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Enhancing understanding of rebound effect: A novel varying coefficient model for China's industrial sector

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  • Xu, Mengmeng
  • Chen, Can
  • Zhou, Xiaoshi

Abstract

Enhancing energy efficiency in the industrial sector is crucial for achieving sustainable energy development in China. However, the energy rebound effect often offsets expected energy savings. Given the dynamic and complex nature of the energy rebound effect, its prompt and accurate measurement within the industrial sector is critical. This study introduces a varying coefficient production function that relaxes the traditional assumption of fixed input-output elasticities, offering a more precise evaluation of the energy rebound effect in China's industrial sector. The results highlight three key findings: (1) the elasticity of labor, capital, and energy demonstrates substantial temporal variation; (2) the energy rebound effect, calculated using the varying coefficient production function, is 61.82 %, exceeding the 50.49 % estimated by the traditional Cobb-Douglas production function with fixed coefficients; (3) the energy rebound effect exhibits significant disparities across different periods and regions. Based on these findings, this study offers targeted policy recommendations aimed at fostering green and sustainable development within China's industrial sector.

Suggested Citation

  • Xu, Mengmeng & Chen, Can & Zhou, Xiaoshi, 2024. "Enhancing understanding of rebound effect: A novel varying coefficient model for China's industrial sector," Energy, Elsevier, vol. 313(C).
    • Handle: RePEc:eee:energy:v:313:y:2024:i:c:s0360544224039306
    DOI: 10.1016/j.energy.2024.134152
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