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Is the rebound effect useless? A case study on the technological progress of the power industry

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  • Jia, Zhijie
  • Lin, Boqiang

Abstract

The paper innovatively divides technological progress's actual emission mitigation effect into technical emission mitigation effect, rebound effect, and substitution effect. Then, taking the power sector as an example, the paper applies a dynamic recursive multi-sector computable general equilibrium model to simulate technological progress and explore its effects. The results indicate that the level of the rebound effect somehow is the trade-off between emission reduction and economic growth and social welfare. Price regulation in the power sector can significantly reduce the rebound effect, economic growth, and social welfare. We find that technological progress could affect economic indicators through commodity and factor markets in mechanism analysis. If the commodity market is distorted/regulated, the factor market will be the only market that directly reacts to the progress. We cannot hold that technological progress has been offset because of the rebound effect. To some extent, the benefits of technological progress may not just be emissions mitigation. Based on our conclusion, several specific implications are proposed.

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  • Jia, Zhijie & Lin, Boqiang, 2022. "Is the rebound effect useless? A case study on the technological progress of the power industry," Energy, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:energy:v:248:y:2022:i:c:s036054422200473x
    DOI: 10.1016/j.energy.2022.123570
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    More about this item

    Keywords

    Electric technical progress; Rebound effect; Substitution effect; Computable general equilibrium (CGE) model; Power generation industry;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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