01.11.07: 'Rebound Effects' Threaten Success of UK Climate Policy
A major new report from the UK Energy Research Centre uncovers the truth behind energy efficiency and carbon reductions
The UK Energy Research Centre (UKERC) today unveils a major new report on how 'Rebound Effects' can result in energy savings falling short of expectations, thereby threatening the success of UK climate policy.
An example of a rebound effect would be the driver who replaces a car with a fuel-efficient model, only to take advantage of its cheaper running costs to drive further and more often. Or a family that insulates their loft and puts the money saved on their heating bill towards an overseas holiday.
According to the report's chief author, Steve Sorrell, Senior Fellow at UKERC, "Rebound effects have been neglected by both experts and policymakers - for example, they do not feature in the recent Stern and IPCC reports or in the Government's Energy White Paper. This is a mistake. If we do not make sufficient allowance for rebound effects, we will overestimate the contribution that energy efficiency can make to reducing carbon emissions. This is especially important given that the Climate Change Bill proposes legally binding commitments to meet carbon emissions reduction targets. We need to get the sums right."
The difficulty of developing policy to take rebound effects into account is exacerbated by disagreement over the significance of rebound effects. Some believe that they are insignificant, while others argue that energy efficiency measures lead to increased energy consumption - an outcome that has been termed 'backfire'.
The report argues that rebound effects vary widely between different technologies, sectors and income groups so that general statements about the size of such effects can be misleading.
Steve Sorrell: "Rebound effects are notoriously complex. Generally speaking we expect rebounds will be large in energy intensive sectors and smaller for households or small businesses. This is important, since energy efficiency policy usually targets these smaller users."
Rebound effects can be both direct (e.g. driving further in a fuel-efficient car) and indirect (e.g. spending the money saved on heating on an overseas holiday). The evidence is that direct rebound effects are usually fairly small - less than 30% for households for example. Much less is known about indirect effects. However the study suggests that in some cases, particularly where energy efficiency significantly decreases the cost of production of energy intensive goods, rebounds may be larger.
To avoid energy efficiency gains from undermining the benefits to climate policy, the report's authors recommend building 'headroom' into policy targets to allow for rebound effects, raising energy prices in line with energy efficiency improvements or imposing absolute caps on emissions.
Main Report (5MB)
More information (technical papers, etc)
Notes to Editors
The report from UKERC is the most thorough and in-depth review of rebound effects ever undertaken, reviewing over 500 papers and reports. It analyses the nature, operation and importance of rebound effects and provides a comprehensive review of the available evidence on this topic, together with closely related issues, such as the link between energy consumption and economic growth.
The UKERC research was led by the Sussex Energy Group (University of Sussex), with contributions from the Surrey Energy Economics Centre (University of Surrey), the Department of Economics at the University of Strathclyde, and the Centre for Energy Policy and Technology at Imperial College.
About the UK Energy Research Centre
The UK Energy Research Centre's mission is to be the UK's pre-eminent centre of research, and source of authoritative information and leadership, on sustainable energy systems. The Centre takes a whole systems approach to energy research, incorporating economics, engineering and the physical, environmental and social sciences while developing and maintaining the means to enable cohesive research in energy. UKERC is funded by the UK Research Councils.
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