The Rebound Effect and Energy Efficiency Policy
Abstract
What do we know about the size of the rebound effect, the well-known phenomenon that improving energy efficiency may save less energy than expected due to a rebound of energy use? Is there any validity to the claims that energy efficiency improvements can actually lead to an increase in energy use (known as backfire)? This article clarifies what the rebound effect is and provides a guide for economists and policymakers interested in its existence and magnitude. We discuss how some studies in the literature consider a rebound effect that results from a costless exogenous increase in energy efficiency, whereas others examine the effects of a specific energy efficiency policy—a distinction that leads to very different welfare and policy implications. We present the most reliable evidence available about the size of the energy efficiency rebound effect and discuss situations where such estimation is extraordinarily difficult. With this in mind, we present a new way of thinking about the macroeconomic rebound effect. We conclude that overall, the existing research provides little support for the so-called backfire hypothesis. However, our understanding of the macroeconomic rebound effect remains limited, particularly as it relates to induced innovation and productivity growth. (JEL: H23, Q38, Q41)
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Both modeling and empirical evidence point to a sizable rebound effect to energy efficiency and a similar effect applies to materials.
“Both modeling and empirical evidence point to a sizable rebound effect to energy efficiency [209] and a similar effect applies to materials [210,211].”
From Material efficiency strategies to reducing greenhouse gas emissions associated with buildings, vehicles, and electronics—a review (2019) · cites this paper as [209]
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- Authors
- Gillingham, K., Rapson, D., & Wagner, G.
- Affiliations
- National Bureau of Economic Research (US)
- University of California, Davis (US)
- Environmental Defense Fund (US)
- Corresponding author
- Gillingham, Kenneth
- Rapson, David
- Wagner, Gernot
- Venue
- Review of Environmental Economics and Policy
- Publisher
- University of Chicago Press
- Published
- 2016-01-01
- Volume
- 10
- Issue
- 1
- Pages
- 68-88
- ISSN
- 1750-6816 (ISSN-L)
- 1750-6824
- OpenAlex
- W3123626357
- Cited by
- 672
- References
- 64
- Citations by year
- 2026: 86 · 2025: 55 · 2024: 64 · 2023: 51 · 2022: 75 · 2021: 74 · 2020: 53 · 2019: 78 · 2018: 48 · 2017: 50 · 2016: 24 · 2015: 6 · 2014: 5 · 2013: 1 · 2012: 1
- FWCI
- 12.83
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Review of Environmental Economics and Policy (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- HighWire Press Open Archive (submittedVersion)
- Topics
- Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Energy, Environment, and Transportation Policies
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Energy, Environment, Economic Growth
- Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Energy Efficiency and Management
- Keywords
- rebound effect, energy efficiency, energy efficiency policy, induced innovation, productivity growth, welfare effects, energy consumption
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