Can we reduce rebound without sacrificing macroeconomic benefits of increased energy efficiency in public/freight transport?

Previous research has shown that increased efficiency in the use of energy triggers price and income effects that result in productivity- or demand-led economic growth processes (depending on whether efficiency improves on the production or consumption side of the economy) but which are accompanied by a rebound in energy use at the economy-wide level, partially offsetting expected energy savings in the more efficiency activity. The question we set out to address here is whether economy-wide rebound effects can be reduced without sacrificing macroeconomic benefits. We take the example of increased energy efficiency in the provision of public and freight transport and use a multi-sector CGE model to examine the impacts on household fuel use in personal transportation, where this is a competing, and relatively energy-intensive competitor for the more efficient public/freight provision. Our key finding is that by varying just one parameter in the model – the elasticity that governs household substitution between personal and the more public/freight transport as the relative price changes – we get marked variation in the magnitude of the economy-wide rebound effect with negligible (if any) impact on key macroeconomic impacts.