Osterkorn debates EE rebound effect
Vienna, 16.06.2011 - REEEP International Secretariat
In February 2011, the Breakthrough Institute published a comprehensive review of the literature and evidence for rebound effects which concluded that a large amount of the energy savings from below-cost energy efficiency are eroded by demand rebound effects. In some cases, the rebound exceeds the savings, resulting in increased energy consumption from efficiency, known as backfire.
Marianne Osterkorn, REEEP’s Director General was asked to respond to this comprehensive review through an article published in UNIDO’s Making It magazine on June 16th 2011, giving her take on the so-called “rebound effect.” The article is reprinted here:
The many benefits of energy efficiency
The Breakthrough Institute report, Energy Emergence: Rebound and Backfire as Emergent Phenomena, highlights the challenges and complexities of measuring the overall effectiveness of energy efficiency measures. The results are complex, and are affected by the interaction of many different factors, including economic growth, energy use, technology, behaviour, and rebound effects. Unfortunately, the assumptions used are not fully verifiable, and the different models show wide variations in their results, all of which devalues the conclusions offered.
The overall effects of energy efficiency can indeed be disputed by employing the many theoretical and modelling methods available to measure the direct and indirect rebound effects. But this whole argument misses the point that energy efficiency has many benefits, other than climate change mitigation, which need to be considered. Energy efficiency leads to increased productivity and economic output, reduced demand, reduced energy bills and last, but by no means least, an enhanced security of energy supply.
If one does keep purely to the climate argument, a more interesting question would be to ask: how much more serious would today’s climate change situation be if energy efficiency had not been implemented in the past? According to the International Energy Agency, substantial energy savings have already taken place steadily over the last 20 years, and it argues that without these energy efficiency measures, today the world’s energy demand would be 50% higher than it actually is. This effect must be taken into account when discussing and evaluating the climate impact of current energy efficiency measures.
California decouples
Examples like California prove that jurisdictions that strongly promote energy efficiency can achieve an energy trend that contrasts sharply with their immediate neighbours. Today, we can observe that the amount of energy consumed by the average Californian is just 60% of the US per capita average – dramatic proof that energy efficiency has effectively decoupled growth in energy consumption from economic growth in the most populous American state.
And this trend is no flash in the pan – it has continued for more than four decades now. The California example shows that regardless of all the rebound arguments, energy really was saved. Costly new power plants have not had to be built, and the whole economy has benefited.
The California experience also shows that energy efficiency programmes have educational effects that result in sustained behavioural changes over time – a phenomenon that can also be observed in several European and Asian countries. This might be dismissed by some as a phenomenon that emerges primarily in saturated markets where people’s energy needs are already satisfied, but no studies exist which can provide reliable data to back up this argument.
Part of a package
What real experience does show is that energy efficiency measures appear to be most effective if they are implemented as a package of activities that include new technology, incentive systems, and education, as well as capacity-building and public promotion. These kinds of integrated programmes have yielded significant energy reduction. The holistic energy efficiency programme in Japan after the first energy crisis in the 1970s is another prime example. Much like California, modern-day Japan has achieved an almost complete decoupling of energy consumption and GDP growth.
Significant effects of comprehensive efficiency programmes, targeting both end-consumer and industry, are also reported in mid-income and developing countries such as Thailand and the Philippines. Thailand initiated a voluntary energy efficiency programme for appliances in 1994, which has since become a well-functioning mandatory system covering more than 50 appliances, lighting, and equipment. According to the Asia-Pacific Economic Cooperation’s peer review on energy efficiency, as of September 2009, the Thai standards and labelling programme has contributed 10,175 gigawatt hours of energy savings, 1,725MW of peak demand capacity savings, and 6.6 million tons of CO2 reduction. In the Philippines, mandatory standards and labels for air-conditioners saved 6MW of capacity during the programme’s first year.
Yet another example is the National Compact Fluorescent Exchange Programme in Ghana, which was launched in 2007, reducing peak load demand for the over-stretched national electricity systems and lowering the electricity bill of mostly low-income consumers. With the exchange of six million light bulbs in Ghana’s households, peak load savings of 124MW per annum, and CO2 savings of 112,320 tons, were achieved. This resulted in overall energy cost savings of US$33m.
Energy savings
These examples from lower-income countries underline that end-consumer energy efficiency clearly impacts net savings for overall national electricity systems in developing countries – especially through reducing peak load demand. It seems that these savings are not “sucked away” through increased consumption, especially at this point of time. Indeed, even if some of these savings would be consumed during a different time of day, the positive benefits for a national energy system and CO2 reduction would not be diminished. The achieved savings would help to reduce costly provisions of mostly fossil fuel-based peak load systems.
Technology alone is not the solution, and yes, the possible rebound effects of energy efficiency measures should indeed be considered by policymakers in realistically estimating the impact of energy efficiency measures on CO2 reduction. But this environmental effect – the extent of which is very much open to debate – is a one-dimensional counter-argument. Real-life experience clearly shows that energy efficiency yields considerable economic and energy security benefits, and therefore measures to improve it are always justified. Of course other measures, such as decarbonization of the global energy supply, should also be implemented to tackle climate change, but energy efficiency programmes increase the energy consciousness of people, and are thus an important first step in saving the planet.