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The Energy Efficiency Rebound Effect in General Equilibrium

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  • Christoph Böhringer
  • Nicholas Rivers

Abstract

We develop a stylized general equilibrium model to decompose the rebound effect of energy efficiency improvements into its partial and general equilibrium components. In our theoretical analysis, we identify key drivers of the general equilibrium rebound effect, including a composition channel, an energy price channel, a labor supply channel, and a growth channel. Based on numerical simulations with both the stylized model as well as a large-scale computable general equilibrium model of the global economy, we show that both general and partial equilibrium components of the rebound effect can be substantial. Our benchmark parameterization suggests a total rebound effect due to an exogenous energy efficiency improvement in the US manufacturing sector of 67% with roughly two-thirds occurring through the partial equilibrium rebound channel and the remaining one-third occurring through the general equilibrium rebound channel.

Suggested Citation

  • Christoph Böhringer & Nicholas Rivers, 2018. "The Energy Efficiency Rebound Effect in General Equilibrium," CESifo Working Paper Series 7116, CESifo.
    • Handle: RePEc:ces:ceswps:_7116
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    4. Blackburn, Christopher J. & Moreno-Cruz, Juan, 2021. "Energy efficiency in general equilibrium with input–output linkages," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    5. Lemoine, Derek, 2020. "General equilibrium rebound from energy efficiency innovation," European Economic Review, Elsevier, vol. 125(C).
    6. Lu Zhang & Renyan Mu & Nigatu Mengesha Fentaw & Yuanfang Zhan & Feng Zhang & Jixin Zhang, 2022. "Industrial Coagglomeration, Green Innovation, and Manufacturing Carbon Emissions: Coagglomeration’s Dynamic Evolution Perspective," IJERPH, MDPI, vol. 19(21), pages 1-19, October.
    7. Brockway, Paul E. & Sorrell, Steve & Semieniuk, Gregor & Heun, Matthew Kuperus & Court, Victor, 2021. "Energy efficiency and economy-wide rebound effects: A review of the evidence and its implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    8. Olman Araya Mejías & Cristina Montalvo & Agustín García-Berrocal & María Cubillo & Daniel Gordaliza, 2021. "Energy Savings after Comprehensive Renovations of the Building: A Case Study in the United Kingdom and Italy," Energies, MDPI, vol. 14(20), pages 1-18, October.
    9. Peng, Hua-Rong & Zhang, Yue-Jun & Liu, Jing-Yue, 2023. "The energy rebound effect of digital development: Evidence from 285 cities in China," Energy, Elsevier, vol. 270(C).
    10. Maliyamu Abudureheman & Qingzhe Jiang & Xiucheng Dong & Cong Dong, 2022. "CO 2 Emissions in China: Does the Energy Rebound Matter?," Energies, MDPI, vol. 15(12), pages 1-25, June.

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    More about this item

    Keywords

    energy efficiency; climate change; rebound effect; general equilibrium;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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