IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v36y2015i1p1-22.html
   My bibliography  Save this article

A Microeconomic Framework for Evaluating Energy Efficiency Rebound and Some Implications

Author

Listed:
  • Severin Borenstein

Abstract

Improving energy efficiency can lower the cost of using energy-intensive goods and may create wealth from the energy savings, both of which lead to increased energy use, a “rebound†effect. I present a theoretical framework that parses rebound into economic income and substitution effects. The framework leads to new insights about the magnitude of rebound when goods are not priced at marginal cost and when consumers are imperfect optimizers, as well as the role of technological progress in rebound. I then explore the implications of this framework with illustrative calculations for improved auto fuel economy and lighting efficiency. These suggest that rebound is unlikely to more than offset the savings from energy efficiency investments (known as “backfire†), but rebound likely reduces the net savings by roughly 10% to 40% from these energy efficiency improvements.

Suggested Citation

  • Severin Borenstein, 2015. "A Microeconomic Framework for Evaluating Energy Efficiency Rebound and Some Implications," The Energy Journal, , vol. 36(1), pages 1-22, January.
    • Handle: RePEc:sae:enejou:v:36:y:2015:i:1:p:1-22
    DOI: 10.5547/01956574.36.1.1
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.36.1.1
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.36.1.1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Graff Zivin, Joshua S. & Kotchen, Matthew J. & Mansur, Erin T., 2014. "Spatial and temporal heterogeneity of marginal emissions: Implications for electric cars and other electricity-shifting policies," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 248-268.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Huntington, Hillard G., 2024. "US gasoline response to vehicle fuel efficiency: A contribution to the direct rebound effect," Energy Economics, Elsevier, vol. 136(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sheldon, Tamara L. & Dua, Rubal, 2018. "Gasoline savings from clean vehicle adoption," Energy Policy, Elsevier, vol. 120(C), pages 418-424.
    2. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    3. Audoly, Richard & Vogt-Schilb, Adrien & Guivarch, Céline & Pfeiffer, Alexander, 2018. "Pathways toward zero-carbon electricity required for climate stabilization," Applied Energy, Elsevier, vol. 225(C), pages 884-901.
    4. Erik P. Johnson & Juan Moreno-Cruz, 2020. "Congestion in the Electricity Transmission System Redistributes Pollution across Long Distances," CESifo Working Paper Series 8483, CESifo.
    5. Graff Zivin, Joshua S. & Kotchen, Matthew J. & Mansur, Erin T., 2014. "Spatial and temporal heterogeneity of marginal emissions: Implications for electric cars and other electricity-shifting policies," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 248-268.
    6. Lang, Corey & Okwelum, Edson, 2015. "The mitigating effect of strategic behavior on the net benefits of a direct load control program," Energy Economics, Elsevier, vol. 49(C), pages 141-148.
    7. Kim, Hyunjung & Kim, Dae-Wook & Kim, Man-Keun, 2022. "Economics of charging infrastructure for electric vehicles in Korea," Energy Policy, Elsevier, vol. 164(C).
    8. Stephen P. Holland & Erin T. Mansur & Nicholas Z. Muller & Andrew J. Yates, 2016. "Are There Environmental Benefits from Driving Electric Vehicles? The Importance of Local Factors," American Economic Review, American Economic Association, vol. 106(12), pages 3700-3729, December.
    9. Steven M. Smith, 2019. "The Relative Economic Merits of Alternative Water Rights," Working Papers 2019-08, Colorado School of Mines, Division of Economics and Business.
    10. Holladay, J. Scott & Price, Michael K. & Wanamaker, Marianne, 2015. "The perverse impact of calling for energy conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 1-18.
    11. Maxwell Woody & Michael T. Craig & Parth T. Vaishnav & Geoffrey M. Lewis & Gregory A. Keoleian, 2022. "Optimizing future cost and emissions of electric delivery vehicles," Journal of Industrial Ecology, Yale University, vol. 26(3), pages 1108-1122, June.
    12. Manjunath, Archana & Gross, George, 2017. "Towards a meaningful metric for the quantification of GHG emissions of electric vehicles (EVs)," Energy Policy, Elsevier, vol. 102(C), pages 423-429.
    13. Powell, Siobhan & Martin, Sonia & Rajagopal, Ram & Azevedo, Inês M.L. & de Chalendar, Jacques, 2024. "Future-proof rates for controlled electric vehicle charging: Comparing multi-year impacts of different emission factor signals," Energy Policy, Elsevier, vol. 190(C).
    14. Kenneth Gillingham & Marten Ovaere & Stephanie Weber, 2021. "Carbon Policy and the Emissions Implications of Electric Vehicles," CESifo Working Paper Series 8974, CESifo.
    15. Stephen P. Holland & Erin T. Mansur & Nicholas Z. Muller & Andrew J. Yates, 2015. "Environmental Benefits from Driving Electric Vehicles?," NBER Working Papers 21291, National Bureau of Economic Research, Inc.
    16. Leslie A. Martin, 2022. "Driving on Sunbeams: Interactions Between Price Incentives for Electric Vehicles, Residential Solar Photovoltaics and Household Battery Systems," Economic Papers, The Economic Society of Australia, vol. 41(4), pages 369-384, December.
    17. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    18. Gerarden, Todd D. & Newell, Richard G. & Stavins, Robert N. & Stowe, Robert C., 2015. "An Assessment of the Energy-Efficiency Gap and Its Implications for Climate Change Policy," Climate Change and Sustainable Development 202116, Fondazione Eni Enrico Mattei (FEEM).
    19. Hoehne, Christopher G. & Chester, Mikhail V., 2016. "Optimizing plug-in electric vehicle and vehicle-to-grid charge scheduling to minimize carbon emissions," Energy, Elsevier, vol. 115(P1), pages 646-657.
    20. Carson, Richard T. & Novan, Kevin, 2013. "The private and social economics of bulk electricity storage," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 404-423.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:36:y:2015:i:1:p:1-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.