Rebound and disinvestment effects in refined oil consumption and supply resulting from an increase in energy efficiency in the Scottish commercial transport sector

In this paper, we use an energy–economy–environment computable general equilibrium (CGE) model of the Scottish economy to examine the impacts of an exogenous increase in energy augmenting technological progress in the domestic commercial Transport sector on the supply and use of energy. We focus our analysis on Scottish refined oil, as the main type of energy input used in commercial transport activity. We find that a 5% increase in energy efficiency in the commercial Transport sector leads to rebound effects in the use of oil-based energy commodities in all time periods, in the target sector and at the economy-wide level. However, our results also suggest that such an efficiency improvement may cause a contraction in capacity in the Scottish refined oil supply sector. This ‘disinvestment effect’ acts as a constraint on the size of rebound effects. However, the magnitude of rebound effects and presence of the disinvestment effect in the simulations conducted here are sensitive to the specification of key elasticities of substitution in the nested production function for the target sector, particularly the substitutability of energy for non-energy intermediate inputs to production.     

Negative rebound and disinvestment effects in response to an improvement in energy efficiency in the UK economy

This paper uses a computable general equilibrium (CGE) framework to investigate the conditions under which rebound effects may occur in response to increases in energy efficiency in the UK national economy. Previous work for the UK has suggested that rebound effects will occur even where key elasticities of substitution in production are set close to zero. The research reported in this paper involves carrying out a systematic sensitivity analysis, where relative price sensitivity is gradually introduced into the system, focusing specifically on elasticities of substitution in production and trade parameters, in order to determine conditions under which rebound effects become a likely outcome. The main result is that, while there is positive pressure for rebound effects even where (direct and indirect) demands for energy are very price inelastic, this may be partially or wholly offset by negative income, competitiveness and disinvestment effects, which also occur in response to falling energy prices. The occurrence of disinvestment effects is of particular interest. These occur where falling energy prices reduce profitability in domestic energy supply sectors, leading to a contraction in capital stock in these sectors, which may in turn lead to rebound effects that are smaller in the long run than in the short run, a result that runs contrary to the predictions of previous theoretical work in this area.     

Rethinking economy-wide rebound measures: An unbiased proposal

In spite of having been first introduced in the last half of the ninetieth century, the debate about the possible rebound effects from energy efficiency improvements is still an open question in the economic literature. This paper contributes to the existing research on this issue proposing an unbiased measure for economy-wide rebound effects. The novelty of this economy-wide rebound measure stems from the fact that not only actual energy savings but also potential energy savings are quantified under general equilibrium conditions. Our findings indicate that the use of engineering savings instead of general equilibrium potential savings downward biases economy-wide rebound effects and upward-biases backfire effects. The discrepancies between the traditional indicator and our proposed measure are analysed in the context of the Spanish economy.     

The European Commission's light bulb decree: Another costly regulation?

Since September 2009, Regulation 244/2009 of the European Commission enforces the gradual phase-out of incandescent light bulbs. As of September 2012, only energy-efficient lighting sources will be allowed for sale. Among these are halogen light bulbs, light-emitting diodes (LED), or compact fluorescent light bulbs—often referred to as energy-saving light bulbs. The Commission's justification for the phase-out of conventional light bulbs maintains that a reduction in the electricity consumed will not only lead to lower energy cost for private households and industrial consumers, but at the same time lead to a decrease in greenhouse gas emissions. This article discusses possible reasons for the slow market diffusion of energy-saving light bulbs and shows that the investment in energy-efficient light bulbs does not necessarily lead to significant cost reductions. Drawing on some illustrative examples, we demonstrate that the use of cheaper incandescent bulbs instead of energy-saving light bulbs can be economically rational in cases of rather low usage times, in which the higher initial purchasing price might only pay off after very long time spans. Furthermore, due to the coexistence with the European Emissions Trading Scheme (ETS), this regulation attains no additional emission reductions beyond those achieved by the ETS alone. We thus conclude that the general ban of incandescent light bulbs is inappropriate and should be abolished by the Commission.     

Empirical estimates of the direct rebound effect: A review

Improvements in energy efficiency make energy services cheaper, and therefore encourage increased consumption of those services. This so-called direct rebound effect offsets the energy savings that may otherwise be achieved. This paper provides an overview of the theoretical and methodological issues relevant to estimating the direct rebound effect and summarises the empirical estimates that are currently available. The paper focuses entirely on household energy services, since this is where most of the evidence lies and points to a number of potential sources of bias that may lead the effect to be overestimated. For household energy services in the OECD, the paper concludes that the direct rebound effect should generally be less than 30%.     

