'Rebound effects' of energy efficiency could halve carbon savings, says study

Research urges governments and climate policymakers to look beyond simple energy solutions and consider the indirect and economy-wide effects when forming legislation
Alok Jha, guardian.co.uk 14 May 09;

Using energy more efficiently might not be as effective at tackling climate change as people think, according to a new study. A team of economists has shown that so-called "rebound effects", where efficiency improvements are offset by behaviour changes, such as increasing demands for cheaper energy, could potentially slash future carbon and energy savings by half.

The rebound effect was first proposed in the 19th century but, until now, there has been very little research on how significant it might be.

In the latest study, Terry Barker, of the Cambridge Centre for Climate Change Mitigation Research, showed that if the International Energy Agency's (IEA) recommendations for efficiency measures are followed in full in the next few decades, the total rebound effect – the proportion of potential energy savings offset by changes in consumer and industry behaviour – could be 31% by 2020 and about 52% around the world by 2030.

He is presenting the results today at a Cambridge University seminar, where economists, business people and policymakers will gather to discuss the wider implications of the rebound effect and consider how to incorporate it into climate negotiations.

"The green stimulus packages being implemented to tackle the financial crisis in several countries all include investments in energy efficiency," said Barker. "They may be a lot less effective at reducing energy use than expected because of the rebound effect, especially in developing countries."

Policymakers and scientists, including the Intergovernmental Panel on Climate Change, only consider the direct rebound effects of energy efficiency, largely ignoring the indirect and economy-wide effects that Barker also identifies in his research.

"That is potentially important because it will lead to us over-estimating what certain policies will achieve," said Steve Sorrell, a researcher at the UK Energy Research Centre and an energy policy expert at the University of Sussex, who is also speaking at today's meeting.

Rebound effects can cut right through society and the three types reflect how they could inadvertently increase energy use. The first, direct effects, include people who drive more regularly because their fuel-efficient cars are cheaper to run. More efficient industry, on the other hand, can lead to indirect effects: cheaper steel might increase the amount of steel produced and, therefore, the number of construction projects in which it can be used. Across society, cheaper electricity bills overall mean consumers have more money to spend on other activities, such as holidays or entertainment, again potentially raising their overall carbon footprint.

In the study, Barker used economic models to predict how energy use in transport, buildings and industry might change in the coming decades. The total rebound figures were calculated by comparing two scenarios of how a growing economy responds to changing energy use. One scenario included the IEA's proposed energy efficiency measures, while the second did not. This allowed researchers to calculate for the first time the indirect and economy-wide rebound effects not usually considered by scientists and policymakers.

Doug Parr, chief scientist at Greenpeace UK said the work on rebound effects showed technology on its own was not a solution to climate change. "Any policy has to be not just about getting technology deployed but also about a strategy that includes tax and regulation. You can't just deploy new technology and hope it'll get you out of trouble. I get the sense that policymakers don't understand it fully."

Sorrell agreed that rebound effect should be taken more seriously by governments when setting climate policy – in particular, making sure they focus on measures outside simple energy efficiency. "Our new understanding of the rebound effect reinforces the case for price-based measures, such as carbon taxes and emissions trading, to control emissions directly."

The rebound effect was first proposed by William Stanley Jevons in 1865 – he argued that increasing the efficiency of steam turbines would increase, rather than decrease, the overall consumption of coal. As the cost of energy goes down, he said, people would be more likely to use steam turbines more often. His prediction came true – increasingly efficient steam turbines powered the industrial revolution.