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.     

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.     

How organizational and global factors condition the effects of energy efficiency on CO2 emission rebounds among the world's power plants

The United Nations Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency (IEA), and several nations suggest that energy efficiency is an effective strategy for reducing energy consumption and associated greenhouse gas emissions. Skeptics contend that because efficiency lowers the price of energy and energy services, it may actually increase demand for them, causing total emissions to rise. While both sides of this debate have researched the magnitude of these so-called rebound effects among end-use consumers, researchers have paid less attention to the conditions under which direct rebounds cause CO₂ emissions to rise among industrial producers. In particular, researchers have yet to explore how organizational and global factors might condition the effects of efficiency on emissions among power plants, the world's most concentrated sources of anthropogenic greenhouse gases. Here we use a unique dataset containing nearly every fossil-fuel power plant in the world to determine whether the impact of efficiency on emissions varies by plants' age, size, and location in global economic and normative systems. Findings reveal that each of these factors has a significant interaction with efficiency and thus shapes environmentally destructive rebound effects.     

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.     

Energy efficiency in the transport sector

The distribution of energy use in the transport sector in the United States of America is presented and analysed in terms of the efficient use of energy in various applications. Comparisons are drawn with other modelling efforts.     

Regional energy rebound effect: The impact of economy-wide and sector level energy efficiency improvement in Georgia,USA

Rebound effect is defined as the lost part of ceteris paribus energy savings from improvements on energy efficiency. In this paper, we investigate economy-wide energy rebound effects by developing a computable general equilibrium (CGE) model for Georgia, USA. The model adopts a highly disaggregated sector profile and highlights the substitution possibilities between different energy sources in the production structure. These two features allow us to better characterize the change in energy use in face of an efficiency shock, and to explore in detail how a sector-level shock propagates throughout the economic structure to generate aggregate impacts. We find that with economy-wide energy efficiency improvement on the production side, economy-wide rebound is moderate. Energy price levels fall very slightly, yet sectors respond to these changing prices quite differently in terms of local production and demand. Energy efficiency improvements in particular sectors (epicenters) induce quite different economy-wide impacts. In general, we expect large rebound if the epicenter sector is an energy production sector, a direct upstream/downstream sector of energy production sectors, a transportation sector or a sector with high production elasticity. Our analysis offers valuable insights for policy makers aiming to achieve energy conservation through increasing energy efficiency.     

Evaluation of the energy efficiency evolution in the European road freight transport sector

In this paper, we evaluate energy efficiency in the European freight transport sector over three decades, according to a variety of indicators, methodologies and databases. The aim is, on the one hand, of determining major drawbacks in energy efficiency metrics, on the other hand, identifying a possible trend in the sector. The present analysis shows that energy efficiency evaluation is generally subject to misinterpretation and distortion with regard to the methods and data source adopted. Two different indicators (energy intensity and fuel economy) were initially taken into account to select the most suitable for evaluating vehicles’ efficiency. Fuel economy was then adopted and measured according to two different methodologies (top–down and bottom–up). We then considered all the possible sources of distortion (data sources employed, methods of data detection, speed of detection, power enhancement, size factor) with the aim of accomplishing a sound estimation. Fuel economy was eventually divided with the maximum power available (adjusted fuel economy), to account for the power shift of vehicles, that represents a further efficiency improvement.     

Rebound effect in Chinese household energy efficiency and solution for mitigating it

The current efforts and technologies on energy efficiency seem unable to hold back the increasing momentum of the household energy consumption per unit of China, which has been on the increase since 2000. Usually, this phenomenon is simply attributed to the demand for more comfortable household lifestyle due to the current rapid economic development of China. However, the latent cause—rebound effect has long been ignored in the household energy efficiency of China, while it has been analyzed deeply and recognized widely all over the world. This article studies the rebound effect in the household energy efficiency of China and its related negative influence on the energy demand. A high rebound effect of at least 30% in the household energy efficiency of China is presumed by reference to the rebound effects of other countries. Finally, five feasible ways are summarized to mitigate the rebound effect and their values are analyzed respectively: (1) develop renewable energy resources, (2) increase energy prices, (3) improve energy efficiency, (4) build rational energy prices system, and (5) improve consumer behavior.     