Empirical evidence of direct rebound effect in Catalonia

This paper reviews the empirical literature concerning the direct rebound effect in households; it briefly analyzes the main theoretical and methodological aspects, and finally estimates the magnitude of direct rebound effect for all energy services using electricity in households of Catalonia (Spain) using econometric techniques. The main results show an estimated direct rebound effect of 35% in the short term and 49% in the long term. The existence of a rebound effect reduces the effectiveness of energy efficiency policies.     

The effect of energy end-use efficiency improvement on China’s energy use and CO2 emissions: a CGE model-based analysis

With its rapid economic growth, China is now confronted with soaring pressure from both its energy supply and the environment. To deal with this conflict, energy end-use efficiency improvement is now promoted by the government as an emphasis for future energy saving. This study explores the general equilibrium effect of energy end-use efficiency improvement on China’s economy, energy use, and CO₂ emissions. This paper develops a static, multisector computable general equilibrium model (CGE) for China, with specific detail in energy use and with the embodiment of energy efficiency. In order to explore the ability of subsidizing non-fossil-generated electricity on moderating potential rebound effects, in this model, the electricity sector was deconstructed into five specific generation activities using bottom–up data from the Chinese electricity industry. The model is calibrated into a 16-sector Chinese Social Accounting Matrix for the year 2002. In the analysis, seven scenarios were established: business as usual, solely efficiency improvement, and five policy scenarios (taxing carbon, subsidized hydropower, subsidized nuclear power, combination of taxing carbon and subsidized hydropower, combination of taxing carbon and subsidized nuclear power). Results show that a sectoral-uniform improvement of energy end-use efficiency will increase rather than decrease the total energy consumption and CO₂ emissions. The sensitivity analysis of sectoral efficiency improvement shows that efficiency improvements happened in different sectors may have obvious different extents of rebound. The three sectors, whose efficient improvements do not drive-up total national energy use and CO₂ emissions, include Iron and Steel, Building Materials, and Construction. Thus, the improvement of energy end-use efficiency should be sectoral specific. When differentiating the sectoral energy-saving goal, not only the saving potential of each sector but also its potential to ease the total rebound should be taken into account. Moreover, since the potential efficiency improvement for a sector over a certain period will be limited, technology measures should work along with a specific policy to neutralize the rebound effect. Results of policy analysis show that one relatively enhanced way is to combine carbon taxing with subsidized hydropower.     

Quantifying the rebound effects of energy efficiency improvements and energy conserving behaviour in Sweden

Doubts have recurrently been raised on the extent to which energy efficiency can reduce the demand for energy. Improvements in efficiency may cause so-called rebound effects by reducing the prices of energy services as well as by increasing the budget for consumption of other goods and services. The magnitude of such effects is crucial to whether energy efficiency should be a strategy for environmental policy or not. This paper aims to derive a general expression of the rebound effects of household consumption in a parameterised form where available data can be tested. The paper analyses how different parameter assumptions affect the quantification of rebound effects and what may be reasonable ranges. Income effects are quantified using data from the Swedish Household Budget Survey of different goods and services split on income classes. The changes in consumption patterns with increasing income are used to establish the composition of marginal consumption. Combined with energy intensities derived from input–output analysis, this gives a model of how money saved on energy use in one sector may lead to increased energy use in other sectors. The total rebound effects of energy efficiency improvements appear to be in the range 5–15% in most cases, but these results are fairly sensitive to assumptions of energy service price elasticities. Cases with low or negative capital costs for energy efficiency improvements may also result in much higher rebound effects as the income effects become more important. Energy-conserving behaviour (reduced energy service demand) affecting direct energy use such as heating and transport gives rise to rebound effects in the order of 10–20%, depending on the household expenditure per primary energy for different fuels and energy carriers.     

The rebound effect on road freight transport: Empirical evidence from Portugal

Because a large proportion of total operating costs for transportation companies goes towards energy, a reduction in energy operating costs, brought about by an increase in fleet fuel efficiency, or an increase in operational efficiency, results in a change in the relative cost of road freight transportation. This fact could result in an increase in the demand for such services. If this is true, the result would be an increase in total fuel consumption. Consequently, that part of the energy savings obtained through the increased energy efficiency would be lost. The existence of a “Rebound Effect” is especially important in the road freight transportation sector and is crucial for the definition of a national energy policy.     

Energy rebound and economic growth: A review of the main issues and research needs

Contrary to conventional wisdom, more efficient use of energy may actually through rebound effects lead to greater instead of less total consumption of energy—or at least to no diminution of energy consumption. If so, energy efficiency strategies may serve goals of raising economic growth and affluence, but as an environmental or energy policy strategy could backfire, leading to more resource use in absolute terms rather than less. This, in turn, could in the long run hamper economic growth, for instance if resource scarcity crowds out technical change. The hypothesis that rebound is greater than unity (‘backfire’) predicts the observed real-world correlation between rising energy consumption and rising efficiency of energy services, however difficult it may be to define a precise holistic metric for the latter. The opposing hypothesis, i.e. that rebound is less than unity and that energy efficiency increases therefore result in less energy consumption than before, requires on the other hand strong forces that do account for the empirically observed economic growth. This paper summarises some of the discussions around the rebound effect, puts it into perspective to economic growth, and provides some insights at the end that can guide future empirical research on the rebound topic.     

