Identifying the limits of the rebound effect

Tina Fawcett. University of Oxford

Delivering energy demand reduction through energy efficiency is probably the single most important strategy in moving to a lower carbon future. However, the efficacy of energy efficiency measures and policies is often challenged with reference to the ‘rebound effect’, which is variously defined, but whose central claim is that energy efficiency will inevitably lead to lower energy and carbon savings than predicted.

The paper will examine the ways that the rebound effect is considered in recent academic literature, incorporated in policy design and used in rhetorical arguments about energy efficiency. It will also draw together empirical evidence about the scale of the rebound effect. It aims to test the hypothesis that the rebound effect is limited in most situations, and that its significance is often over-stated.

The literature on the rebound effect is beset with inconsistent definitions. The classic definition emerges from economics – but even within the economics literature different definitions are used. Further, there has been a blurring of different concepts, including overlaps with building studies design-performance gap literature and with the idea of moral licensing, from psychology. This leads to confusion about what exactly is under discussion, how and whether rebound (direct and indirect) can be empirically measured, how significant it is in general and in particular cases, and what it means for the design of energy efficiency policy. The different types of definition currently in operation are described and categorised, and the effect of these on research design and findings discussed.

Contrary to what is sometimes claimed, policy designers, implementers and evaluators can take account of the rebound effect. For example, the potential for rebound, or comfort taking, as a result of efficiency improvements has been increasingly recognised in the UK energy supplier obligation scheme. This is described, along with examples of other policy designs including or excluding the rebound effect. This evidence is used to reflect on how and whether policy processes can or should take account of the rebound effect.

Rhetorical claims about rebound are identified and examined – particularly the common claim that saving money on household energy use could prompt people into taking a long-haul flight, thus undermining the case for energy efficiency. Using the same logic, the author’s investment in (expensive) solid wall insulation is shown to have saved tens of times more carbon through reducing the money available for transatlantic flights, than through energy savings in the home. This, and other examples, illustrate the importance of choice of counterfactuals, and the misleading nature of many rhetorical arguments about the rebound effect.

Bringing together this variety of evidence and analysis, the discussion section considers why the rebound effect seems to have more influence and attract more attention than the evidence would support. It looks at the boundaries of analysis, priorities in policy making & evaluation and theories of decision-making and how these have influenced research. The paper concludes that when the rebound effect is considered in policy or research, it should be carefully defined, and not confused with other causes of under-performance of energy efficiency measures or policies, which require quite a different response. Misleading arguments around the rebound effect have been used to wrongly critique energy efficiency and the paper dissects these. The focus on improving energy efficiency measures and policies needs to be on the real challenges, and where the rebound effect is not significant, this should be more clearly recognised.