Our fact-checking revealed that empirical estimates of energy rebound cited by the Breakthrough Institute are over-estimated or wrong, and they contradict the technological reality of energy efficiency gains observed in many industrial sectors. For journalists, the Rebound Effect is a trap—it is a man-bites-dog story that never happened.
Energy efficiency policies work, a new study finds, especially when they are broad and deep and sustained, as in the case of California.
Summary
Energy efficiency is an over-rated policy tool when it comes to cutting energy use and CO2 emissions—that’s the basic message promoted by the US think tank the Breakthrough Institute (BTI), and amplified in major news outlets like the New Yorker and the New York Times. Their logic is that every action to conserve energy through efficient use leads to an opposite reaction to consume more energy—a “rebound” mechanism, which, according to the BTI, can negate as much as 60-100% of saved energy, and in some cases can backfire to increase net energy consumption.
In this research note we refute this policy message and show that the BTI, as well as its champions in the media, have overplayed their hand, supporting their case with anecdotes and analysis that don’t measure up against theory and data….
We provide new statistical evidence to show that energy efficiency policies and programs can reliably cut energy use—a finding that is consistent with the policy stance of leading experts and organizations like the US Energy Information Agency (EIA) and the World Bank. Additionally, we take our policy message one step further—by using new insights from the emerging multi-disciplinary literature on “energy efficiency gap,” we recommend that the world needs more energy efficiency policies and programs to cut greenhouse gases—not less as implied by the BTI and its cohorts in the media.
Is energy efficiency a curse in disguise? This policy instrument, long held in high esteem and considered to be the single most pragmatic choice currently available for cutting energy use and CO2 emissions, has recently come under question.
The past year has been particularly hard on energy efficiency, handing it a major thrashing in the press. Much of the literature behind these news reports flow from a young US think tank called The Breakthrough Institute (BTI). The BTI has applied the concept of a “Rebound Effect” to characterize energy efficiency policies as a medicine whose side-effects outweigh the benefits. Energy efficiency, they say, is self-defeating because it creates incentives for more energy use.
Propagated last year in a number of reports, the Rebound Effect has become another policy dispute on the climate turf. It calls into question the calculations of reputable organizations like the International Energy Agency (IEA), McKinsey & Company, British Petroleum, and PricewaterhouseCoopers (PwC) who estimate that energy efficiency alone can cut greenhouse gases by 25-40%.
The Rebound Effect deserves to be taken seriously, not just because there is an undeniable trend in global energy use to show that humanity has never successfully decreased energy use, but also because the idea is extremely powerful for those seeking reasons to disregard efficiency – whether in support of an alternate climate initiatives or in opposition to climate change in general. If the Rebound Effect can take back as much as 60-100% of energy savings, as implied by the narrative sketched by the BTI, there is no way that the world can achieve the projected reductions in GHG emissions from energy efficient approaches. In essence, the Rebound Effect has the power to derail climate policy as a whole, simply by calling into question energy efficiency.
Recognizing this seriousness, we began a detailed investigation of the economics and the science behind the Rebound Effect. We examined the sources of energy Rebound resurgence, finding that the current polemic against energy efficiency is largely fuelled by a study that is neither published nor peer-reviewed. We review the literature on energy Rebound at household and production-sector levels and identify weaknesses in both the source data and the methodology employed by Rebound’s proponents. We not only disprove the claims of Reboundistas but through our original statistical analysis we reaffirm that energy efficiency policies indeed reduce per capita energy use.
