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Efficiency in Domestic Space Heating: An Estimation of the Direct Rebound Effect for Domestic Heating in the U.S

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  • Benjamin Volland

Abstract

Improvements in energy efficiency are increasingly seen as a key strategy to reduce energy consumption in the domestic sector. Yet, concerns are mounting that households rebound, meaning that they adapt to efficiency gains by increasing their demand, as efficiency improvements reduce relative costs of energy. This study investigates the elasticity of household energy consumption for space heating with respect to changes in household heating efficiency. We account for the simultaneity of energy efficiency and energy consumption by applying an instrumental variable approach. Using data from the 2009 Residential Energy Consumption Survey, we document that while there is substantial ‘takeback’ among US households, rebound rates are far too small to dominate energy savings from these improvements. Estimates of the direct rebound effect in domestic heating are about 30%. Moreover, we find no evidence for a substantial indirect rebound at the household level. However, we document that the degree of ‘takeback’ increases in energy prices, suggesting that price-based and efficiency-based policy instruments may counteract each other.

Suggested Citation

  • Benjamin Volland, 2016. "Efficiency in Domestic Space Heating: An Estimation of the Direct Rebound Effect for Domestic Heating in the U.S," IRENE Working Papers 16-01, IRENE Institute of Economic Research.
  • Handle: RePEc:irn:wpaper:16-01
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    Cited by:

    1. repec:eee:ecolec:v:149:y:2018:i:c:p:21-39 is not listed on IDEAS
    2. Hediger, Cécile & Farsi, Mehdi & Weber, Sylvain, 2018. "Turn It Up and Open the Window: On the Rebound Effects in Residential Heating," Ecological Economics, Elsevier, vol. 149(C), pages 21-39.

    More about this item

    Keywords

    Energy efficiency; rebound effect; space heating.;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand

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