What do we know about the size of the rebound effect? Should we believe claims that energy efficiency improvements lead to an increase in energy use? This paper clarifies what the rebound effect is, and provides a guide for economists and policymakers interested in its magnitude. We describe how some papers in the literature consider the rebound effect from a costless exogenous increase in energy efficiency, while others examine the effects of a particular energy efficiency policy—a distinction that leads to very different welfare and policy implications. We present the most reliable evidence available quantifying the energy efficiency rebound, and discuss areas where estimation is extraordinarily difficult. Along these lines, we offer a new way of thinking about the macroeconomic rebound effect. Overall, the existing research provides little support for the so-called “backfire” hypothesis. Still, much remains to be understood, particularly relating to induced innovation and productivity growth.
The Rebound Effect and Energy Efficiency Policy
Working Paper by Kenneth Gillingham, David Rapson, and Gernot Wagner — Nov. 18, 2014Download
Common Resources — Nov 19, 2014
Reconsidering the Rebound Effect
The rebound effect from improving energy efficiency has been widely discussed—from the pages of the New York Times and New Yorker to the halls of p...
Explainer — Jun 17, 2020
Energy Efficiency 101
The basics of improving energy efficiency, from how it can reduce energy use and mitigate climate change to the policies in place to encourage people to invest in energy-efficient products.
Resources Articles — Jun 15, 2020
A Half Century of Economics at EPA
As the field of economics has developed, so too has EPA’s use of economic research in designing environmental policies in the United States.