Transcript Direct and Indirect Rebound Effects for U.S. Households With Input-Output Analysis Brinda A.

Direct and Indirect Rebound Effects for U.S.
Households With Input-Output Analysis
Brinda A. Thomas
Ph.D. Candidate, Engineering & Public Policy Dept.
Carnegie Mellon University
[email protected]
Climate and Energy Decision-Making Center
Annual Meeting
21 May 2012
Energy Efficiency Opportunities for Carbon
Mitigation are Substantial & Cheap
IEA 2009
Motivation
Efficiency contributes 66% of CO2 abatement in 2020
and 52% of CO2 abatement in 2030
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Methods & Data
Results
Conclusion
Economic, Technical & Behavioral Limits to
Energy Efficiency
• Energy Efficiency “gap” (Jaffe and Stavins, 1994, Howarth and Sanstad, 1995, Sorrell
et al., 2004)
• Engineering vs. Actual Conditions for Efficiency (Vine et al., 1994)
• Rebound Effects
– Households or firms may increase energy service demand due to
• Direct Rebound: the lower price of energy services with efficiency
• Indirect Rebound: re-spending energy cost savings and embodied energy
• Macroeconomic Effects
– Basic definition: 1 – (Actual Savings/Potential Savings)
– Measured by various elasticities (%D in demand wrt %D in price)
• Stakeholders include policymakers, utilities, program evaluators, and
analysts involved with
– State and federal energy efficiency policies, utility demand-side management
programs, and dynamic/forecasting models of energy demand
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Motivation
Methods & Data
Results
Conclusion
Direct + Indirect Rebound Effect Model
Rebound
= Direct (Own-Price Elasticity) + Indirect (Cross-Price Elasticity * Eo )
Es
Expected Efficiency Savings = t% reduction in household energy expenditures
= EsssIt
Assumptions
1. Each fuel provides a single energy service
2. Basic elasticity properties hold (Engel Agg., Cournot Agg. & Slutsky Decomp.)
3. Compensated (constant-utility) cross-price elasticities for all goods are constant
4. Ignoring capital costs of efficiency (overestimate: Henly et al., 1987)
Dubin et al. (1983)
Greening et al. (2000)
Greene (2011)
2004 U.S. Consumer
Exp. Survey
Houthakker and
Taylor (1966, 2010)
EIO-LCA 2002 model
www.eiolca.net
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Motivation
Methods & Data
Results
Conclusion 3
Rebound Effects Vary by Unit of Analysis
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Motivation
Methods & Data
Results
Conclusion
Rebound in Primary Energy & CO2e varies by fuel
Error bars from uncertainty in direct rebound (± 3 - 11%) &
in indirect rebound due to income elasticity functional form (± 1 2%)
Motivation
Methods & Data
Results
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Conclusion
Summary of Findings
• 71-82% of expected efficiency savings can be achieved after
accounting for direct and indirect rebound effects
– 10-20% direct and 5-11% indirect rebound effects, depending on fuel
– Electricity and gasoline efficiency have lower rebound effects than natural
gas, depending on prices and budget shares
• Indirect rebound does not appear to be bounded by the energy
share of GDP (Schipper and Grubb, 2000)
– We overestimate the rebound effect by ignoring effects possible higher
capital costs of efficient appliances and vehicles
• Rebound highly sensitive to energy prices and electricity grid mix
• States with high energy prices and cleaner electricity have higher
% rebound effects
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Motivation
Methods & Data
Results
Conclusions
Policy Implications
• Policies explicitly designed to counter rebound effects may
not be needed
– Difficult to target higher energy prices only to those households
making efficiency investments – this might impose even more barriers
to efficiency investments
– A carbon price at the social cost of carbon ensures that rebound
effects – and energy consumption in general – yield net social benefits
• Study of rebound effects allows for:
– improved targeting of efficiency policies (by fuel and end-use)
– better assessments of the cost-effectiveness of energy efficiency
investments
– Improved forecasts of energy demand in scenarios with large
investments in energy efficiency
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Motivation
Methods & Data
Results
Conclusions
Acknowledgements
Thanks to Ines Azevedo, M. Granger Morgan, Scott Matthews,
Karen Turner, Zeke Hausfather, and Chris Weber for useful
discussions.
Funding by:
Contact Info: Brinda Thomas, [email protected]
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