Rebound Effects from Increased Efficiency in the Use of Energy by UK Households

Patrizio Lecca, Kim Swales, Karen Turner

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Abstract

In this paper, we use CGE modelling techniques to identify the impact on energy use of an improvement in energy efficiency in the household sector. The main findings are that 1) when the price of energy is measured in natural units, the increase in efficiency yields only to a modification of tastes, changing as a result, the composition of household consumption; 2) when households internalize efficiency, the improvement in energy efficiency reduces the price of energy in efficiency units, providing a source of improved competitiveness as the nominal wage and the price level both fall; 3) the short-run rebound can be greater than the long run rebound if the household demand elasticity is the same for both time frames, however, the short run rebound is always lower than in the long-run if the demand for energy is relatively more elastic in the long-run; 4) the introduction of habit formation changes the composition of household consumption, modifying the magnitude of the household rebound only in the short-run. In this period, household and economy wide rebound are lowest for external habit formation and highest when consumers’ preferences are defined using a conventional utility function.
Original languageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Pages1-48
Number of pages49
Volume11
Publication statusPublished - 2011

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Keywords

  • energy efficiency
  • rebound effects
  • households energy consumption
  • CGE model

Cite this

Lecca, P., Swales, K., & Turner, K. (2011). Rebound Effects from Increased Efficiency in the Use of Energy by UK Households. (23 ed.) (pp. 1-48). Glasgow: University of Strathclyde.