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The 'rebound' effect of energy-efficient cars overplayed

January 23, 2013

hybrid car

A close-up of a plug-in hybrid car. Critics of energy efficiency programs in public policy debates have cited the rebound effect as a reason that hybrid cars and plug-in electric vehicles, for example, don't really save energy in the long run. But an economist has found the so-called 'rebound' effect is inaccurate. (Karin Higgins/UC Davis)

The argument that those who have fuel-efficient cars drive them more and hence use more energy is overplayed and inaccurate, a University of California, Davis, economist and his co-authors say in a comment article published Wednesday in the journal Nature.

Critics of energy efficiency programs in public policy debates have cited the “rebound effect” as a reason that hybrid cars and plug-in electric vehicles, for example, don’t really save energy in the long run.    

The “backfire” concept, a more extreme version of “rebound,” actually stems from a 19th century analysis in a book titled “The Coal Question,” by Stanley Jevons. The book hypothesized that energy use rises as industry becomes more efficient because people produce and consume more goods, according to the Nature article. But the article’s co-authors found that in the modern economy, the effect is not supported empirically.

“If a technology is cheaper to run, people may use it more. If they don’t, they can use their savings to buy other things that required energy to make. But evidence points to these effects being small — too small to erase energy savings from energy efficiency standards, for example,” said David S. Rapson, assistant professor of economics at UC Davis.

Rebound effects are therefore “no excuse for inaction,” the article states.

Energy efficiency standards will once again be a topic of debate — and a potential target for attack — with the renewed focus on climate change and the possibility of federal regulatory action, Rapson explained: “From an economic perspective, a carbon tax or well-functioning cap-and-trade market is still optimal. But if the political reality doesn’t allow these, efficiency standards should be evaluated based on the balance of costs and benefits. Rebounds are an important consideration, but are often overblown and misunderstood.

“Even though increased efficiency may prompt changes in behavior, energy is still saved overall,” said Rapson. “Energy efficiency policies should therefore continue to be considered as a way to address greenhouse gas emissions.”

Rapson co-authored the article, “The Rebound Effect Is Overplayed,” with Kenneth Gillingham and Matthew J. Kotchen of the Yale University School of Forestry and Environmental Studies, and Gernot Wagner of the Environmental Defense Fund in New York.

The article is available at: http://www.nature.com/nature/journal/v493/n7433/full/493475a.html.

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UC Davis is a global community of individuals united to better humanity and our natural world while seeking solutions to some of our most pressing challenges. Located near the California state capital, UC Davis has more than 34,000 students, and the full-time equivalent of 4,100 faculty and other academics and 17,400 staff. The campus has an annual research budget of over $750 million, a comprehensive health system and 13 specialized research centers. The university offers interdisciplinary graduate study and 99 undergraduate majors in four colleges and six professional schools.

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