How to deal with the rebound effect? A policy-oriented approach

Policy makers and environmental agencies have echoed concerns brought forward by academics about the need to address the rebound effect for achieving absolute energy and environmental decoupling. However, such concerns have generally not been translated into tangible policy action. The reasons behind this inaction are not fully understood, and much remains unknown about the status of the rebound effect issue on the policy agenda and policy pathways available. Such knowledge gaps may hamper the development of effective policies to address this issue. In this paper, we examine the extent to and ways in which the rebound effect is considered in policy documents and analyse thirteen specific policy pathways for rebound mitigation. The effectiveness of the pathways is scrutinised and conclusions are offered to mitigate rebound effects. The main policy conclusions of the paper are that an appropriate policy design and policy mix are key to avoiding undesired outcomes, such as the creation of additional rebound effects and environmental trade-offs. From the discussion, economy-wide cap-and-trade systems as well as energy and carbon taxes, when designed appropriately, emerge as the most effective policies in setting a ceiling for emissions and addressing energy use across the economy.