Can a combination of energy efficiency initiatives give us “good” rebound effects?

Our research and analysis undertaken with partners around energy efficiency highlights how the anticipated gains in terms of emissions reductions and economic savings through initiatives such as retrofitting insulation or promoting renewable energy sources can be lost or eroded as a result of behaviour change or other systemic responses.

What is the rebound effect?

This is known as the rebound effect. So for example, if energy to heat homes becomes cheaper this could lead to people consuming more rather than less of it. Understanding rebound effects and the behaviours and interactions that drive them will be critical to designing and implementing the right mix of energy efficiency policies. Yet it is not simple, and as discussed by a number of our researchers in an earlier blog, accurately predicting and calculating the impacts of rebound effects is hard to do. Particularly when they bring opportunities as well as challenges, and multiple trade-offs that need to be considered. For example, as a result of effective energy savings initiatives households may well choose to spend savings made on their energy bills on other goods and services, which in turn can help the economy grow, but which could also lead to increased energy use to produce those goods or services.

Lessons on energy efficiency and the rebound effect from Spain

Recent research exploring the potential for ‘good’ rebound effects from energy efficiency initiatives in Spain suggests that a combination of policy interventions aimed at improving efficiency in household electricity and petroleum use, combined with a more competitive supply of energy from renewable sources, may be the only way to get reductions in all energy use, and benefit the economy. Through such a blend of policy action, economic modelling demonstrates that targets around renewable energy use in the overall economy are met and the use of non-renewables is markedly reduced. However, it also shows that without additional action to affect the reliance on conventional vehicles and fuel, and with energy efficiency initiatives positively impacting on household incomes, petrol consumption increases.

There are no simple answers. However, and importantly, while contributing to ongoing energy efficiency debates, this research and analysis also underscores the need for understanding around the measurement and impacts of rebound effects to be further strengthened in relation to all areas of climate action if we are to ensure sustainable, prosperous and more equitable transitions to net zero.