Energy Efficiency and its Rebound Effects

There are many articles that tout the benefits of energy efficiency. Even I discuss the benefits in my posts.

So, let's ask a simple question: Does energy efficiency lead to a reduction in energy demand?

Answer: Well, it depends.

Let's give an example to see why the answer to the proposed question isn't as straightforward as it should be. Consumer A decides to replace many of the devices in his/her home with more energy efficient ones. However, his/her electric bill doesn't go down at all; in fact, it has gone up. What's going on? The money that may (or may not) have been saved from device replacement has gone to other power-sucking devices, which results in a zero or negative gain.

This is called the rebound effect, which best describes as the paradox of increased energy efficiency leads to an increased in energy consumption, which might be sometimes greater than before the implementation of energy efficiency strategies.

In the residential side, there seems to be some evidence of this happening. In 2013, EIA (Energy Information Administration) released an article indicating that HVAC, which used to be one of the largest contribution to home energy usage, is now no longer the majority. This is due to several facts: construction of larger homes and consumers are having an insatiable appetite of more power-sucking devices.

Industries are more apt to the rebound effect. For example, when Factory A decides to implement energy efficiency strategies in the factory, the efficiency measures lower the effective price of the services derived from fuel consumption - heating, cooling, transportation, industrial processes, etc. As a result, this leads Factory A to demand more of these services due to production ramp-up or rearrangement of production to take advantage of the "savings". Just like with Consumer A, Factory A will most likely see an increased usage of energy than before.

As a result, despite advances in energy efficiency implementation and efforts, the US's energy budget has increased significantly. This isn't a unique problem to the United States, but a worldwide problem. In a later discussion, I will show that other factors other than rebound effects are contributing to the increase in the world's energy budget.

While I have just given two prime examples of the energy efficiency rebound effect providing a negative impact, I will propose that the rebound effects of energy efficiency don't reach to all areas of society equally and that some rebound effects are actually better for society.

Cities are a great example to support this claim. Due to lowering budgets, a larger and younger population, resiliency protection, and other factors, cities are implementing many energy efficiency strategies. Since cities get their budgets from taxpayers, money that is saved through energy efficiency projects can then be reinvested into other areas, such as infrastructure improvement, public projects, etc. This is a great example of positive rebound effect in which the implementation of energy efficiency is paid forward towards continuous improvement.

 Another example of the unequal rebound impact can be seen in another example. Consumer B decides to replace his/her light bulbs with more energy efficiency ones. Unfortunately, he/she decides to leave the light bulbs on all the time. While this may be a simple and laughable example, such kind of practices exists in many areas all over the world. These practices can be overcome with education, automation technology, and patience.

While there are certainly the rebounds effects when energy efficiency practices are put into place, I will still propose that correctly implementing energy efficiency ideas with industry-standard practices and approaches while combining education and technology, the benefits of energy efficiency outweigh the probable negative rebound effects. Implementing energy efficiency strategies is a better approach than having no action taken.

Energy efficiency is the idea of an enhanced and effective energy supply. It's part of a multi-step approach to a more resilient society. A resilient society is one that is able to recover from difficult and prolonged power interruptions, such as from a severe weather. Energy efficiency combined with other strategies such as distributed generation, renewables, and microgrids is a step in the direction of a move towards a much more sustainable and resilient future. A future that can be enjoyed by our children, grandchildren, and many generations henceforth.

Note: This weblog does not represent the thoughts, intentions, plans or strategies of my employer. It is solely my opinion.

Note 2: The rebound effect is known as the Khazzoom-Brookes postulate. You can read about it more here and here.