Economy-wide rebound effects from an increase in efficiency in the use of energy: the Italian case

The International Energy Agency (IEA, 2009) suggests the importance of efficiency improvement to reduce energy use and, within the European Union, one of the targets for member states is to reduce energy consumption by 20% through increased energy efficiency (European Commission, 2009). Energy efficiency improvement has the unquestionable benefits to reduce the price of energy services. However, it is still under debate the extent to which, improvement in the productivity of energy, is effective in terms of reducing the consumption of energy and thus the associated negative externalities (e.g., carbon dioxide emissions, CO2). Thus, policy makers are particularly interested to determine the size of the energy rebound effect. In this paper, we attempt to quantify the magnitude of the general equilibrium rebound effects from an increase in energy efficiency in the industrial use of energy in Italy. To this end, we use a large-scale numerical dynamic general equilibrium model calibrated using the Italian Social Accounting Matrix for the year 2010.