Increased Household Energy Efficiency: Can It Boost the UK Economy?

Improving UK household energy efficiency has positive effects on the UK economy by households spending their savings from lower energy bills to buy non-energy goods and services and thereby stimulating demand in the wider economy. However, the combination of cheaper energy and increased spending on non-energy goods and services will partially offset the energy savings from more energy efficient households. This is the so-called ‘rebound effect`. In contrast to previous economy-wide rebound research that has noted that energy efficiency improvements in industry sectors leads to an increase in productivity, this research concludes that greater household energy efficiency is likely to lead to a demand-driven economic expansion, increasing employment and reducing unemployment.