{
  "id": "RL31188",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL31188",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 101003,
      "date": "2001-11-19",
      "retrieved": "2016-05-24T20:19:14.077941",
      "title": "Energy Efficiency and the Rebound Effect",
      "summary": "Several measures in the 107th Congress seek to increase energy efficiency as a means to decrease\ndependance on foreign oil, cut electricity demand and to curb both air pollution and greenhouse gas\nemissions. However some claim that these measures may not be as effective as projected because\nof the rebound effect.\n  By definition, increasing a device's energy efficiency decreases its consumption of energy. \nHowever, a simple projection may overestimate the energy savings unless it accounts for the\nconsumer's response to lower costs. For example, a company that doubles the efficiency of an\nelectric home heating system projects that the cost of operating this device should be cut in half. But\nnow that it is cheaper to heat his house, the consumer may choose to increase the setting on his\nthermostat. Instead of saving the money and reducing the demand for electricity which the increased\nefficiency would allow, the consumer may choose to spend some of the money saved to live at a\nmore comfortable temperature. This is an example of the rebound effect. \n  The rebound effect is defined as the difference between the projected and the actual savings due\nto increased efficiency. It is a combination of three components: direct effects, indirect effects, and\nmarket or dynamic effects. The home heating example cited above is an example of the direct effect.\nAn example of the indirect effect is the consumer choosing to spend the savings from a more\nefficient home heater to purchase another electric device such as a new hair dryer. The market or\ndynamic effect occurs when a decrease in aggregate demand causes the energy price to fall. This,\nin turn, makes new uses economically viable or increases the market penetration of existing devices,\ndriving up demand. An example of this is the introduction of a more efficient coal burning engine\nused in the extraction of coal in the mid-1880s. The new engine was predicted to reduce overall\nconsumption; however, its use greatly lowered the price of coal. Thus more people could afford to\nuse coal heat in their homes, which greatly increased demand.\n  The size of a rebound depends on many factors, including the type of device being improved,\nenergy prices, consumer income, and the overall state of the economy. For typical consumer\nend-uses, the rebound usually ranges between 0% and 40%. That is, the actual energy savings ranges\nfrom 60% to 100% of the projected amount. \n  Policymakers may be able to more accurately gauge the realistic benefits of proposed efficiency\nprograms by accounting for the rebound effect. For instance, some may consider it desirable\ncompensate for the rebound effect by increasing appliance efficiency or fuel economy standards even\nfurther than previously suggested. Alternately, others may feel that a lower energy savings estimate\nmeans reduced program cost effectiveness. A third choice would be to slightly lower expectations\nof the proposed program. \n  How the rebound effect changes projected reductions in greenhouse gas emissions is\ncontroversial, although it is generally agreed that increases in efficiency will reduce emissions per\nunit of Gross Domestic Product.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
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      ],
      "topics": []
    }
  ],
  "topics": [
    "Energy Policy"
  ]
}