An empirical study on the rebound effect considering capital costs
Technological progress is one of the means of reducing energy usage and carbon dioxide (CO2) emissions. However, this reduction, in turn, leads to a reduction in the real cost of energy services per unit, which results in an increase in the demand for energy services. Therefore, a reduction in the anticipated CO2 emissions caused by a technological improvement might be partially offset in response to the cost reduction. Previous studies have referred to this effect as the "rebound effect." A large amount of empirical evidence on the rebound effect exists; however, most of these studies assume an exogenous improvement in energy efficiency, and thus, capital costs that may decrease the magnitude of the rebound effect are not taken into account expressly. This paper extends the scope of the research conducted by Brannlund et al. [Brannlund, R., Ghalwash, T., Nordstrom, J., 2007. Increased energy efficiency and the rebound effect: effects on consumption and emissions. Energy Economics 29, 1-17] in terms of two aspects: (i) considering capital costs explicitly as additional capital costs and (ii) adapting an iterating procedure, and estimating the rebound effect, using Japanese household data. As a result of our empirical analysis, we conclude that the rebound is approximately 27%. However, we also find that ignoring additional capital costs leads to an increase in the rebound effect. In the case of Japanese households, the magnitude of the rebound effect increases to approximately 115%. Moreover, our simulation study shows that only a one-time iteration of Brannlund et al. [Brannlund, R., Ghalwash, T., Nordstrom, J., 2007. Increased energy efficiency and the rebound effect: effects on consumption and emissions. Energy Economics 29, 1-17] may lead to a biased result.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- A. Greening, Lorna & Greene, David L. & Difiglio, Carmen, 2000. "Energy efficiency and consumption -- the rebound effect -- a survey," Energy Policy, Elsevier, vol. 28(6-7), pages 389-401, June.
- Xiao, Ni & Zarnikau, Jay & Damien, Paul, 2007. "Testing functional forms in energy modeling: An application of the Bayesian approach to U.S. electricity demand," Energy Economics, Elsevier, vol. 29(2), pages 158-166, March.
- Brännlund, Runar & Ghalwash, Tarek & Nordström, Jonas, 2004.
"Increased Energy Efficiency and the Rebound Effect: Effects on consumption and emissions,"
Umeå Economic Studies
642, Umeå University, Department of Economics.
- Brannlund, Runar & Ghalwash, Tarek & Nordstrom, Jonas, 2007. "Increased energy efficiency and the rebound effect: Effects on consumption and emissions," Energy Economics, Elsevier, vol. 29(1), pages 1-17, January.
- Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
- Bentzen, Jan, 2004. "Estimating the rebound effect in US manufacturing energy consumption," Energy Economics, Elsevier, vol. 26(1), pages 123-134, January.
- David L. Greene, 1992. "Vehicle Use and Fuel Economy: How Big is the "Rebound" Effect?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 117-144.
- Roy, Joyashree, 2000. "The rebound effect: some empirical evidence from India," Energy Policy, Elsevier, vol. 28(6-7), pages 433-438, June.
- J. Daniel Khazzoom, 1980. "Economic Implications of Mandated Efficiency in Standards for Household Appliances," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 21-40.
- Jalas, Mikko, 2002. "A time use perspective on the materials intensity of consumption," Ecological Economics, Elsevier, vol. 41(1), pages 109-123, April.
- Manami Ogura & Kazuhiro Ohtani, 2007. "Testing demand homogeneity when error terms have an elliptically symmetric distribution," Applied Economics Letters, Taylor & Francis Journals, vol. 14(7), pages 497-502.
- Berkhout, Peter H. G. & Muskens, Jos C. & W. Velthuijsen, Jan, 2000. "Defining the rebound effect," Energy Policy, Elsevier, vol. 28(6-7), pages 425-432, June.
- Amory B. Lovins, 1988. "Energy Saving from the Adoption of More Efficient Appliances: Another View," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 155-170.
- Chib, Siddhartha & Greenberg, Edward, 1995. "Hierarchical analysis of SUR models with extensions to correlated serial errors and time-varying parameter models," Journal of Econometrics, Elsevier, vol. 68(2), pages 339-360, August.
- Saunders, Harry D., 2000. "A view from the macro side: rebound, backfire, and Khazzoom-Brookes," Energy Policy, Elsevier, vol. 28(6-7), pages 439-449, June.
- Binswanger, Mathias, 2001. "Technological progress and sustainable development: what about the rebound effect?," Ecological Economics, Elsevier, vol. 36(1), pages 119-132, January.
When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:30:y:2008:i:5:p:2486-2516. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.