of thinking about the macroeconomic rebound effect. Overall, the existing research provides little support for the so-called “backfire” hypothesis. Still, much remains to be understood, particularly relating to induced innovation and productivity growth.

Keywords: Energy Efficiency, Rebound Effect, Take-back Effect, Backfire, Jevons Paradox

JEL Classification: H23, Q38, Q41

Suggested Citation

Gillingham, Kenneth and Rapson, David and Wagner, Gernot, The Rebound Effect and Energy Efficiency Policy (January 15, 2015). FEEM Working Paper No. 107.2014, Available at SSRN: https://ssrn.com/abstract=2550710 or http://dx.doi.org/10.2139/ssrn.2550710

Kenneth Gillingham (Contact Author)

Yale University ( email )

493 College St
New Haven, CT CT 06520
United States

David Rapson

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Gernot Wagner

Columbia University - Columbia Business School, Economics ( email )

420 West 118th Street
New York, NY 10027
United States

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