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Direct and Indirect Energy Rebound Effects in German Households: A Linearized Almost Ideal Demand System Approach

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  • Schmitz, Hendrik

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Madlener, Reinhard

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

We estimate direct and indirect energy rebound effects for a wide variety of goods and services in Germany. To this end, we employ a linearized approximation of the popular Almost Ideal Demand System (LAIDS) approach suggested by Deaton and Muellbauer (1980). Excluding measures of energy efficiency when estimating rebound can lead to biased results. We alleviate this shortcoming previous research has suffered from by explicitly accounting for energy efficiency in our estimations. Using data for Germany from 1970 to 2014, we find moderate direct and significant indirect rebound effects for different energy carriers across four model specifications. Income rebound effects are counterbalanced by significant negative substitution effects, which in some cases even lead to negative overall rebound estimates.

Suggested Citation

  • Schmitz, Hendrik & Madlener, Reinhard, 2017. "Direct and Indirect Energy Rebound Effects in German Households: A Linearized Almost Ideal Demand System Approach," FCN Working Papers 10/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    • Handle: RePEc:ris:fcnwpa:2017_010
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    Cited by:

    1. Specht, Jan Martin & Madlener, Reinhard, 2018. "Business Models for Energy Suppliers Aggregating Flexible Distributed Assets and Policy Issues Raised," FCN Working Papers 7/2018, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    2. Pereira, Guillermo Ivan & Specht, Jan Martin & Silva, Patrícia Pereira & Madlener, Reinhard, 2018. "Technology, business model, and market design adaptation toward smart electricity distribution: Insights for policy making," Energy Policy, Elsevier, vol. 121(C), pages 426-440.
    3. Heesen, Florian & Madlener, Reinhard, 2021. "Revisiting heat energy consumption modeling: Household production theory applied to field experimental data," Energy Policy, Elsevier, vol. 158(C).
    4. Hendrik Schmitz and Reinhard Madlener, 2020. "Direct and Indirect Energy Rebound Effects in German Households: A Linearized Almost Ideal Demand System Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5), pages 89-118.
    5. Du, Qiang & Han, Xiao & Li, Yi & Li, Zhe & Xia, Bo & Guo, Xiqian, 2021. "The energy rebound effect of residential buildings: Evidence from urban and rural areas in China," Energy Policy, Elsevier, vol. 153(C).
    6. Cécile Hediger, 2022. "Rebound effects in residential heating: How much does an extra degree matter?," IRENE Working Papers 22-05, IRENE Institute of Economic Research.
    7. Saunders, Harry D. & Roy, Joyashree & Azevedo, Inês M.L. & Chakravarty, Debalina & Dasgupta, Shyamasree & De La Rue Du Can, Stephane & Druckman, Angela & Fouquet, Roger & Grubb, Michael & Lin, Boqiang, 2021. "Energy efficiency: what has research delivered in the last 40 years?," LSE Research Online Documents on Economics 114344, London School of Economics and Political Science, LSE Library.
    8. Jacksohn, Anke & Tovar Reaños, Miguel Angel & Pothen, Frank & Rehdanz, Katrin, 2023. "Trends in household demand and greenhouse gas footprints in Germany: Evidence from microdata of the last 20 years," Ecological Economics, Elsevier, vol. 208(C).
    9. Moz-Christofoletti, Maria Alice & Pereda, Paula Carvalho, 2021. "Distributional welfare and emission effects of energy tax policies in Brazil," Energy Economics, Elsevier, vol. 104(C).
    10. Tovar Reaños, Miguel A. & Lynch, Muireann Á., 2022. "Measuring carbon tax incidence using a fully flexible demand system. Vertical and horizontal effects using Irish data," Energy Policy, Elsevier, vol. 160(C).
    11. Wang, Lijun & Zha, Donglan & O’Mahony, Tadhg & Zhou, Dequn, 2023. "Energy efficiency lags and welfare boons: Understanding the rebound and welfare effects through China's urban households," Renewable and Sustainable Energy Reviews, Elsevier, vol. 188(C).
    12. Paula Pereda & Maria Alice Christofoletti, 2019. "Heterogeneous welfare and emission effects of energy tax policies in Brazil," Working Papers, Department of Economics 2019_32, University of São Paulo (FEA-USP).
    13. 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).
    14. Höwer, Daniel & Oberst, Christian A. & Madlener, Reinhard, 2017. "Regionalization Heuristic to Map Spatial Heterogeneity of Macroeconomic Impacts: The Case of the Green Energy Transition in NRW," FCN Working Papers 13/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised 01 Feb 2019.
    15. Baležentis, Tomas & Butkus, Mindaugas & Štreimikienė, Dalia & Shen, Zhiyang, 2021. "Exploring the limits for increasing energy efficiency in the residential sector of the European Union: Insights from the rebound effect," Energy Policy, Elsevier, vol. 149(C).
    16. Colmenares, Gloria & Löschel, Andreas & Madlener, Reinhard, 2019. "The rebound effect and its representation in energy and climate models," CAWM Discussion Papers 106, University of Münster, Münster Center for Economic Policy (MEP).

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    More about this item

    Keywords

    Rebound effects; Germany; LAIDS; Energy efficiency;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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