The potential for energy efficiency gains in the Canadian commercial building sector: A stochastic frontier study

The achievement of energy efficiency in commercial buildings is a function of the activities undertaken, the technology in place, and the extent to which those technologies are used efficiently. We study the factors that affect efficient energy use in the Canadian commercial sector by applying a stochastic frontier approach to a cross-section of Canadian commercial buildings included in the Commercial and Institutional Building Energy Use Survey (CIBEUS). Structural and climate-control features of the buildings as well as climatic conditions are assumed to determine the location of the frontier, while management-related variables including such factors as ownership type and activities govern whether or not the maximally attainable efficiency along the frontier is achieved. Our results indicate that although, on average, buildings appear to be fairly efficient, certain types of operations are more likely than others to exhibit energy efficiencies that are significantly worse than average. These results, along with those related to the effects of physical characteristics on the stochastic efficiency frontier, suggest that there is scope for focused policy initiatives to increase energy efficiency in this sector.     

Linking energy efficiency and innovation practices: Empirical evidence from the foundry sector

The Europe 2020 strategy currently promotes energy efficiency and innovation through disconnected targets focusing on either energy or R&D. Similar policies indicate that in practice, these two concepts are usually perceived as mutually exclusive. Furthermore, evidence in the literature regarding the relationship between R&D and energy efficiency is still highly limited. This exploratory study aims to address this gap by investigating the link between innovation practices and energy efficiency through a multiple case study of 30 foundries in Northern Italy. We analysed the firms' innovativeness, measured by internal R&D and Open Innovation practices (inbound and outbound), and energy efficiency, measured by specific energy consumption, level of adoption of energy-efficient technologies and barriers to energy efficiency. The results seem to show that those foundries complementing internal R&D with inbound practices have a higher level of energy efficiency, a higher level of adoption of available technologies, and a lower perception of barriers to efficiency improvements. This finding suggests that diversifying innovation practices could lead to better performance with respect to all three indicators of energy efficiency analysed. This study contributes to understanding how more innovative firms can be more energy efficient, providing interesting highlights for managers and policymakers.     

An estimation of the energy and exergy efficiencies for the energy resources consumption in the transportation sector in Malaysia

The purpose of this work is to apply the useful energy and exergy analysis models for different modes of transport in Malaysia and to compare the result with a few countries. In this paper, energy and exergy efficiencies of the various sub-sectors are presented by considering the energy and exergy flows from 1995 to 2003. Respective flow diagrams to find the overall energy and exergy efficiencies of Malaysian transportation sector are also presented. The estimated overall energy efficiency ranges from 22.74% (1999) to 22.98% (1998) with a mean of 22.82±0.06%$22.82\pm 0.06\%$ and that of overall exergy efficiency ranges from 22.44% (2000) to 22.82% (1998) with a mean of 22.55±0.12%$22.55\pm 0.12\%$. The results are compared with respect to present energy and exergy efficiencies in each sub-sector. The transportation sector used about 40% of the total energy consumed in 2002. Therefore, it is important to identify the energy and exergy flows and the pertinent losses. The road sub-sector has appeared to be the most efficient one compared to the air and marine sub-sectors. Also found that the energy and exergy efficiencies of Malaysian transportation sector are lower than that of Turkey but higher than Norway.     

Assessment of the energy utilization efficiency in the Turkish transportation sector between 2000 and 2020 using energy and exergy analysis method

Energy and exergy utilization efficiencies in the Turkish transportation sector over the period from 2000 to 2020 are evaluated in this study. A comparison of the overall energy and exergy efficiencies of the Turkish transportation sector with the other countries is also presented. Energy and exergy analyses are performed for four transport modes, namely roadway, railway, airway and seaway, while they are based on the actual data for 2000 and projected data for 2020. Roadway appears to be the most efficient mode when compared with railway, air and seaway. It is projected that about 15% of total energy resources will be used in this sector during 2020. The energy utilization efficiencies for the Turkish transportation sector range from 23.71% in 2000 to 28.75% in 2020, while the exergy utilization efficiencies vary from 23.65% to 28.85% in the same years, respectively. Exergetic improvement potential for this sector is estimated to be 700 PJ in 2020, with an average increase rate of 4.5% annually between 2000 and 2020. Road transport and oil-fuelled combustion engines offer the principal scope for exergetic improvement in the coming decades. It may be concluded that the methodology used in this study is practical and useful for analyzing sectoral energy and exergy utilization to determine how efficiently energy and exergy are used in the sector studied. It is also expected that this study will be helpful in developing highly applicable and productive planning for energy policies.     

