Module

Resource Efficient Design

ENGT5260

Assignment
The Rebound Effect can compromise attempts to move
towards more efficient resource use.

[Name of Student]
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Lecturer:

Resource Efficient Design

Table of Contents
1.

Introduction.......................................................................................................2

2. The Rebound Effect..........................................................................................2

2.1 Types of Rebound Effect.............................................................................3
2.1.1

Direct Rebound.....................................................................................3

2.1.2

Indirect Rebound Effect.......................................................................3

2.1.2

Economy-Wide Rebound Effect...........................................................4

3.

Case Study: Energy Efficiency Policies & Programs (EU)..............................4

4.

Insights on Developing Countries....................................................................6

5.

Policy Implications...........................................................................................6

6.

Research Needed..............................................................................................6

7.

Conclusion........................................................................................................7

References................................................................................................................8

Resource Efficient Design

1.

Introduction

Many concepts of sustainable development emphasize the importance of

efficiency improvements by technological progress (Binswanger, 2001). The
magnitude of the Rebound Effect, its relevance and how it effects the efficient
utilization of resources is still debated. Generally, it is assumed that the
introduction of efficient resource utilization techniques led to an overall reduced
energy consumption, compared to the situation in which such improvements are
not made at all. The phenomenon Rebound Effect might decrease the size of
resource savings. Many research reports illustrates that there is an overall increase
in the energy demand as a result of introduction of certain types resource efficient
techniques. The objective of this paper is to illustrate the Rebound Effect and its
relevance to resource efficiency with case examples.

2. The Rebound Effect

The increase, in resource and energy utilization which is observed as opposite
reaction to introduction of efficient design policy and/or an innovation in the
technology, is called The Rebound Effect. The increase is applied by the
behavioral or other systemic response, in particular the increase in efficiency
brings reduction in cost (Khazzoom, 1980) (Sorrel S. , 2010). Rebound Effect has
been identified for technology, time and space for the following reasons:

Technology Rebound in which the improvement in the certain resource

or technology results in the leading change in resource or energy

consumption.
Time Rebound in which more or less improvements in time consumption

leading to changes in the resource or energy consumption.

Space Rebound in which more or less use of space leads to change in the
resource or energy consumption.

For example, with a 10% increase in the efficiency in fuel consumption of the car
engine does not lead to a 10% decrease in the fuel consumption, economic

Resource Efficient Design

theories suggest that the improvement will reduce the marginal cost but
consumption of service is expected to increase such consumer may choose to
drive the car more often.

2.1 Types of Rebound Effect

Generally, there are three recognized types of Rebound Effect, which are Direct
Rebound, Indirect Rebound and Economy-Wide Rebound.

2.1.1

Direct Rebound

Direct Rebound is the consideration that when the price of energy sources or resources
becomes cheap then there is an inclination towards the high utilization of it. When the
demand of any resource is elastic, the will be the rebound and vice versa. When resource
consumption is close to saturation level, the efficient management or the conservation of
the resource will be larger. For example, the consumer will be willing to adopt efficient
energy policy if the cost of the resource is high. Therefore the rebound is more relevant in
the resources having high potential of conservation and lower for minor saving potential.

2.1.2

Indirect Rebound Effect

Indirect rebound is the observation that when the savings in the energy with
adoption of efficient energy policy lead to the consumption of resources in some
other areas. Examples of the indirect rebound effect are (Sorrel, 2007):

Monetary savings from efficient energy resources are used to obtain other

items that require almost, in some cases, equal amount resources saved.
Manufacturers utilize the resource efficient as a mean to increase
productivity, which tends to increase factors such as materials, cost and

labor, which also consume energy.

Resource Efficient Design may lead to a growth in economy but if not
separated from increased energy demands, causes increased energy

consumption.
Providing cheap energy by resource efficiency leads to increase in
demand.

Resource Efficient Design

2.1.3

Economy-Wide Rebound Effect

The cumulative effect of direct rebound and indirect rebound effects is called the
Economy Wide Rebound Effect. This particular type of rebound is more
significant where efficient production methods leads to more productivity which
results in increase of economic growth and resource utilization at a macroeconomic level (Sorrel, 2007) (Jenkins, 2010).
Overview of the effects of rebound effect along with its types are shown in the
Figure 1.

3.

European Union Energy Efficient Policies & Programs

Resource Efficient Design

Rebound Effect for energy efficient and resource efficient design polices have
been calculated in Britain and Germany. In 2005, House of Lords initiated an
inquiry to check whether there is a role of Rebound effect in UK energy use not
reducing with efficient resource use and efficiency improvements. UK ERC
investigated and conducted a review of the evidences on rebound effect and
resources efficiency (Sorrel, 2007). Following this, several projects started for the
investigation of the magnitude of the rebound effect (Barker, 2009). Studies
estimated that by 2005-2010, By 2010, the overall rebound effect in UK will be
26% that covers households, transportation, commerce and industry, from which
15% will be direct rebound and 11% will be indirect rebound effects. Data given
in Table 1 below shows that the largest effects of direct rebound were in the
transportation and household, whereas indirect and economy wide rebound is in
resource intensive and other industrial sectors.

