Rationing Energy Rebound
Blog by Dave Elliott, Professor or Technology Policy, The Open University, United Kingdom
Everyone is in favour of energy efficiency. Using energy more efficiently is usually seen as the cheapest way to reduce/avoid carbon emissions.
Certainly, given that energy has been relatively cheap until recently in countries like the Canada & the UK , we have paid little attention to conserving it, so that there are substantial energy saving gains that can be made.
If for example, a consumer cuts energy bills by a few hundred pounds each year by investing in domestic energy saving (e.g. better building insulation), they are likely to spend this money on other energy intensive good and services, such as a holiday abroad by jet plane, thus wiping out some or all of the energy and carbon saving gains. Similarly, for drivers who replaces a car with a fuel-efficient model, only to take advantage of its cheaper running costs to drive further and more often.
There has been a long debate on exactly what the scale of this and other types of rebound or ‘take back’ effect might be in practice. A report last year from the UK Energy Research Centre concluded that ’ For household heating, household cooling and personal automotive transport in developed countries, the direct rebound effect is likely to be less than 30% and may be closer to 10% for transport’. Moreover ‘Direct rebound effects for these energy services are likely to decline in the future as demand saturates’, although it warned that, ‘indirect effects mean that the economy-wide reduction in energy consumption will be less.’
In terms of how to respond to rebound effects, the report points out that ‘Carbon/energy pricing can reduce direct and indirect rebound effects by ensuring that the cost of energy services remains relatively constant while energy efficiency improves. Carbon/energy pricing needs to increase over time at a rate sufficient to accommodate both income growth and rebound effects, simply to prevent carbon emissions from increasing. It needs to increase more rapidly if emissions are to be reduced.’ That could be painful for consumers, already hit as they are by rising fuel bills.
One proposal to achieve reduction in energy used without relying on direct pricing is personal carbon rationing- with consumers being allocated carbon credits to limit their overall consumption. These credits would be tradeable, so that consumers who managed to use less could sell any excess to those who were less frugal. The annual allocations could then be gradually reduced.
Read the full blog post at www.environmentalresearchweb.org.
Contact Dave Elliott.
