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Status of USA Rebound
Effect Activities
The Debate, the
Progress
AGENDA
A Lively Debate
Direct Rebound Effects in Production
Frontier Effects—Lighting
Rebound Mitigation
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AGENDA
A Lively Debate
Direct Rebound Effects in Production
Frontier Effects—Lighting
Rebound Mitigation
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A Lively Debate
• Rebound research in the USA, Canada, and
Latin America has long lagged behind Europe.
• A recent literature survey on rebound by The
Breakthrough Institute in California has
unleashed a firestorm of controversy
– Numerous blogs
– Magazine articles (e.g., The New Yorker, Nature)
– Newspaper columns (e.g., New York Times)
– A 250+ entry email thread
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A Lively Debate (2)
• The debate has polarized the energy/climate change
community in the US:
– A significant number believe rebound to be minimal to
non-existent: something to be “de-bunked”;
– Others believe that, taken together, rebound effects could
easily lead to backfire.
• Out of this acrimony has come a serious effort to
create a structured academic dialogue, involving:
– The Breakthrough Institute
– Stanford University researchers
– Other well-known energy researchers
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AGENDA
A Lively Debate
Direct Rebound Effects in Production
Frontier Effects—Lighting
Rebound Mitigation
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Direct Rebound in Production (2)
• Globally, about two-thirds of energy is
consumed in the production of goods and
services.
• End-use energy consumed directly by
households and for personal transportation is
only about one-third.
• Instead embedded energy consumption in the
US dominates and historically has grown…
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Direct Rebound in Production (3)
Final Consumer Energy Use by Source
Energy Use, Quadrillion BTUs
US, 1987
70
60
Government Services
50
40
Purchased Products &
Services
30
20
Personal Transportation
Energy Use
10
Household Energy Use
0
Embedded
Consumption
Direct Consumption
Final Consumer Energy Use by Source
Energy consumption
embedded in goods & services
grew from 1987 to 2002
(58% to 60% of total)
Energy Use, Quadrillion BTUs
US, 2002
70
60
Government Services
50
40
Purchased Products &
Services
30
20
Personal Transportation
Energy Use
10
Household Energy Use
0
Embedded
Consumption
Direct Consumption
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Direct Rebound in Production (4)
200%
100% Rebound
Actual
250,000
150%
Zero Rebound
200,000
Rebound
100%
150,000
50%
Rebound
Energy Consumption
300,000
Rebound Across 30 US Sectors
100,000
0%
50,000
0
-50%
1960
1965
1970
1975
1980
1985
1990
1995
2000
Direct rebound in the productive part of the economy (that part
producing the goods and services) was large from 1980 to 2000.
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140%
120%
100%
80%
60%
40%
20%
0%
Electric Utilities
Transportation
Services
Chemicals
Construction
Primary Metal
Agriculture
Financial Industries
Government Enterprises
Food & Kindred…
Paper & Allied Products
Stone, Glass, Clay
Machinery, non-…
Fabricated Metal
Electrical Machinery
Lumber and Wood
Rubber &…
Textile Mill Products
Motor Vehicles
Non-metallic mining
Communications
Transportation…
Printing, Publishing &…
Instruments
Apparel
Metal Mining
Furniture & Fixtures
Misc. Manufacturing
Leather
Tobacco
Direct Rebound in Production (5)
• Rebound varies significantly across sectors.
Long-term Rebound
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AGENDA
A Lively Debate
Direct Rebound Effects in Production
Frontier Effects—Lighting
Rebound Mitigation
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Frontier Effects -- Lighting
• Tsao et al., in a Journal of Physics article,
analyzed energy used by new lighting
technologies since the 1700s. They found:
– New applications for lighting have offset energy
efficiency gains almost precisely (100% rebound);
– The share of GDP spent on lighting was unchanged
and independent of “luminous efficacy”;
– This has occurred for more than 300 years, across
3 continents, and across 6 technologies.
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AGENDA
A Lively Debate
Direct Rebound Effects in Production
Frontier Effects—Lighting
Rebound Mitigation
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Rebound Mitigation
• An energy tax is found that offsets rebound (leading to
roughly stable energy demand over time).
• The tax must be large—roughly equivalent to a carbon tax of
$95/tonne of CO2.
• It is applied across all sectors, including commercial/ industrial
transportation.
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Rebound Mitigation (2)
• Using such a tax to offset rebound could prove
costly to the economy:
Weighted
average
across all
sectors
Real Output Gain/Loss vs. Energy Saved
(No Payroll Tax Offset)
10%
% Output Gain/Loss
after 20 years
5%
0%
-5% 0%
10%
20%
30%
40%
50%
60%
-10%
-15%
Employment Rate Gain/Loss vs. Rebound
-20%
(No Payroll Tax Offset)
-30%
% Energy Saved after 20 years
While this analysis is specific
to the US, it suggests the EU
ETS may have incurred
hidden costs.
% Employment rate Gain/Loss
after 20 years
-25%
10%
5%
0%
0%
20%
40%
60%
80%
100%
120%
-5%
-10%
Long-term Rebound to be Offset
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Rebound Mitigation (3)
• A (“revenue neutral”) payroll tax offset could
counter this damage:
Weighted
average
across all
sectors
Real Output Gain/Loss vs. Energy Saved
(Payroll Tax Offset)
10%
0%
-5% 0%
10%
20%
30%
40%
50%
60%
-10%
-15%
Employment Rate Gain/Loss vs. Rebound
-20%
(Payroll Tax Offset)
-25%
-30%
% Energy Saved after 20 years
% Employment rate Gain/Loss
after 20 years
% Output Gain/Loss
after 20 years
5%
10%
5%
0%
0%
20%
40%
60%
80%
100%
120%
-5%
-10%
Long-term Rebound to be Offset
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Rebound Mitigation (4)
CAUTIONS:
•
•
•
•
•
•
•
Methodological caution: the analysis does not account for possible technology
improvements “induced” by the tax on energy. This could move the results in
undetermined ways.
For the US over this time period, the payroll tax offset would have needed to be
large enough (6.4%) to almost entirely offset employer payroll taxes (7.6%).
This energy tax/payroll tax offset program would only have stabilized energy
consumption, not reduced it.
It produces winners and losers; these effects could have problematic compounding
effects inter-sectorally.
A tax that varies by sector shows evidence of improving the outcome.
But in any case, it would be hellishly difficult to implement an energy (GHG)
tax/payroll tax offset fairly, effectively, and with minimum economic damage.
Governments would need to be extremely disciplined to continue using all tax
revenues solely to offset payroll taxes.
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