Do increases in energy efficiency improve environmental quality and sustainability?
Hanley, N. and McGregor, P.G. and Swales, J.K. and Turner, K. (2009) Do increases in energy efficiency improve environmental quality and sustainability? Ecological Economics, 68 (3). pp. 692-709. ISSN 0921-8009 (https://doi.org/10.1016/j.ecolecon.2008.06.004)
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Governments world-wide increasingly see energy efficiency as an important aspect of sustainability. However, there is a debate in the literature as to whether the impact of improved energy efficiency on reducing energy use might be partially, or more than wholly, offset through 'rebound' and 'backfire' effects. This paper clarifies the theoretical conditions under which such effects would occur and explores their likely significance using a computable general equilibrium (CGE) model of the Scottish economy. We find that for Scotland a general improvement in energy efficiency in the production sectors of the economy initially produces rebound effects that eventually grow into backfire. Energy use ultimately increases in response to an efficiency gain and the ratio of GDP to CO2 emissions falls. The economic factors underpinning rebound effects are straightforward: energy efficiency improvements result in an effective cut in energy prices, which produces output, substitution, competitiveness and income effects that stimulate energy demands. However, the presence of strong rebound or even backfire does not mean that efficiency-enhancing policies are irrelevant: rather it suggests that such policies operating alone are insufficient to generate environmental improvements. The implication is that a co-ordinated portfolio of energy policies is required.
ORCID iDs
Hanley, N., McGregor, P.G. ORCID: https://orcid.org/0000-0003-1221-7963, Swales, J.K. and Turner, K.;-
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Item type: Article ID code: 8752 Dates: DateEvent15 January 2009PublishedSubjects: Social Sciences > Economic Theory Department: Strathclyde Business School > Economics Depositing user: Strathprints Administrator Date deposited: 16 Mar 2010 16:56 Last modified: 12 Sep 2024 21:04 URI: https://strathprints.strath.ac.uk/id/eprint/8752