A dynamic analysis of industrial energy efficiency and the rebound effect: implications for carbon emissions and sustainability

Abstract

Energy efficiency improvement (EEI) is generally known to be a cost-effective measure for meeting energy, climate, and sustainable growth targets. Unfortunately, behavioral responses to such improvements (called energy rebound effects) may reduce the expected savings in energy and emissions from EEI. Hence, the size of this effect should be considered to help design efficient energy and climate targets. Currently, there are significant differences in approaches for measuring the rebound effect. Here, we used a two-step procedure to measure both short- and long-term energy rebound effects in the Swedish manufacturing industry. In the first step, we used data envelopment analysis (DEA) to measure energy efficiency. In the second step, we use the efficiency scores and estimated a derived energy demand equation including rebound effects using a dynamic panel regression model. This approach was applied to a firm-level panel dataset covering 14 sectors in Swedish manufacturing over the period 1997–2008. We showed that, in the short run, partial and statistically significant rebound effects exist within all manufacturing sectors, meaning that the rebound effect decreased the energy and emission savings expected from EEI. The long-term rebound effect was in general smaller than the short-term effect, implying that within each sector, energy and emission savings due to EEI are larger in the long run compared to the short run. Using our estimates of energy efficiency and rebound effect, we further performed a post-estimation analysis to provide a guide to policy makers by identifying sectors where EEI have the most potential to promote sustainable economic growth with the lowest environmental impact.

Assessing the Impact of Digitalization, Tax Revenues, and Energy Resource Capacity on Environmental Quality: Fresh Evidence from CS-ARDL in the EKC Framework

“…Conversely, Saunders [58], whose research focuses on the United States, introduced the concept of the "rebound effect", suggesting that improvements in energy efficiency may paradoxically lead to an increase in overall energy consumption. Amjadi et al [6], who study countries in the Middle East, provide further support for this effect, adding a layer of complexity to the energy efficiency debate. In addition, Khan et al [59], using data from Morocco, highlight the role of governance mechanisms in influencing the relationship between energy efficiency and carbon emissions.…”

“…These include not only direct effects related to energy consumption in the production of information and communication technology (ICT) but also indirect effects resulting from the widespread use of ICT. Specifically, increased energy efficiency may inadvertently lead to higher overall energy consumption due to rebound effects [6][7][8][9]. As digital technologies increasingly permeate different sectors, their impact on environmental sustainability, particularly in the context of SDG 9 (Industry, Innovation and Infrastructure), becomes more pronounced.…”

The “energy rebound effect” within the framework of environmental sustainability

“…Sectors like energy production, transportation, or those with high production elasticity can trigger substantial rebound effects (Yu et al, 2015). Amjadi et al (2022) characterize the "production-side energy rebound effect" as the adjustments in a producer's energy utilization behavior resulting from the enhanced efficiency of energy use. In their study, they calculated the short-and long-term energy rebound effects across a span of 11 years (1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008) for each of the 14 sectors within the Swedish manufacturing industry.…”

Shaping India's climate future: A perspective on harnessing carbon credits from agriculture

“…5 The intentional or unintentional use of climate-related concerns to maintain the division between the countries of the Global North and Global South (Agarwal and Narain, 2019). 6 Emission reductions in a developed nation, state or industry may lead to increased emissions in a developing nation like India (Amjadi et al, 2022;York et al, 2022). 7 About 70% carbon rich biomass-based soil conditioner added to compost is favourable for soil carbon sequestration and nutrient replenishment (Antonangelo et al, 2021;Elkhlifi et al, 2023;Nair and Mukherjee, 2022).…”

“… 6 Emission reductions in a developed nation, state or industry may lead to increased emissions in a developing nation like India (Amjadi et al, 2022; York et al, 2022). …”