UCD economist: ‘Rebound effect’ won’t erase energy benefits

The argument that those who have fuel-efficient cars drive them more and hence use more energy is overplayed and inaccurate, a UC Davis economist and his co-authors say in a comment article published Wednesday in the journal Nature.

Critics of energy efficiency programs in public policy debates have cited the “rebound effect” as a reason that hybrid cars and plug-in electric vehicles, for example, don’t really save energy in the long run.

The “backfire” concept, a more extreme version of “rebound,” actually stems from a 19th century analysis in a book titled “The Coal Question,” by Stanley Jevons. The book hypothesized that energy use rises as industry becomes more efficient because people produce and consume more goods, according to the Nature article. But the article’s co-authors found that in the modern economy, the effect is not supported empirically.

“If a technology is cheaper to run, people may use it more. If they don’t, they can use their savings to buy other things that required energy to make. But evidence points to these effects being small — too small to erase energy savings from energy-efficiency standards, for example,” said David S. Rapson, assistant professor of economics at UCD.

Rebound effects are therefore “no excuse for inaction,” the article states.

Energy-efficiency standards once again will be a topic of debate — and a potential target for attack — with the renewed focus on climate change and the possibility of federal regulatory action, Rapson explained: “From an economic perspective, a carbon tax or well-functioning cap-and-trade market is still optimal. But if the political reality doesn’t allow these, efficiency standards should be evaluated based on the balance of costs and benefits. Rebounds are an important consideration, but are often overblown and misunderstood.

“Even though increased efficiency may prompt changes in behavior, energy is still saved overall,” Rapson said. “Energy efficiency policies should therefore continue to be considered as a way to address greenhouse gas emissions.”

Rapson co-authored the article, “The Rebound Effect Is Overplayed,” with Kenneth Gillingham and Matthew J. Kotchen of the Yale University School of Forestry and Environmental Studies and Gernot Wagner of the Environmental Defense Fund in New York.

— UC Davis News Service