Figure 1: Overview of the Rebound Effect

Table 1: Estimated Total Rebound in Case Study

Year
Resource Intensive Industries

2005
27

2010
25

Resource Efficient Design

Other Industries
Transportation
Households
Commerce etc.
Total

15
29
33
0
26

16
32
30
7
26

Notes:
Statistics are of total rebound
Sources: Cambridge Econometrics
Recently, University of Stirling used Computable General Equilibrium (CGE)
method to investigate the impact of economy wide rebound effect for Scotland.
The results show that the implementation of efficient resource design policy leads
to energy efficiency improvements by 5% in production sector (Hanley et al,
2009). While, backfire occurs when there improvements leads to increase in
resource intensive sectors, particularly where competitiveness is important
(Turner, 2009).
A UK investigation shows that Indirect Rebound Effect is estimated to reach 31%
by 2020 and by 2050 it can reach as high as 52% (Barker, 2009).
A German study associates Indirect Rebound Effect with resource efficient design
programs proposed by the energy saving funds for households, it was estimated
are 5.3% (Irrek, 2009).

4.

Insights on Developing Countries

In China, the ever so increasing energy demands and industrial growth makes
essential for the country to neutralize the rebound effect because about 30% to
50% rebound is expected in household (Ouyang, 2010). The paper also suggests
that while use efficient resource policy can slow down the consumption of nonrenewable resources but it is necessary to cut down the rebound effect to lower
the resource utilization.

Resource Efficient Design

In other under-developed countries where typical fuel is still being used as a

primary source of energy causing higher rebound. 50-80% of rebound effect was
measured on calculated kerosene saving against actual savings when kerosene
lamps replaced solar powered lanterns in India (Roy, 2000). The saving turned
out to be nil and often times in negative value, this was because the use of
kerosene was shifted from lantern to other requirements e.g. kerosene cooking
stoves. Consequently, with technology improvements, high rebound effect
appears, unless controlled by appropriate economic policies.

5.

Policy Implications

The contribution of resources efficient policy need to be reviewed. Resource

efficiency should be encouraged but through the prices of resources such as fuel
such as carbon taxes as it will be important for climate change and resource
efficiency. Rebound should be given more significance when designing a
resources efficient policy. Rebound is technically between industrial sectors hence
there may be a greater capacity of increments in energy price. Rebound may be
mitigated through implementation of emission taxing scheme to control pollution

6.

Research Needed

Research on direct rebound need to improve for the expansion of scope.

Quantitative analysis of indirect and economy wide rebound should be
encouraged. Robust calculations of economy-wide rebound effect can be obtained
from macro-economic models. Further research should investigate whether
different resource efficient policies are associated with improvements in
productivity. At present it is largely ignored by economists.

7.

Conclusion

The available research and study on such a changing topic is limited and
inconclusive. Although the rebound effect is significant but this doesnt mean that
efficient resource utilization should be affected at all. A few CGE models estimate
a rebound may exceed 50% therefore a lot of attention is required methodology of

Resource Efficient Design

efficiency improvements. Strategies can influence the behavioral response to the

improvement of resource efficient design e.g. the electricity tariff can be
influenced by spreading awareness about the carbon emission causing global
warming. Since rebound effect can offset energy saving and efficient resource
utilization, a major policy overhaul is required which can lead to sustainable
development.

Word Count: 1411 Excluding References, Cover Page and Table of contents
Word Count: 1498 Excluding References and including Cover Page & Table of contents

References
Barker, T. D. (2009). The macroeconomic rebound effect and the world economy.
Energy Efficiency. 411-427.
Binswanger, M. (2001). Technological progress and sustainable development:
what about the rebound effect? Ecological Economics, 36(1), 119-132.
Hanley et al, P. G. (2009). Do increases in energy efficiency improve
environmental quality and sustainability?,, 68(3), 692-709.

Resource Efficient Design

Irrek, W. (2009). Paper for the 2nd International Wuppertal Colloquium on

Sustainable Growth, Resource Productivity and Sustainable Industrial
Policy Recent Findings. New Approaches for Strategies and Policies.
Jenkins, J. (2010). Energy Emergence, Rebound and Backfire as Emergent
Phenomena: Implications for Climate Change Mitigation Policy A Review
of the Literature.
Khazzoom, J. (1980). Economic implications of mandated efficiency in standards
for household appliances. Energy Journal, 1(4), 21-40.
Ouyang, E. L. (2010). Rebound effect in Chinese household energy efficiency and
solution for mitigating it. Energy, 35(12), 5269-5276.
Roy, J. (2000). The rebound effect: some empirical evidence from India. Energy
Policy, 433-438.
Sorrel. (2007). The Rebound Effect: an assessment of the evidence for economywide energy savings from improved energy efficiency. UK Energy
Research Centre.
Sorrel, S. (2010). Energy, Growth and Sustainability: Five Propositions, Sussex
Energy Group Conference Energy transitions in an interdependent world.
Sustainability 2010, 2, 1784-1809.
Turner, K. A. (2009). Energy efficiency improvements and rebound effects: some
lessons from the Scottish Case. Welsh Economic Review.
Wirl, F. (1997). The economics of conservation programs. Kluwer.