The rebound effect of energy-efficiency improvements System dynamics modelling on rebound effects from improved automobile fuel-efficiency, integrating economic theory and social practice theory

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Energy efficiency policies are being implemented by several states to reduce energy consumption and CO2 emissions. The endeavours to increase energy efficiency assume that the improvement in energy efficiency will lead to a decrease in energy consumption and CO2 emission. This assumption, however, might not become a reality if there appear significant behavioural responses in economy and society to the increased energy efficiency, known as ‘rebound effects’ (Herring and Sorrell, 2009). Rebound effects are defined as the gap between expected reductions and actual savings in energy consumption due to improved energy efficiency through technological progress (Berkhout, Muskens, & Velthuijsen, 2000: 426; Binswanger, 2001: 120). The magnitude of rebound effects is critical to ensure the effectiveness of efficiency policies. If the rebound effects are greater than 100%, it is denoted as a ‘backfire’ effect, a paradoxical outcome triggered by the efficiency improvement, implying that energy consumption has increased due to the improvements in energy efficiency. This study aims to investigate the causal mechanisms of generating rebound effects from improved energy efficiency by adopting a methodological approach based on system dynamics modelling. Different disciplines attempt to understand the essence of rebound effects and have explained the rebound generating mechanisms based on their ontologies (Polimeni et al., 2008; Wallenborn, 2018). System dynamics models are utilized as a practical research strategy to converge different disciplines and theories on rebound effects. The system dynamics modelling on rebound effects in this study centres on the sector of automobile fuel efficiency in the EU countries. The modelling to analyse the rebound mechanisms from the improved automobile fuel efficiency is based on the integration of two disciplinary perspectives: economic theory and social practice theory. Computer simulations allow seeing the long-term effect of the enhancement in energy efficiency, compared to the baseline trend, showing the size of the contribution to the energy-saving goals. The model does not concentrate on the estimation of the specific magnitude of the rebound effect. Rather, it aims to enlighten future trends in energy consumption and the possibility that backfires occur. Simulations and model structures are meticulously inspected to understand the generating mechanisms of rebound effects. Furthermore, policy experiments are conducted to explore the policy options for rebound mitigation. Finally, the study discusses the simulation results to get meaningful policy insights and implications in terms of the effectiveness of efficiency policies on energy security and climate change. The simulations and model structures give insight into the relationships between fuel-efficiency improvements and energy consumption. The analysis shows that the increase of fuel efficiency enables to drive more distances per unit amount of fuel, which creates more utilities and human welfare. However, it does not ensure a reduction in energy consumption. It is likely that it causes significant rebound effects leading to less than the expected reduction of energy consumption, or even backfires leading to an increase in energy consumption. Policy experiments elucidate possible pathways to decouple between energy consumption and driving distance as well as to overcome backfires.
Faculteit der Managementwetenschappen