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IPCC: "Rebound Effects Cannot Be Ignored"

Full Spectrum: Energy Analysis and Commentary with Jesse Jenkins

Summary

  • The IPCC says “rebound effects cannot be ignored” in crafting climate mitigation efforts
  • Rebound effects can erode roughly 20-60% of the energy savings from cost-saving energy efficiency measures in rich, developed countries, and rebounds are likely larger in emerging economies with a greater appetite for energy.
  • Properly accounting for the size of rebound effects is critical to “a more-realistic calculation” of the contribution of energy efficiency to climate mitigation.

Cost-saving energy efficiency measures can trigger a rebound in energy demand which erodes some of the climate benefits of efficiency, according to the Intergovernmental Panel on Climate Change’s Fifth Assessment Report. These “rebound effects cannot be ignored,” the IPCC concludes after surveying the available peer-reviewed scientific literature in its Working Group Three report on Mitigation of Climate Change.

“By considering the size of the rebound effect, a more-realistic calculation of energy-efficiency measures can be achieved,” the IPCC writes, noting that proper attention to these rebound effects is critical to “providing a clearer understanding of [efficiency’s] contribution to climate policy.”

Focusing on rebound effects is important, because the magnitude of rebound determines how effective cost-saving efficiency improvements are at contributing to lasting reductions in total energy use and therefore greenhouse gas emissions. 

Energy efficiency has frequently been cited as the single greatest contributor to emissions reduction and climate mitigation strategies by everyone from the International Energy Agency to consultants like the Rocky Mountain Institute and McKinsey and Company to efficiency advocates and environmental NGOs. Energy efficiency “makes the largest contribution to global emissions reduction” in the IEA’s latest roadmap to stabilize global warming, for example, while President Obama told reporters in 2009 that with efficiency, “we can save as much as 30 percent of our current energy usage.”

Yet none of these studies takes serious account of rebound effects,* which can undermine the ability of efficiency measures to deliver such significant energy use and CO2 reductions. 

Rebound effects are triggered when energy efficiency improvements lower the cost of energy services, such as lighting, transportation, heating or cooling, or industrial processes.

“Direct rebounds appear when, for example, an energy-efficient car has lower-operating costs encouraging the owner to driver further,” the IPCC explains.

At the same time, “indirect rebounds … appear when increased real income is made avialable by saving energy costs that are then used to invest or purchase other goods and services that emit GHG emissions.”

At the economy-wide level, “market price effects, economic growth effects, and adjustments in capital stocks that result in further increases in long-run demand response for energy” are all examples of macroeconomic rebound effects. 

According to the IPCC’s review of the academic literature, the magnitude of rebound effects varies from context to context, but they can be significant.

In developed economies, “the majority of studies” show rebound effects for end-use energy services like heating, cooling, and lighting, “in the region of 20-45% … meaning that efficiency measures achieve 65-80% of their original purposes.” For transportation, the IPCC notes that “there are some studies that support higher rebounds,” with one study finding rebounds in transportation eroded more than half of the original energy savings. 

In general, then, rebound effects in rich, developed countries could erode 20-60% of the original energy savings.

There is also “evidence to support the claim that rebound effects can be higher in developing countries,” the IPCC reports.

As the IPCC explains, “rebound effects in the residential sector in India and other developing countires can be expected to be larger than in developed economies because high-quality energy use is still small in households in India and demand is very elastic.” Given that developing economies will account for the vast majority of global energy demand growth over the coming decades, the IPCC recommends further research “on the precise scale of rebound effects in developing countries.”

In some contexts, there is even “some evidence” that “rebound effects [can] exceed initial savings,” leading to a so-called “backfire.”

Clearly climate mitigation strategies that lean heavily on energy efficiency measures cannot ignore rebound effects any longer.  

The IPCC notes that rebound effects “do not make energy-efficiency measures completely redundant.” Indeed, as I have written previously, “rebound effects, particularly in emerging economies, mean consumers and firms are using energy efficiency to enhance their economic welfare, getting more energy services out of the same or less overall energy use. That’s a fundamentally good thing.”

That said, accurately estimating how much rebound effects erode lasting energy savings is essential to depict the contribution of efficiency to long-term climate and energy strategies.

The focus on rebound effects in the latest IPCC report stands in contrast to the 2007 Fourth Assessment Report, which gave just two brief mentions to these important phenonoma.

The latest IPCC report reflects the increasingly robust academic literature on the subject of rebound effects, which has grown remarkably since a 2007 study published by the UK Energy Research Centre helped spark renewed interest in the subject. (Note: I was the lead author on a February 2011 review of the literature on rebound effects which helped spark further interest on the topic in the United States.)

Further reading:

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* After a brief discussion in an endnote, McKinsey, for instance, completely disregards rebound effects. In Reinventing Fire, RMI dismisses the possibility of significant economywide rebound. The IEA’s 2012 World Energy Outlook assumes that rebound effects erode only 9 percent of energy savings, in contrast to the much larger range of rebound effects supported by the academic literature (and summarized by the IPCC’s Working Group III). I do not have access to the full 2014 update to the IEA’s climate strategy, but the executive summary does not mention rebound effects at all, despite relying on efficiency for “the largest contribution to global emissions reductions.”

