On decomposing the energy rebound effect

Abstract

We suggest a new decomposition of the rebound effect, highlighting the contribution of four components: efficiency, technology, capital, and energy changes. The new approach offers several advantages: it has a strong economic foundation as it starts from the modeling of the production process, it naturally gives the option to understand how each of the four components contributes to the rebound effect, and it is based on a non-parametric estimation method that does not resort on strong assumptions nor require estimating parameters. We apply our technique to the case of China’s logistics industry, which is counteracted by increased energy consumption and carbon emissions to support economic growth. Our findings reveal that the rebound effect varies significantly across provinces, with an average of 0.76. Economic growth, driven by factors such as capital accumulation and technological advancements, plays a crucial role in determining the rebound effect, with provinces experiencing higher growth benefiting from improved energy efficiency. We further establish determinants of the rebound effect, viz., government intervention, environmental control, and economic growth. The results highlight region-specific energy policy that takes note of the spatially heterogeneous impacts of economic development and policy efforts on the rebound effect.