Energy efficiency and savings but beware the Rebound Effect

The United Kingdom Energy Research Centre has reported today that a “rebound effect” may occur when people buy energy efficient products or energy creating products. Because these products will save money, the report argues, the carbon dioxide savings associated with energy efficiency and benign energy creation will be offset by the money saved being spent on consumption.  For example, if you buy an energy efficient car, you will tend to use it more and public transport less. Therefore, the authors of the report argue, where we have carbon dioxide saving targets we will have to be careful to ensure that the energy savings are not lost by other means. I think that it is common sense that money saved will at some time be spent either directly by the saver, or indirectly by the state. Most expenditure is on consumption and consumption involves the creation of harmful emissions.   The authors show that in the case of lighting, as real costs reduce so more lighting is used. They concede that lighting in developed countries may have reached a “saturation point”. In other words, there is only so much of anything that you can actually use, although as floodlight as the rooms in our homes may now be, compared with several hundred years ago, we can still find other things to light up – like using it to decorate the outside of our homes. The report concludes that the rebound effect is significant, but that does not render energy efficiencies ineffective, because the carbon cost of the rebound effect is unlikely to exceed 30% of the carbon savings. The report indicates that the Government must be careful and take this effect into account when considering their targets. I agree, but all that means is that we should aim higher. There is no point in aiming for one target by one means and that is in effect the present Government’s policy, which is almost wholly based around an emissions trading scheme. You have to use every device at your disposal to reduce carbon dioxide emissions. Some of these devices will seem unpalatable – you will have to ensure that energy costs are high to reduce consumption and encourage the up take of efficiency measures and renewables, so you will have to take money out of people’s pockets to prevent excessive harmful consumption making sure that incentivise benign, unharmful consumption.