Content Discussion

Joris van Dorp's picture
Joris van Dorp on May 21, 2014

A good article on an important topic. Thanks mr. Jenkins.

One can speculate on why energy efficiency has arguably received more attention and praise than it deserves as a global warming policy measure. Some question I like to ask, for that matter, are:

– If renewable energies like solar and wind are ‘free’ and ‘incredibly abundant’ as is often claimed by supporters of those energies, then what specific need is there of increasingly strenuous and costly efforts at increasing energy efficiency beyond what is economically viable?

– To what degree are shrill claims of the ‘huge’ co2 emission reduction effect of “Negawatts” and energy efficiency drowning out discussion about the need to rehabilitate nuclear energy in order to reduce and ultimately stop the still ongoing and disastrous global expansion of coal and gas burning?

For what it’s worth, I have often been told by people that nuclear power and CCS are unnecessary because “Efficiency is the cheapest and quickest way to reduce CO2 emissions”. Probably, but does it really make nuclear and CCS irrelevant? I think not.

John Miller's picture
John Miller on May 21, 2014

Jesse, the ‘rebound effect’ is unfortunately tied to the normal behavior of mankind.  Why do Developed Nations have greater energy consumption then Developing Countries (per capita)?  It normally is proportional to living standards.  As Nations raise their living standards, so do they raise their use of energy and consumption of goods & services that require increased consumption of energy.  For example (as you briefly referenced) compare the living standards and energy consumption of the upper/elite classes within China and India compared to their average Citizens.  You might find Developing Country upper class individuals have carbon footprints very similar to Developed Countries.

To truly mitigate the rebound effect possibly involves eventually implementing some form of ‘rationing’ energy supplies.  In Developed EU Countries they have implemented VAT and other energy related taxes for many years, which are major influencing factors to why EU energy costs are at least double the U.S. and why EU per capita energy consumption is significantly less.  The rebound effect should give some level of support to carbon tax advocates, but even this strategy has its performance risks; both economic health and political.

Keith Pickering's picture
Keith Pickering on May 21, 2014

A formal proof of the Jevons Effect, or rebound effect, in the thermodynamic frame can be found here:

Garrett, T.J. (2011). Are there basic physical constraints on future anthropogenic emissions of carbon dioxide? Climatic change 104(3-4), 437-455.

 

 

donough shanahan's picture
donough shanahan on May 22, 2014

Jesse

The probelm with efficiency is that its partner in crime is useage. Just because a gas guzzler is efficient does not mean that it is any good. I feel that the usage term gets overwhelmed. 

Joris van Dorp's picture
Joris van Dorp on May 23, 2014

To truly mitigate the rebound effect possibly involves eventually implementing some form of ‘rationing’ energy supplies.  In Developed EU Countries they have implemented VAT and other energy related taxes […]”

I presume you realise that VAT and other energy taxes are in no way similar to ‘rationing’ because only the poor are affected by such taxes. The middle-class and the rich are hardly affected. They heat their entire houses and have ample lighting in all their rooms. They still use incandescant light bulbs in many cases, due to the superior light quality of such bulbs.

The poor, not so much. Their houses are often colder and their lighting-use is less. They have smaller cars and use public transport more often. Moreover, they are increasingly unable to pay for their energy, as hundreds of thousands of families in Germany attest who get cut-off from access to the grid every year.

To truly obtain something similar to actual energy rationing, the energy taxes would have to be made income/net worth dependant. Unlikely to happen any time soon.

Energy taxes are usefull when they help stimulate reasonable efficiency measures. But when they are so high that they force people to do without energy services, then we are heading in a wrong direction as a society. Then we are causing damage to quality of life (of the poor), which is indefensible in my opinion. There is no excuse for not ensuring reliable, abundant, clean and affordable energy. If we fail to provide such energy for any reason, than the reason has to be found immediately and corrected immediately with extreme prejudice. I think we all need to be very aware of this development. We cannot let uninformed ideologues and anti-human Malthusians ruin our lives one step at a time, even while they are always hard at work to do just that through their narrow and unfounded perspective on technology and sustainability, IMHO.

Lewis Perelman's picture
Lewis Perelman on May 28, 2014

[deleted]

Lewis Perelman's picture
Lewis Perelman on May 28, 2014

I wouldn’t say Garrett’s article constitutes a proof, but it is a provocative argument that economic growth globally requires a constant increase in energy input.

Garrett’s article can be found here: 

http://link.springer.com/article/10.1007%2Fs10584-009-9717-9

 

Note that Garrett felt that two critical articles published in the issue were unfair:

http://www.inscc.utah.edu/~tgarrett/Economics/Criticisms.html

Lewis Perelman's picture
Lewis Perelman on May 28, 2014

I made a similar argument in my book, Energy Innovation. However, I suggested that a better metaphor than “rebound” may be “water balloon”: Like the latter, constriction in one place leads to expansion somewhere else. Along the line Garrett suggested, at least partly, there is a tendency to conserve gross energy consumption in relation to economic growth. That may not be inconsistent with evidence that economic energy efficiency — in terms of BTUs per dollar of GDP — has improved in a number of industrial economies. So greater efficiency seems to lead to relatively greater gains in the economic standard of living. But it doesn’t seem to dampen the appetite for overall energy consumption.

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