If I replace my old rusty car with a low-consumption hybrid, the price of one kilometre driven decreases quite nicely. Driving is inexpensive now so I may drive more than before, perhaps buy a second car too. Energy saving and emissions reductions remain smaller than expected or do not manifest themselves at all. If one replaces a standard bulb with an energy saving one, it is a well-known fact that one more easily “forgets” the new one switched on more frequently than an old one. Once again, the savings are smaller than expected.
This is a rebound: the level of energy efficiency actually is lower than expected. This phenomenon has largely gone unnoticed, but in recent years has been studied much more.
It is also a rebound when money saved through energy is spent on something else. When one heats up their house with electricity, one can save EUR 1,000 per winter by actively burning wood. If you spend the money on food, fuel or a trip to Spain, the emissions rebound back at you.
When a company trims their energy consumption, the saved money is likely to be invested in new production, which once again hikes the consumption. Energy savings may also decrease the price of the final product. This may then increase the product demand, which picks up sales, increases production and ultimately increases energy consumption.
The trick is that energy efficiency boosts the business, i.e. increases financial growth. When financial growth sets in, more energy is consumed and emissions rise.
The impact of the rebound is repeated at the global level. In the United States of America, new cars consume much less fuel than old ones. The relative demand of fuel decreases, and when American cars consume a significant share of the entire world’s oil, the decrease reduces the market price for oil. This may then result in new demand in the goods and services production which consumes oil throughout the world. Once again, the increasing of energy consumption efficiency creates financial activity elsewhere which partially neutralises the benefits of the effectiveness increase.
Carbon calculators are wrong
On a global scale, the impact of the rebound may be up to 50%. For consumers, it is perhaps around 30%. This means that the impact of climate deeds is 30% smaller than is thought.
Naturally, this means that online calculators of carbon footprints and how to reduce it are wrong. But, it is more important that energy efficiency is the biggest and most beautiful emissions reduction method in all climate scenarios one can think of. If the rebound eats up half of it, one must quickly think of something else to replace it.
The rebound does not mean that energy efficiency is a bad idea. On the contrary: exactly because of the problems, one must pay more attention to it.