Development of a modelling framework in response to new European energy-efficiency regulatory obligations: The Irish experience

Momentum has been building for an EU-wide approach to energy policy in which energy end-use efficiency is regarded as one of the main planks. Member States are already obliged to plan for the achievement of energy savings targets in respect of the period 2008–2016 and they now face additional economy-wide targets for 2020. Efficiency investments are widely regarded as capable of improving industrial competitiveness, security of energy supply and the abatement of greenhouse gas emissions. Nevertheless, the design of policy packages may involve trade-offs between these objectives. The challenge for energy modellers is to quantify future energy savings associated with combinations of efficiency measures. This paper draws on the international experience in energy modelling and tracks recent progress that has been made towards a harmonised European framework for verification of savings. It points to the significant development work that remains to be done, particularly to enable an increased reliance on bottom-up evaluation methods. One significant gap in our knowledge relates to the required adjustment of technical savings due to behavioural factors such as rebound effects. The paper uses one country (Ireland) as a case study to demonstrate how a framework is being developed to respond to these new requirements.     

Allocation of energy resources for power generation in India: Business as usual and energy efficiency

This paper deals with MARKAL allocations for various energy sources, in India, for Business As Usual (BAU) scenario and for the case of exploitation of energy saving potential in various sectors of economy. In the BAU scenario, the electrical energy requirement will raise up to 5000 bKwh units per year or 752 GW of installed capacity with major consumers being in the industry, domestic and service sectors. This demand can be met by a mix of coal, hydro, nuclear and wind technologies. Other reneawbles i.e. solar and biomass will start contributing from the year 2040 onwards. By full exploitation of energy saving potential, the annual electrical energy demand gets reduced to 3061 bKwh (or 458 GW), a reduction of 38.9%.The green house gas emissions reduce correspondingly. In this scenario, market allocations for coal, gas and large hydro become stagnant after the year 2015.     

基于电力能效的智能用电小区建设研究

通过基于电力能效的智能用电小区综合示范工程的建设,充分研究智能用电小区电力能效提升的方法,改变了以往主要靠单一产品或局部技术改造的节电做法。依靠智能用电小区电力能效管理整体解决方案,降低用户用电成本,有效提高综合经济效益,充分落实节约资源、保护环境的国家政策。     

Energy and economic growth: Grounding our understanding in physical reality

This article attempts to summarise the complex, wide ranging and unresolved debate within the economics literature on the possibility of decoupling economic growth from energy use. It explores the difference between neo-classical and ecological economic worldviews and highlights how the ecological economic approach attempts to ground its analysis within the physical limits implied by the laws of thermodynamics. Once these laws are accounted for, the possibility of decoupling economic growth from energy use seems more limited than neo-classical economics implies. Analysis of empirical evidence also demonstrates that observed improvements in GDP/energy use ratios in the USA are better explained by shifts towards higher quality fuels than by improvements in the energy efficiency of technologies. This implies a need to focus on decarbonising energy supply. Furthermore, where energy-efficiency improvements are attempted, they must be considered within the context of a possible rebound effect, which implies that net economy-wide energy savings from energy-efficiency improvements may not be as large as the energy saved directly from the efficiency improvement itself. Both decarbonising energy supply and improving energy efficiency require the rapid development and deployment of new and existing low-carbon technologies. This review therefore concludes by briefly outlining areas of economic thought that have emerged as a result of engagement between economists and experts from other disciplines. They include ecological, evolutionary and institutional economics, all of which can make policy-relevant contributions to achieving a transition to a low-carbon economy.     

Chemical heat regeneration in power plants

Cycles of gas turbine devices using liquid and gas fuels with chemical heat regeneration are considered. A thermodynamic analysis of one of these schemes was carried out using energy and enthalpy balances. The behaviour of the cycle was investigated as a function of the pressure in the chemical regenerator (P_ch) and in the turbine (P_T), and the temperature in the chemical catalytic regenerator (T_ch). Calculations were carried out at P_T ? 10.0 MPa, P_ch ? 2.0 MPa and T_ch ? 600 K. As a result, it was shown that the thermal efficiency η_T of the cycle with chemical regeneration of the exhaust gases increased by about 12%. The dependences of η_T on P_ch and T_ch were obtained.