General Equilibrium Rebound from Energy Efficiency Innovation

Lemoine, Derek

doi:10.3386/w25172

Cited by 11 publications

(19 citation statements)

References 23 publications

(40 reference statements)

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“…Our paper contributes to four areas of the literature. First, we add to work on energy rebound which covers both micro- (Binswanger, 2001;Borenstein, 2015) and macroeconomic approaches (Khazzoom, 1980;Brookes, 1990;Saunders, 1992;Wei, 2007;Lemoine, 2015). 3 An important shortcoming of these studies is that energy efficiency improvements are viewed as being exogenous, i.e.…”

Section: October 2018mentioning

confidence: 99%

“…Microeconomic approaches to studying energy rebound have been used to examine the substitution possibilities between consumption goods(Binswanger, 2001;Borenstein, 2015) while macroeconomic approaches have been used to investigate the energy consumption elasticity of energy efficiency in various functional forms(Khazzoom, 1980;Brookes, 1990;Saunders, 1992;Wei, 2007;Lemoine, 2015). These approaches have informed calculations of productspecific energy rebound with reduced-form analyses using estimated price elasticities of energy demand (see the review byGreening, Greene, and Difiglio, 2000;Gillingham, Rapson, and Wagner, 2016) as well as economy-wide rebound calculations with large-scale simulation models (see the review byMichaels, 2012).…”

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confidence: 99%

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Withdrawal

Schwerin

2022

Int Economic Review

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Withdrawal: Does Higher Energy Efficiency Lower Economy‐Wide Energy Use? Sebastian Rausch and Hagen Schwerin. The above article from the International Economic Review, published online on 20 January 2019 in Wiley Online Library (wileyonlinelibrary.com) as an Accepted Article (https://onlinelibrary.wiley.com/doi/abs/10.1111/iere.12388), has been withdrawn by agreement between the journal's Co‐Editor Masaki Aoyagi, and Wiley Periodicals, LLC. The withdrawal has been agreed following a recommendation by the authors’ institution, ETH Zurich, due to an unresolved authorship dispute.

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Section: October 2018mentioning

confidence: 99%

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confidence: 99%

Withdrawal

Schwerin

2022

Int Economic Review

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“…These effects can also be apportioned to substitution and income or output effects for consumer energy efficiency improvements or for innovations in industry, respectively. General equilibrium and macroeconomic effects include the effect of reduced energy prices due to the fall in energy demand assuming rebound is less than 100% (Borenstein, 2015;Gillingham et al, 2016); the effect of changes in the prices of other goods and inputs, such as wages (Lemoine, 2020); and the effects of increased total factor productivity, which increases capital accumulation and economic growth and, as a result, energy use (Saunders, 1992). Different authors classify these effects differently but everything except partial equilibrium direct rebound can usefully be thought of as indirect rebound.…”

Section: Theorymentioning

confidence: 99%

“…Theory shows that partial equilibrium (where all prices are constant) rebound is higher the higher is the elasticity of substitution between energy and other inputs (Saunders, 2008;Lemoine, 2020). General equilibrium effects could increase or decrease this rebound even resulting in "super-conservation" or negative rebound where energy use falls by more than the efficiency improvement.…”

Section: Introductionmentioning

confidence: 99%

How large is the economy-wide rebound effect?

Stern

2020

Energy Policy

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The size of the economy-wide rebound effect is crucial for estimating the contribution that energy efficiency improvements can make to reducing greenhouse gas emissions and for understanding the drivers of energy use. Economy-wide rebound from an energy efficiency improvement includes changes in the use of energy to produce complementary and substitute goods or inputs and other flow-on effects that affect energy use across the economy as well as the direct rebound due to energy users using more of an energy service that has become less costly as result of improved energy efficiency. Jevons first argued in 1865 that improvements in energy efficiency increase total energy use, and in recent decades researchers have argued for and against this "backfire" hypothesis. Theory provides some guidance on the factors affecting rebound but does not impose much constraint on the range of possible responses. Historical evidence suggests that the improved energy efficiency of recent technology has not reduced energy use because consumption has shifted to more energy-intensive goods and services. Simulations and econometric research have produced mixed results. Some recent general equilibrium studies find large rebound, around 100%, but more research is needed to confirm or refute these findings.

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“…This is the force that drives the difference between the short-and long-run elasticities of substitution. The effect of the elasticity of substitution on the degree of rebound and potential for backfire is the central element of the existing macroeconomic literature (e.g., Saunders, 1992;Sorrell et al, 2007;Lemoine, 2016). The second major reason for backfire is the decline in the energy price, resulting from decreases in energy use.…”

Section: Research Subsidiesmentioning

confidence: 99%

Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation

Casey

2020

Preprint

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I construct a putty-clay model of directed technical change and use it to analyze the effect of environmental policy on energy use in the United States. The model matches key data patterns that cannot be explained by the standard Cobb-Douglas approach used in climate change economics. My primary analysis examines the impact of new energy taxes. The new putty-clay model suggests that tax-inclusive energy prices need to be 290% higher than laissez-faire levels in 2055 in order to achieve policy goals consistent with the international agreements. By contrast, the Cobb-Douglas approach suggests that tax-inclusive energy prices need only be 150% higher. Similarly, the new model predicts that the energy expenditure share must rise to 5%-compared with 3.3% today-while the standard model assumes that rapid declines in energy use will leave the expenditure share unchanged. The putty-clay model also implies that final good consumption must fall by 2.8% to meet policy goals, which is double the prediction from the standard model. In a second analysis, I find that policy interventions cannot achieve long-run reductions in energy use without increasing prices, implying that, by themselves, energy efficiency mandates and R&D subsidies have limited potential as tools for climate change mitigation. Finally, I use the model to analyze the long-run sustainability of economic growth in a world with non-renewable resources. Using two definitions of sustainability, I find that the new putty-clay model delivers results that are more optimistic than the existing literature.

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General Equilibrium Rebound from Energy Efficiency Innovation

Cited by 11 publications

References 23 publications

Withdrawal

Withdrawal

How large is the economy-wide rebound effect?

Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation

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