Split incentives and energy efficiency in Canadian multi-family dwellings

This paper examines the energy-related behaviour of owners and occupants of multi-family dwellings in Canada, some of whom do not pay directly for electricity or heat, but instead have these costs included in their rent or condo fees. Using data from the 2003 Survey of Household Energy Use, we look at the extent to which split incentives that result from bill-paying arrangements affect a variety of activities including the setting of temperatures at various times of the day and the use of eco-friendly options in basic household tasks. Findings suggest that these split incentives do indeed impact some aspects of occupant behaviour, with households who do not pay directly for their heat opting for increased thermal comfort and being less sensitive to whether or not somebody is at home and the severity of the climate when deciding on temperature settings. Regardless of who pays for utilities, Canadian households who live in multi-family dwellings are generally unresponsive to fuel prices. Our empirical results suggest the possibility of environmental benefits from policies aimed at improving energy-efficiency in this sector, especially if targeted at reducing the impacts of the behaviour of those who do not pay directly for energy use.     

Energy efficiency in transport and mobility from an eco-efficiency viewpoint

European Union countries’ current energy policies for the transport sector promote, amongst other initiatives; urban mobility plans, the renewal of fleets of cars and industrial vehicles and the introduction of biofuel. From the point of view of eco-efficiency and Life Cycle Assessment (LCA), energy policies must go further. The objective of this paper is to analyse the current transport model and the policies on energy efficiency being promoted in the EU from a LCA point of view. Special attention has been paid to private vehicles, in assessing the environmental impact of the various stages of manufacture, their use and disposal, and the consequences of plans to renew fleets. How old should a vehicle ideally be so that when it is changed, the embodied energy in the materials of the vehicle is less than the gain in energy efficiency due to changing the model for example? In addition the paper analyses the different means of transport in the energy consumption-time ratio from a LCA viewpoint. The fact that reducing transport times leads to greater energy consumption gives rise to the question: how long does nature take to repair the environmental damage caused?     

Assessing the rebound effect using a natural experiment setting: Evidence from the private transportation sector in Israel

Subsidizing energy-efficient technologies is considered by energy and environmental organizations to be one of the most effective policies for decreasing energy consumption. In the transportation sector such policies are becoming ever more popular, and have been implemented in a considerable number of countries in recent years. Because these policies promote energy-efficient cars with lower usage costs, they may rebound and increase the distances traveled by households that have switched to energy-efficient cars. From an econometric perspective, a subsidization policy can be used as a valid instrument to identify the households’ choice of energy efficiency levels of the cars they own. This identification, in turn, can be utilized to account for endogeneity in the estimation of a rebound effect. The present study uses a natural experiment setting of such a policy implemented in Israel in 2009. The empirical results indicate a fairly large average rebound effect of 40%. The results also indicate that while the policy indeed encouraged the purchase of energy-efficient cars, households that bought a new or used car during the surveyed period did not generate a rebound effect of a different magnitude compared with other households that did not. We discuss the implications of our findings.     

An empirical analysis of energy efficiency in China''s iron and steel sector

Using Malmquist Index Decomposition, this paper investigates energy efficiency of China's iron and steel sector during the period 1994–2003. Provincial panel data is employed, allowing various energy inputs and product outputs. The energy efficiency improvement is decomposed into two components: technical change (production frontier shifting effect) and technical efficiency change (catching up effect) over time. Our empirical results indicate that the energy efficiency in China's iron and steel sector increased by 60% between 1994 and 2003, which is mainly attributable to technical progress rather than technical efficiency improvement. The energy efficiency gaps among provincial iron and steel sectors during this period have widened. However, energy efficiency of iron and steel plants owned by the state has slowly improved in some regions, such as Shanghai, Liaoning, Beijing and Hubei. Nevertheless, technical efficiency in these four regions has decreased considerably. Energy efficiency in China's two largest private-own iron and steel bases (Heibei and Jiangsu) improved significantly.     

The role of energy efficiency in reducing Scottish and UK CO2 emissions

In 2003, the UK government launched its long-anticipated White Paper on energy, the centrepieces of which were ambitious targets for the production of electricity from renewable technologies and the long-term aspiration of a 60% reduction in UK greenhouse gas emissions by 2050. In the White Paper it was recognised that such a dramatic reduction in emissions will require significant changes in the way in which energy is produced and used. However there has been a general failure to recognise the fact that in order to meet emissions targets, the UK will have to significantly reduce its energy consumption; this is not helped by the general misconception in the UK that reductions in CO₂ emissions will occur simply by increasing the production of electricity from renewable sources.

