New Nature comment argues that energy efficiency “rebound effect” is no excuse for inaction

(New York, NY - Jan. 23, 2013)  Buy a more fuel-efficient car and you will drive it more. The ‘rebound effect’ is real, argue Environmental Defense Fund (EDF) economist Gernot Wagner and three colleagues in this week’s Nature, but it is too small to reverse energy savings entirely.

In Monday’s inaugural address, President Obama set a clear signal that climate change will be high up on his second-term agenda. He could do worse than look to energy efficiency measures as one area of focus. That will inevitably cause detractors to point to the ‘rebound effect’ as an excuse for inaction.

But the rebound effect is never an excuse for inaction argues Wagner together with Yale University’s Kenneth Gillingham, David Rapson at University of California, Davis, and Matthew J. Kotchen, currently on leave from Yale to serve as Deputy Assistant Secretary for Environment and Energy at U.S. Treasury.

“Energy inefficiency is never a good thing,” says Wagner. “Yes, more efficient cars are cheaper to use, so we drive a bit more. But that response is indeed small, and even that small response should be considered a net positive.”

The rebound effect comes in four forms, argue the authors. If a car is more efficient, people may drive more, or they may use the savings to buy other products that consume energy. Moreover, price drops due to reduced energy demand in one place may increase use elsewhere, and more efficient technologies may spur industrial growth, again leading to energy increase. From their own studies and others, the authors conclude that the rebound effect is usually small, 10% or less, and unlikely to exceed 60%. So even in the worst of circumstances, energy efficiency measures save energy overall.

“If anything,” says Wagner, “the existence of the rebound effect may prompt us to use even stricter energy efficiency standards. If you have an overall target in mind, and the rebound effect shaves off a bit, you ought to consider using a slightly stricter target to begin with.”