CEDM Theory and Methods Workshops Understanding the Rebound

CEDM Theory and Methods Workshops: Understanding the Rebound Effect June 13 th, 2011 Prepared for CEDM Annual Meeting 2011 Inês Azevedo Executive Director, CEDM Assistant Research Professor, EPP

Many governments and others are placing great store in energy efficiency as part of a portfolio of strategies to reduce energy consumption and CO 2 emissions Sources: Azevedo et al. , Lave et al. , EPRI. 2

There is an ongoing debate (since the 90 ies…) on whether much of the anticipated reductions may be illusionary - this because of either direct or indirect "rebound. ” Images from: UK Energy Research Center and Polimeni et al. The literature is of very mixed quality, and recent work provides reviews, but very little new empirical research… 3

Definitions Direct rebound effect: If consumers adopt energy efficient technologies that are saving them money, they might use that good/service more often. For example, one might substitute incandescent bulbs with CFLs but then leave them on all night. Substitution effect: Part of the economic savings described in 1) could be used to increase consumption of other goods/services, and erode some of the energy or GHG savings. For example, one could use the savings from energy efficiency investments to do more travel. Economy wide effect: "a fall in the real price of energy services may reduce the price of intermediate and final goods throughout the economy, leading to a series of price and quantity adjustments, with energy-intensive goods and sectors likely to gain at the expense of less energy-intensive ones" (Sorrell, 2008). 4

It is unclear whether these effects are large or marginal… Some argue that rebound is an un-important issue. Others arguing that energy and carbon dioxide savings will be eroded and in some cases that policy will even "back-fire, " leading to an increase in energy consumption and emissions as opposed to a decrease. Results in the literature all over the map 5

Figure complied by Mike Blackhurst Example: residential heating 6

Figure compiled by Brinda Thomas From other sectors: 7

Figure compiled by Brinda Thomas And internationally: 8

We are undertaking a collaborative effort: • The Climate and Energy Decision Making Center • ZIRN at the University of Stuttgart, Germany (Prof. Ortwin Renn) • School of Public Management at Tsinghua, China (Prof. XUI Lan) This will be done under the auspices of the IRGC and will include 2 workshops: 1. June 27 -28, Washington D. C. 2. October 13 -14, Stuttgart, Germany. 9

Goal • Assess the state of understanding. • Lay out a research agenda that is specific, identifying studies that can inform the needs of those developing energy policy. • Publish the conclusions as an IRGC report and in the refereed literature. 10

Draft agenda for June 27 -8: 11

Mr. Steven Sorell Dr. Karen Turner Dean John Graham Dr. Inês Azevedo Mr. Michael Blackhurst Dr. Hadi Dowlatabadi Dr. Paul Fishbeck Prof. David Keith Dr. Granger Morgan Prof. Orwin Renn Dr. Costa Samaras Mr. Marco Sonnberger Ms. Brinda Thomas University of Sussex University of Stirling Indiana University CMU UBC CMU University of Calgary CMU University of Stuttgart RAND University of Stuttgart CMU Ms. Cheryl Eavey Dr. David Greene Dr. Gilbert Metcalf National Science Foundation Oak Ridge National Laboratory Tufts University and MIT Albany College of Pharmacy and Health Sciences Breakthrough Institute Dr. John Polimeni Dr. Harry Saunders Dr. Jeff Tsao Sandia National Laboratories Russell Meyer Danny Cullenward Dr. Jim Sweeney Dr. Alan Sanstad Mr. Jesse Jenkins Pew Center on Global Climate Change Stanford University LBNL Breakthrough Institute California Institute for Energy and Envrionment Ed Vine Carla Frisch (on behalf of DOE, EERE Kathleen Hogan) Dr. Lan Xue Tsinghua University Mr. Blake Alcott University of Leeds Miss Elena Verdolini FEEM ~ 30 participants 12

Inês Lima Azevedo, Ph. D Assistant Research Professor Engineering and Public Policy Department Carnegie Mellon University Executive Director Climate and Energy Decision Making www. cedm. epp. cmu. edu email: iazevedo@cmu. edu webpage: http: //www. epp. cmu. edu/people/bios/azevedo. html Acknowledgements: This work was supported by the center for Climate and Energy Decision Making (SES-0949710), through a cooperative agreement between the National Science Foundation and Carnegie Mellon University