Specifically, this paper highlights the current trends in renewables deployment and energy demand, with a specific focus on Scotland, where the authorities have set more ambitious renewables targets than the rest of the UK. As will be demonstrated in this paper, without energy demand reduction, the deployment of renewables alone will not be sufficient to curtail growth in UK CO₂ emissions. This is illustrated using a case study of the Scottish housing sector; whilst this case study is necessarily local in scope, the results have global relevance. The paper will also address the magnitude of energy savings required to bring about a reduction in emissions and assesses the status of the policies and technologies that could help bring such reductions about.     

Influence of the power supply on the energy efficiency of an alkaline water electrolyser

Electric energy consumption represents the greatest part of the cost of the hydrogen produced by water electrolysis. An effort is being carried out to reduce this electric consumption and improve the global efficiency of commercial electrolysers. Whereas relevant progresses are being achieved in cell stack configurations and electrodes performance, there are practically no studies on the effect of the electric power supply topology on the electrolyser energy efficiency. This paper presents an analysis on the energy consumption and efficiency of a 1 N m³ h⁻¹ commercial alkaline water electrolyser and their dependence on the power supply topology. The different topologies of power supplies are first summarised, analysed and classified into two groups: thyristor-based (ThPS) and transistor-based power supplies (TrPS). An Electrolyser Power Supply Emulator (EPSE) is then designed, developed and satisfactorily validated by means of simulation and experimental tests. With the EPSE, the electrolyser is characterised both obtaining its I–V curves for different temperatures and measuring the useful hydrogen production. The electrolyser is then supplied by means of two different emulated electric profiles that are characteristic of typical ThPS and TrPS. Results show that the cell stack energy consumption is up to 495 W h N m⁻³ lower when it is supplied by the TrPS, which means 10% greater in terms of efficiency.     

An integrated DEA PCA numerical taxonomy approach for energy efficiency assessment and consumption optimization in energy intensive manufacturing sectors

This paper introduces an integrated approach based on data envelopment analysis (DEA), principal component analysis (PCA) and numerical taxonomy (NT) for total energy efficiency assessment and optimization in energy intensive manufacturing sectors. Total energy efficiency assessment and optimization of the proposed approach considers structural indicators in addition conventional consumption and manufacturing sector output indicators. The validity of the DEA model is verified and validated by PCA and NT through Spearman correlation experiment. Moreover, the proposed approach uses the measure-specific super-efficiency DEA model for sensitivity analysis to determine the critical energy carriers. Four energy intensive manufacturing sectors are discussed in this paper: iron and steel, pulp and paper, petroleum refining and cement manufacturing sectors. To show superiority and applicability, the proposed approach has been applied to refinery sub-sectors of some OECD (Organization for Economic Cooperation and Development) countries. This study has several unique features which are: (1) a total approach which considers structural indicators in addition to conventional energy efficiency indicators; (2) a verification and validation mechanism for DEA by PCA and NT and (3) utilization of DEA for total energy efficiency assessment and consumption optimization of energy intensive manufacturing sectors.     

Impact of energy policy instruments on the estimated level of underlying energy efficiency in the EU residential sector

The promotion of energy efficiency is seen as one of the top priorities of EU energy policy (EC, 2010). In order to design and implement effective energy policy instruments, it is necessary to have information on energy demand price and income elasticities in addition to sound indicators of energy efficiency. This research combines the approaches taken in energy demand modelling and frontier analysis in order to econometrically estimate the level of energy efficiency for the residential sector in the EU-27 member states for the period 1996 to 2009. The estimates for the energy efficiency confirm that the EU residential sector indeed holds a relatively high potential for energy savings from reduced inefficiency. Therefore, despite the common objective to decrease ‘wasteful’ energy consumption, considerable variation in energy efficiency between the EU member states is established. Furthermore, an attempt is made to evaluate the impact of energy-efficiency measures undertaken in the EU residential sector by introducing an additional set of variables into the model and the results suggest that financial incentives and energy performance standards play an important role in promoting energy efficiency improvements, whereas informative measures do not have a significant impact.