Energy saving innovations and economy wide rebound effects

Energy efficiency has gained significant policy and research attention for over a number of years, but often the focus is on rebound effects, the portion of the potential energy savings not realised because of economic responses. In this chapter, we seek to demonstrate that there are several macroeconomic impacts associated with energy efficiency improvements, which merit significantly more attention and deliver a wide range of socio-economic benefits. Our findings show that improving the energy efficiency of households could stimulate the economic activity within a nation or a region, leading to increased employment opportunities, investment and potentially public budget savings. Moreover, energy efficiency could aid in alleviating fuel poverty. And in every case that we have examined, those benefits are realised while achieving energy savings. We understand though that rebound is not likely to be left out of energy efficiency discussions. We then propose the use of an alternative metric of the effectiveness of energy efficiency policies; one that focuses on the achieved savings rather than those that did not materialise.