Elsevier

Energy Policy

Volume 28, Issues 6–7, June 2000, Pages 367-388
Energy Policy

On the rebound? Feedback between energy intensities and energy uses in IEA countries

https://doi.org/10.1016/S0301-4215(00)00018-5Get rights and content

Abstract

The interaction or feedback between energy efficiencies or energy intensities and energy use has long been the topic of debate. Some have argued that energy efficiency improvements, by reducing energy intensities and therefore lowering the cost of energy services, would lead to 'rebound’ effects offsetting much or all of any initial savings in energy. In this paper we analyse historical data on energy use, efficiency and pricing in different sectors to try and identify 'rebounds'. For the period of our data (since about 1970) we show that key measures of activity (car use, manufacturing output and structure, house area, etc.) have changed little in response to changes in energy prices or efficiency, instead continuing their long-term evolution relative to GDP or other driving factors. While our analysis cannot disentangle more macro-level economic feedbacks in a detailed way, we show indirectly that such effects also appear to have been small over the 1970s and 1980s. Overall, our analysis of disaggregated sectoral and subsectoral energy-use and activity trends in a variety of IEA economies, suggests that any feedback effect is small compared to both the effects on energy use of changes in energy intensities and overall economic growth.

We conclude that most of the improvements in energy efficiencies led to reductions in energy intensities observed in the 1970s and 1980s. Weighted by 1990 activity levels, intensities were roughly 15–20% lower in 1994/5 than in 1973, which in turn meant real savings of energy; energy demand in IEA countries is roughly this much below what it would have been for the same GDP had these savings not occurred. “Rebounds” may have taken back some of the overall savings, but most remain, even after the fall of oil prices in 1986. Any boost to GDP as a result of these savings could not have been sufficient to increase energy demand enough to significantly alter these conclusions. That the savings remained after the fall in oil prices supports the notion that net savings — restrained energy growth relative to GDP in some formulations — arise from technological progress, even if energy prices do not increase. How far this effect can reach, however, is a matter of considerable debate.

Introduction

The impact of more efficient energy use in reducing energy demand, and the overall prospects for restraining energy demand growth, are important topics in the context of environmental policy. Periodically, claims surface that improving energy efficiency improvements do not in fact reduce demand nearly as much as expected (a weak rebound) or that improved efficiency leads to effects that erase most of the expected savings (a strong rebound) or indeed stimulates greater energy use than if no improvements had taken place at all (a backfire) by lowering the cost of energy services and by stimulating economic activity (Brookes, 1990, Brookes, 1992, Brookes, 1993; responses by Grubb, 1990, Grubb, 1992).

New research permits us to search for 'rebound’ effects or more generalised `feedback’ between energy efficiency, energy use, and economic activity. Recent papers (Greening and Greene, 1998; Berkhout and Velthuisen, 1997 both summarised in this issue) review the literature and important theory. Here we define and measure key trends in the activity levels (or structure) of energy uses and intensities of energy uses in key sectors of nearly a dozen IEA countries.1 We interpret the changes in these indicators to search for various kinds of rebounds. (Other papers in this issue deal more directly with both theoretical issues and direct observations of real behaviour.)

In this paper our concern is whether demand is lower “than it would have been”, at a given time, without efficiency improvements; or alternatively, when the economy has reached a certain GDP. We also consider briefly whether the GDP itself grew faster as a result of energy efficiency improvements (leading more indirectly to greater energy use), a `macro’ rebound effect. Finally, we speculate on the impact of future efficiency improvements on energy use.

Succinctly, we find that any rebound in most cases is not observable in the sectoral and end-use data. Certainly, our findings would reject the 'strong’ rebound hypothesis that rebound (over the time periods analysed) could be large enough to offset most of the energy savings arising from efficiency improvements. Our thesis is not that the interaction is absent. Rather we conclude that feedback effects are small in mature sectors of mature economies, and only potentially large in a few cases; lowering energy intensities almost always leads to lower energy use than otherwise.

Of course, the scale of the system keeps increasing with population, household formation, and the climb of incomes and sectoral output. Consequently, we normalise most of our observations of absolute quantities to either population or GDP, and display changes in intensive quantities (e.g., energy intensities per unit activity) against GDP or personal consumption expenditures per capita. Thus, we are able to view many effects that account for both income and price or efficiency effects, i.e., the “less than otherwise” condition. We still may find that over a sufficient period, energy use has increased even if energy efficiency has improved, because population or GDP grew significantly, growth not significantly stimulated by the increases in energy efficiency. Our thesis, supported by the aforementioned surveys, is that the improvement in energy efficiency per se is only a small part of the reason why total end-use activities may have increased.

This analysis represents only a first step in searching for both micro- and macro-feedbacks between energy efficiencies and energy uses. All we can show at this stage is that the various rebounds, if present, offset only a small part of the overall savings in energy that arise from lower energy intensities.

Section snippets

The conceptual framework

The debate on “rebound” has confused conceptually distinct issues. The first concerns the extent to which there is a direct “feedback”, within an activity or sector, between energy efficiency improvements and the level of energy-using activities (compared to demand in the absence of those efficiency improvements), which we call the micro-rebound effect. This might also be called product substitution, since a consumer demands more of a given energy-service or product because it becomes cheaper.

Looking for the rebound: energy use and intensities in IEA countries 1970s to 1990s.

Recent work analysed the structure of energy use in more than a dozen IEA countries from the early 1970s (Schipper et al., 1996b, Schipper et al., 1996c, Schipper et al., 1997a; IEA, 1997a, IEA, 1997b, IEA, 1997c; Schipper et al., 1998). The end uses or activities A consist of:

  • seven two- and three-digit ISIC branches of manufacturing;

  • ten end-uses in households;

  • five modes each of travel and freight;

  • fuel and electricity in the service sector;

  • For some countries, GDP in “other industry” consisting

Structural changes, technology and GDP responses

In all the sectors we have studied, prices for energy were heading down by the late 1980s. In most of the 13 countries we studied, road fuel prices lay at close to or below their 1973 levels in 1995, while heating fuels and industrial boiler fuels were still somewhat more expensive than in 1973. (Real electricity prices lay within ±20% of their 1973 values). Energy intensities of heating, driving, etc. remained below their 1970s levels, and showed little upturn as prices fell, although the

Policy implications

These observations suggest that the rebound debate may have overestimated the importance of energy in determining the mix of human and economic activities in an economy. The reason is that two centuries of technology have managed to reduce consumption of energy relative to the size of the economy even as energy prices fell, so that the costs of energy fell. With each reduction in the cost share of energy, its importance in determining the course of activities falls.

Rebound sensitivities are in

Overall conclusions

The serious energy literature, as well as the columns of important weeklies (New Scientist, 6 Sept. 1998) have debated the various rebound effects since the writings of Jevons. Most of this writing has been theoretical. We have looked at the empirical evidence for “rebound” of energy demand in response to energy efficiency improvements, using detailed sectoral data covering 80–90% of total energy demand in the countries studied. We find no major rebound effects, and where specific quantified

Acknowledgements

The authors acknowledge the comments of Dr. Kenneth wigley, formerly Head of the Economic Analysis Division of the International Energy Agency, and thank Jean-Marie Boundaire, Formerly Heat of the long term office of the IEA, whose insights stimulated this article and the entire issue.

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