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Energy efficiency and rebound effects in German industry – evidence from macroeconometric modeling

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  • Christian Lutz
  • Maximilian Banning
  • Lara Ahmann
  • Markus Flaute

Abstract

Increases in energy efficiency are reduced by the rebound effect. Efficiency gains on the micro level do not lead to proportionate reductions of energy consumption on the macro level. The German energy-economy model PANTA RHEI is applied to better understand the rebound effect. To get more robust estimates micro data from a cost structure survey of the German manufacturing sector was used to derive price elasticities of energy demand. The mesoeconomic rebound effect of an autonomous increase in energy efficiency at the industry level in manufacturing is between 7% in 2021 and 12% in 2030. The macroeconomic rebound effect lies between 12% in 2021 and 18% in 2030. Inclusion of necessary investment and assumptions of higher elasticities of substitution increase the effects. Rebound effects limit the scope of technology-driven efficiency improvements and must be considered in the design of ambitious energy efficiency programs and climate policies.

Suggested Citation

  • Christian Lutz & Maximilian Banning & Lara Ahmann & Markus Flaute, 2022. "Energy efficiency and rebound effects in German industry – evidence from macroeconometric modeling," Economic Systems Research, Taylor & Francis Journals, vol. 34(3), pages 253-272, July.
    • Handle: RePEc:taf:ecsysr:v:34:y:2022:i:3:p:253-272
    DOI: 10.1080/09535314.2021.1937953
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