A Dynamic Analysis of Industrial Energy Efficiency and the Rebound Effect

32 Pages Posted: 30 Mar 2020 Last revised: 4 Nov 2020

See all articles by Golnaz Amjadi

Golnaz Amjadi

STATEC Research; Centre for Environmental and Resource Economics (CERE)

Tommy Lundgren

Umea School of Business and Economics

Wenchao Zhou

Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE)

Date Written: March 2, 2020

Abstract

Energy efficiency improvement (EEI) is generally known to be a cost-effective measure for meeting energy, climate and sustainable growth targets. Unfortunately, behavioral responses to such improvements (called energy rebound effects) may reduce the expected savings in energy and emissions from EEI. Hence, the size of this effect should be considered to help set realistic energy and climate targets. Currently there are significant differences in approaches for measuring rebound effect. Here, we used a two-step procedure to measure both short- and long-term energy rebound effects in the Swedish manufacturing industry. In the first step, we used data envelopment analysis (DEA) to obtain energy efficiency scores. In the second step, we estimated energy rebound effects using a dynamic panel regression model. This approach was applied to a firm-level panel dataset covering all 14 sectors in the Swedish manufacturing industry over the period 1997–2008. We showed that, in the short run, partial rebound effects exist within most of manufacturing sectors, meaning that the rebound effect decreased, but did not totally offset, the energy and emission savings expected from EEI. The long-term rebound effect was smaller than the short-term effect, implying that within each sector, energy and emission savings due to EEI are larger in the long run compared to the short run.

Keywords: Energy Efficiency Improvement, Rebound Effect, Data Envelopment Analysis

Suggested Citation

Amjadi, Golnaz and Lundgren, Tommy and Zhou, Wenchao, A Dynamic Analysis of Industrial Energy Efficiency and the Rebound Effect (March 2, 2020). Available at SSRN: https://ssrn.com/abstract=3547679 or http://dx.doi.org/10.2139/ssrn.3547679

Golnaz Amjadi (Contact Author)

STATEC Research ( email )

House of Entrepreneurship
14, rue Erasme
Luxembourg, L-1468
Luxembourg

Centre for Environmental and Resource Economics (CERE)

Department of Economics
Umeå University
Umeå, 901 87
Sweden

Tommy Lundgren

Umea School of Business and Economics ( email )

Biblioteksgränd 6
Umea, 901 87
Sweden

Wenchao Zhou

Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE)

Almas Allé 10
Umeå, 750 07
Sweden

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