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Increased energy efficiency and the rebound effect: Effects on consumption and emissions
Umeå University, Faculty of Social Sciences, Department of Economics.
Umeå University, Faculty of Social Sciences, Department of Economics.
Umeå University, Faculty of Social Sciences, Department of Economics.
2007 (English)In: Energy Economics, ISSN 0140-9883, E-ISSN 1873-6181, Vol. 29, no 1, 1-17 p.Article in journal (Refereed) Published
Abstract [en]

The main objective of this paper is to examine how exogenous technological progress, in terms of an increase in energy efficiency, affects consumption choice by Swedish households and thereby emissions of carbon dioxide (CO2), sulphur dioxide (SO2) and nitrogen oxide (NOx). The aim of the paper is closely related to the discussion of what is termed the “rebound effect”. To neutralise the rebound effect, we estimate the necessary change in CO2 tax, i.e. the CO2 tax that keeps CO2emissions at their initial level. In addition, we estimate how this will affect emissions of sulphur dioxide and nitrogen oxides. The results indicate that an increase in energy efficiency of 20% will increase emissions of CO2 by approximately 5%. To reduce the CO2 emissions to their initial level, the CO2 tax must be raised by 130%. This tax increase will reduce the emissions of sulphur dioxide to below their initial level, but will leave the emissions of nitrogen oxides at a higher level than initially. Thus, if marginal damages from sulphur dioxide and nitrogen dioxide are non-constant, additional policy instruments are needed.

Place, publisher, year, edition, pages
London: IPC science and technology P. , 2007. Vol. 29, no 1, 1-17 p.
Keyword [en]
household consumption, energy demand, emissions, rebound effect, taxation
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-5057DOI: 10.1016/j.eneco.2005.09.003OAI: oai:DiVA.org:umu-5057DiVA: diva2:144414
Available from: 2006-04-10 Created: 2006-04-10 Last updated: 2017-12-14Bibliographically approved
In thesis
1. Income, Energy Taxation, and the Environment: An Econometric analysis
Open this publication in new window or tab >>Income, Energy Taxation, and the Environment: An Econometric analysis
2006 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis consists of four papers: two of them deal with the relationship between consumption, energy taxation, and emissions on macro level, and two of them focuses on the effects of changes in consumption and income on the environmental quality on a micro level.

The main objective of paper [I] is to examine how exogenous technological progress, in terms of an increase in energy efficiency, affects consumption choice by Swedish households and thereby emissions of carbon dioxide (CO2), sulphur dioxide (SO2) and nitrogen oxide (NOx). The aim of the paper is closely related to the discussion of what is known as the “rebound effect”. To neutralise the rebound effect, we estimate the necessary change in CO2 tax, i.e. the CO2 tax that keeps CO2 emissions at their initial level. In addition, we estimate how this will affect emissions of sulphur dioxide and nitrogen oxides. The results indicate that an increase in energy efficiency of 20 percent will increase emissions of CO2 by approximately 5 percent. To reduce the CO2 emissions to their initial level, CO2 tax must be raised by 130 percent. This tax increase will reduce the emissions of sulphur dioxide to below their initial level, but will leave the emissions of nitrogen oxides at a higher level than initially.

One of the premises implied in paper [II] is that the changes in consumer prices, as a result of changes in environmental taxes, may send a different signal to the consumer compared with other changes in consumer prices, such as changes in producer price. In addition, this assumed difference in the signaling effect of the changes in environmental taxes, compared to changes in the producer price, may also differ between different commodities. To achieve the objectives a system of demand functions for Swedish households is estimated. To test for the signalling effect of environmental taxes the consumer price for energy goods is partitioned into a producer price part and a tax part.

In Paper [III], we estimate the income elasticity of demand for recreational services and other traditional groups of goods in Sweden and we test for potential changes in such estimates over the twentieth century. The paper uses Swedish household surveys for the years 1913, 1984, 1988, and 1996. Because of the difficulty of directly observing the demand for recreational services, we employ an indirect methodology by using the demand for some outdoor goods as proxies for the recreational services demand.

In paper [IV], we investigate the relationship between pollution and income at the household level. Here we want to investigate, and hence contribute to the existing literature, under what conditions concerning individual preferences and the link between consumption and pollution a linear relationship are to be expected, but also to empirically assess the relationship. To achieve our objective we formulate a model determining different type of households’ choice of consumption for goods. Furthermore we link the demand model to emission functions for the various goods. The results from the empirical analysis show that, at least in a close neighbourhood of observed income/pollution, we can reject linearity for all three types of pollutions, CO2, SO2, and NOx. According to our results the pollution/income relationships are all strictly concave. Thus the implication is that the income distribution seems to matter in the sense that equalization of income will lead to higher emissions. Furthermore it is shown that the slope as well as the curvature differs between different types of households, which means that preferences differ across households.

Place, publisher, year, edition, pages
Umeå: Institutionen för nationalekonomi, Umeå universitet, 2006. 115 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 678
Keyword
Household consumption, energy demand, emissions, rebound effect, energy taxation, tax elasticities Environmental services, income elasticities, Engel Curves, income distribution.
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-749 (URN)91-7264-079-0 (ISBN)
Public defence
2006-05-05, Sal s205h, Samhällsvetarhuset, Umea University, 13:15
Opponent
Supervisors
Available from: 2006-04-10 Created: 2006-04-10 Last updated: 2012-06-04Bibliographically approved

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