THE REBOUND DEBATE What if….. “…..But what if drivers who find that they can go longer on a tank of gas drive more? Would all that additional driving cancel out the environmental benefits?”
----Numbers Guy from Wall Street Journal on May 27, 2009
2/2/2011 2 Presentation Outline
Rebound Effect : The Concept Rebound Taxonomy Rebound Studies ◦ Direct Rebound ◦ Indirect Rebound ◦ Economy-wide Rebound Rebound : Worry or Not to Worry? Summary and Conclusion
2/2/2011 3 Presentation Outline
Rebound Effect : The Concept Rebound Taxonomy Rebound Studies ◦ Direct Rebound ◦ Indirect Rebound ◦ Economy-wide Rebound Rebound : Worry or Not to Worry? Summary and Conclusion
2/2/2011 4 William Stanley Jevons
Jevons Observed : England's consumption of coal soared after James Watt’s engine greatly improved the efficiency of steam engines. Jevons Claimed: Any further increases in efficiency would deplete England's deposits of coal at faster rate..
2/2/2011 5 And Jevons Paradox…
"It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth.”
“The Coal Question” 1865
2/2/2011 6 1980s : Khazzoom and Brookes
Len Brookes (UK) claimed : Attempts to reduce energy consumption by increasing efficiency would eventually raise energy demand. Daniel Khazzoom (CA, USA) noted : Rebound was ignored in mandatory performance standards for domestic appliances being set by the California Energy Commission.
2/2/2011 7 1992 : Khazzoom-Brookes Postulate Under a wide range of assumptions and based on Neo-Classical growth theory, Harry Sounders proposed ‘Khazzoom- Brookes (KB) Postulate :
“With fixed real energy price, energy efficiency gains will increase energy consumption above where it would be without these gains.”
(Sounders, H., The Energy Journal, 1992, Vol 13(4), 113-148)
2/2/2011 8 Rebound Effect (RE)
Reincarnated “Jevons Paradox”, reflective of KB postulate, rooted in economics. ◦ The extent to which the estimated energy savings enabled by the enhancement in energy efficiency are reduced by the behavioral response (i.e., higher consumption) to the increase in efficiency.
9 2/2/2011 Presentation Outline
Rebound Effect : The Concept Rebound Taxonomy Rebound Studies ◦ Direct Rebound ◦ Indirect Rebound ◦ Economy-wide Rebound Rebound : Worry or Not to Worry? Summary and Conclusion
2/2/2011 10 RE Classification
Economy-wide: K-B Postulate Rebound due to growth in economy assisted by efficiency enhancement.
Direct Rebound : Indirect Rebound : Efficiency Efficiency enhancement enhancement promotes rebound promotes rebound in the same energy in the different sector energy sector
2/2/2011 11 Backfire
Extreme case of rebound where all the gains earned by increase in energy efficiency are wiped out by the rebound effect.
2/2/2011 12 Rebound Mechanisms
time
complexity
2/2/2011 13 Presentation Outline
Rebound Effect : The Concept Rebound Taxonomy Rebound Studies ◦ Direct Rebound ◦ Indirect Rebound ◦ Economy-wide Rebound Rebound : Worry or Not to Worry? Summary and Conclusion
2/2/2011 14 A Note on Rebound Research
It’s more about enhancement in efficiency than the efficiency per say. Deviation from physics to economics. Enhancement in efficiency is expected to reduce prices. Consumer response doesn’t differentiate between reduction in price and increase in efficiency Empirical research, not experimental. Rebound research rooted in elasticity studies (economics).
2/2/2011 15 Macroeconomics
Economy‐ wide Indirect Rebound Rebound DIrect Direct Rebound Rebound Microeconomics
Relatively easier to explore empirically compared to indirect and economy-wide effects. Main areas of Direct RE studies : Personal transport Residential heating & cooling. • Unsatisfied demand and income elasticity of energy service play major roles in generating direct rebound.
2/2/2011 16
Direct RE in Personal Transport:
2/2/2011 17 Direct RE in Other HH Services
Residential heating
Other household
2/2/2011 18 Presentation Outline
Rebound Effect : The Concept Rebound Taxonomy Rebound Studies ◦ Direct Rebound ◦ Indirect Rebound ◦ Economy-wide Rebound Rebound : Worry or Not to Worry? Summary and Conclusion
2/2/2011 19 Macroeconomics
Economy‐ wide Indirect Rebound Rebound Indirect Rebound DIrect Rebound Microeconomics
Not many studies on Indirect Rebound.
Some Observations : ◦ Energy costs make for a smaller share of the overall expenditure ◦ No concrete evidence that households in wealthy countries channel savings back into energy use. Two widely cited studies presented next.
