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Increased Energy Efficiency and the Rebound Effect: Effects on consumption and emissions

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  • Brännlund, Runar

    () (Department of Economics, Umeå University)

  • Ghalwash, Tarek

    () (Department of Economics, Umeå University)

  • Nordström, Jonas

    () (Department of Economics, Umeå University)

Abstract

In this paper we examine how the Swedish consumers consumption basket have changed over time, and how this have affected emissions of carbon dioxide (CO2), sulphur dioxide (SO2) and nitrogen oxide (NOx). More specifically we examine how exogenous technological progress in terms of an increase in energy efficiency affects consumption and emissions. Due to the change in energy efficiency we calculate the necessary change in the CO2 tax to keep CO2 emissions at the initial level, and how this affects emissions of sulphur dioxide and nitrogen oxides. The results indicate that an increased energy efficiency of 20 percent will increase the emissions of CO2 by approximately 5 percent. To reduce the CO2 emissions to the initial level, the CO2 tax has to be raised by 130 percent. This tax increase will reduce the emissions of sulphur dioxide below the initial level, but will leave the emissions of nitrogen oxides at a higher level than the initial one. Thus, if marginal damages from sulphur dioxide and nitrogen dioxide are non-constant, additional policy instruments are needed.

Suggested Citation

  • 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.
  • Handle: RePEc:hhs:umnees:0642
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    References listed on IDEAS

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    More about this item

    Keywords

    Household consumption; energy demand; emissions; taxation.;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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