Cross-posted from Environmental Law Prof Blog.
Energy efficiency policy is one of the few areas where we might still expect some progress at the federal level toward reducing greenhouse gas emissions in the next few years. Predictably, energy efficiency has become the target of criticism. Republican senators argue that phasing out inefficient incandescent light bulbs is anti-consumer even though it would save consumers money on their energy bills. And in a New York Times article, John Tierney took aim at energy efficiency standards by implying that energy efficiency improvements don’t actually save energy on account of the “rebound effect.” The rebound effect expresses the idea that energy efficiency improvements result in a reduction in the price content of energy in the final consumer product or service, and consumers may respond to this cost savings by consuming more of that product or service (the direct rebound effect) or more of other products and services (the indirect rebound effect). This increased consumption negates the presumed one-to-one relationship between efficiency improvements and energy savings.
While theoretically plausible, the important question regards the actual size of the rebound effect. Tierney suggests that the rebound effect may swallow the energy savings of energy efficiency, but the available empirical evidence does not bear this out. The direct rebound effect has been much better studied than the indirect rebound effect (see Sorrell et al. 2009). In the transport sector, where the rebound effect has been most studied, the effect is likely to lie between 10 and 30%. In other words, 70 to 90% of the energy savings achieved by a more efficient car are actually saved (and not negated in the form of higher consumption). When more efficient heating is installed, about 80% of the energy savings remain intact. From my perspective, a 70 to 90% energy savings looks pretty good.
As for the indirect rebound effect, Sorrell et al. 2007 find that there are few published studies and that they are flawed. In other words, there is little empirical support for the indirect rebound effect. According to Sorrell it has two components: the embodied energy in energy efficiency improvements (the energy required to produce and install the measures that improve energy efficiency) and “secondary effects,” which refer to the change in demand for other goods and services spurred by energy efficiency improvements. From what I can tell, these secondary effects seem to amount largely to the idea that consumers will spend whatever money they have on something, and that something is likely to require the use of energy. While I can certainly see bemoaning the energy consumption of overconsumption (and I probably will in a future post), I just can’t see blaming it on energy efficiency.