Jon Koomey and I have a new paper out on energy efficiency and the rebound effect. In a joint post at his website, we explain what the paper means and its implications for the debate over the effectiveness of energy efficiency as a climate mitigation strategy.
Our paper critiques the primary line of evidence behind a 2011 Breakthrough Institute report on the rebound effect, which relied heavily on a paper from BTI Senior Fellow Dr. Harry Saunders. But Dr. Saunders' analysis turns out to have been sorely mistaken, as we show in our new paper:
Our work confirms that Dr. Saunders’ data actually concern national average prices, not the sector- and location-specific marginal prices that energy economists agree are necessary to evaluate the rebound effect. The distinction is most important because actual energy prices vary widely by sector and location; in addition, economic theory asserts that changes in the marginal (not the average) price of energy services cause the rebound effect. As a result, Dr. Saunders’ findings of high rebound and backfire are wholly without support.
Lest this seem like a petty academic grievance, it’s as though Dr. Saunders set out to study the performance of individual NFL quarterbacks when their teams are behind in the third quarter of play, but did so using league-wide quarterback averages across entire games—not third-quarter statistics for each player. If that doesn’t sound credible to sports fans, trust us, it’s an even bigger problem when you’re talking about the last fifty years of U.S. economic history.
Check out the whole essay here.
UPDATE: Jon and I have received a few replies from Breakthrough-affiliated researchers and have posted our responses here.