2/2/2011 20 Indirect Rebound : Brannlund et al. (2007)
Econometric model of aggregate household expenditure of 13 goods and services. Investigated direct + indirect rebound effect of 20% energy efficiency increase in transportation and heating for the Swedish households. The rebound estimated in terms of changes in the emission levels of CO2, SO2 and Nox (via changes in demand pattern) The results predict backfire that can only be countered by a 130% higher CO2 tax. 2/2/2011 21 Indirect Rebound : Mizobuchi(2007)
Modified version of the Brannlund et al approach for Japanese households. The results without the capital cost considerations are remarkably similar to those from the above mentioned Swedish study. However, with the consideration of the capital costs, the rebound is reduced from backfire to 27%. What about the embedded energy?
2/2/2011 22 Presentation Outline
Rebound Effect : The Concept Rebound Taxonomy Rebound Studies ◦ Direct Rebound ◦ Indirect Rebound ◦ Economy-wide Rebound Rebound : Worry or Not to Worry? Summary and Conclusion
2/2/2011 23
Macroeconomics
Economy-wide Economy‐ wide Indirect Rebound Rebound DIrect Rebound Rebound Microeconomics
Focus on the ‘role’ of energy, not cost.
Lack of “agreed upon” theoretical basis. Prediction of models vary depending on the choice of macro-econ theory, production function (elasticity assumptions) etc.
2/2/2011 24 Macroeconomics
Economy‐ wide Indirect Rebound Economy-Wide RE Rebound DIrect Rebound Microeconomics The argument is about the “magnitude” and not “existence.” Predicted range of the economy-wide rebound is 37% to 100 +%. Economies and models where energy forms an important export-import commodity tend to show larger rebound Realization of the economy-wide rebound makes backfire a non-trivial possibility.
2/2/2011 25 Presentation Outline
Rebound Effect : The Concept Rebound Taxonomy Rebound Studies ◦ Direct Rebound ◦ Indirect Rebound ◦ Economy-wide Rebound Rebound : Worry or Not to Worry? Summary and Conclusion
2/2/2011 26 Rebound : To Worry or Not To Worry WORRY NOT TO WORRY
Energy use is higher Energy use is lower post efficiency- post efficiency enhancement enhancement – a position maintained a position maintained by Len Brookes, and by Lee Schipper , under some Howarth. etc circumstances by Harry Saunders.
2/2/2011 27 Rebound : Question
Long term energy savings from improvements in Q : Would the energy energy efficiency. (IEA use be this high if countries) there were no “development” ?
Q: Are development and increase in energy efficiency endogenous or exogenous to each other?
2/2/2011 28 Rebound : To Worry or Not To Worry WORRY NOT TO WORRY
Increase in energy The arguments linking efficiency enhancement energy efficiency play significant role in increase with in “development” (i.e., increase in growth in GDP, income, productivity are not perhaps even empirically plausible. population…), thereby Energy does not play increasing eventual significant role in energy consumption. growth.
2/2/2011 29 Energy Efficiency & Consumption
High levels of energy http://www.eia.doe.gov/emeu/aer efficiency are an essential part of a dynamic productive economy, and higher standards of life !!
Improving energy efficiency is a key policy component for building economies This data is “consumption” only i.e., it does not account for without necessarily “embedded” energy in the goods growing energy and services consumed. consumption…
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Energy Intensity Index
Changes in energy intensity that are associated with the improve-- ments in the efficient use of energy.
http://www1.eere.energy.gov/ba/pba/intensityindicators/printable_versions/total_energy.html
2/2/2011 31 Presentation Outline
Rebound Effect : The Concept Rebound Taxonomy Rebound Studies ◦ Direct Rebound ◦ Indirect Rebound ◦ Economy-wide Rebound Backfire Reality Check Summary and Conclusion
2/2/2011 32 Rebound Research: Summary
RE debate origins are in energy economics.
Direct and Indirect Rebound roughly in the range of 30 to 50%... But it’s really about the Economy-wide rebound… Magnitude is scenario-specific (most affected by income, unsatisfied demand) and the results may not be transferable.
2/2/2011 33 Rebound Research Concluding Remarks Some rebound is expected, inevitable and even OK as “cost-of-progress, particularly in the developing world. Concerns are over “unjustifiable” backfire. ◦ The crux of the backfire argument lies in the resolution on the role of energy in the economy & development. Technological solutions are still at the heart of energy conservation efforts, but…..
2/2/2011 34 Rebound Research : Concluding Remarks (cont) …but the eventual goal is “absolute,” and not “per capita.”
Hence the public awareness and policy measures (like cap on total usage) need to supplement technology to minimize rebound and maximize the benefits of energy efficiency enhancements.
2/2/2011 35 THANK YOU !!
2/2/2011 36