April 17, 2012
European Commission Publishes Report Warning Policymakers to Attend to Rebound Effects
By Alex Trembath and Jesse Jenkins
A new report on energy rebound published by the European Commission surveys the wide range of evidence and academic literature and concludes that rebound effects can and do limit the lasting reductions in energy use achievable by energy efficiency measures and policies. Efficiency, the report finds, reduces the implicit price of energy services, and triggers a rebound in demand that can erode a substantial portion of expected energy savings. By examining case studies and empirical data, the report determines:
The rebound effect can limit the environmental improvements possible through SCP [sustainable consumption and production] and sustainable products policies and technologies and, in particular, the goal of decoupling resource consumption from economic growth.
The new report, "Addressing the Rebound Effect," councils policymakers to take full stock of rebound effects when designing energy and climate policy lest they overestimate the impact of efficiency measures.
An excellent survey of scientific literature, the new report, completed by http://www.gv-ss.com/ on behalf of the European Commission, comes only a few months after a similar report from the Breakthrough Institute, entitled "Energy Emergence: Rebound & Backfire as Emergent Phenomena."
Energy rebound--the phenomenon by which use of a given energy service may rise following efficiency improvements, thereby eroding some fraction of the absolute energy use reductions--is a real effect with important ramifications for policymakers. The new European Commission published report calls attention to real and significant role that energy use rebound has on efforts to transform and constrain absolute energy use.
Both reports stress that observing and measuring actuated rebound effects can be particularly difficult, and that results will vary across economic sectors and on a case-by-case basis. However, the existence and significance of rebound is uncontroversial across the wide spectrum of research, the European Commission published report concludes.
"In general," the authors find, "evidence does not support views that rebound effects are too small to be significant ([e.g. Amory] Lovins, 1998 & 2005; [Lee] Schipper, 2000)."
"Addressing the Rebound Effect" summarizes the findings of 24 case examples and 44 expert stakeholders on rebound effects that illustrate absolute energy use rebound following changes in price, time-use, space-use, and technology-use, all of which can affect changes in consumption patterns and economy-wide energy use.
Likewise, Breakthrough Institute's "Energy Emergence" report surveyed 96 published journal articles and reports and concludes:
Rebound effects are real and significant, and combine to drive a total, economy-wide rebound in energy demand with the potential to erode much (and in some cases all) of the reductions in energy consumption expected to arise from below-cost efficiency improvements. Consequently, rebound effects have important implications for emissions mitigation efforts.
These findings are not surprising given what we know about consumer behavior and basic economics. Economics 101 offers the Law of Demand, which observes that as the price of a product or service decreases, consumption or use increases, and vice versa.
What is surprising is that so little attention to energy rebound has been afforded by policy makers and advocates for energy efficiency. As "Addressing the Rebound Effect" found,
In the context of energy and climate change policies, projections from the IPCC [Intergovernmental Panel on Climate Change] that by 2030, energy efficiency gains will reduce global energy consumption by 30% below where they would otherwise do not incorporate the rebound effect. Many rebound effect publications cite this as a serious oversight in light of the evidence for rebound effects for energy efficiency. Because of this, they propose that meeting GHG [greenhouse gas] emissions targets by relying on energy efficiency gains are likely to fall short.
Both studies find that rebound effects are in no way a rationalization against the deployment of energy efficiency measures, and in general find efficiency in practice to be economically beneficial. Furthermore, as the GVSS report documents, policy and technological methods may be able to counteract rebound effects to secure greater environmental gains, while "Energy Emergence" notes a number of mechanisms in which efficiency measures can still contribute indirectly to environmental objectives.
Both reports, however, make it quite clear that policymakers and analysts must fundamentally rethink the role energy efficiency plays in addressing climate change and resource depletion challenges. Rebound effects mean that we can no longer assume that a 30 percent gain in overall energy efficiency, for example, will directly and linearly reduce total energy use by 30 percent. Rather, the operation of rebound effects renders the relationship between efficiency, economic activity, and total energy use complex and non-linear, and such effect demand great care from policymakers and analysts.
Published on behalf of the European Commission, GVSS's "Addressing the Rebound Effect" will no doubt do much to deepen the global conversation about rebound effects and further spread knowledge of the strong expert consensus regarding the scale and importance of rebounds to policymakers around the world. Rebound effects are real and significant, but we can hope that rather than serving to discourage efforts to make our economies more efficient, an awareness of rebound will make us wiser and more informed in efforts to decarbonize the global energy system.
Please refer to the following links for more resources:
"Addressing the Rebound Effect," by Dr. Dorothy Maxwell et al
Powerpoint Presentation on the GVSS Report
GVSS Stakeholder Meeting Report, Content Summary, and Next Steps
"Energy Emergence: Rebound & Back-Fire as Emergent Phenomena" by Jesse Jenkins, Michael Shellenberger and Ted Nordhaus
FAQ on energy rebound from the Breakthrough Institute
Powerpoint Presentation on the Breakthrough Report