The world is failing to account for a “rebound effect” that could wipe out more than half of the savings from energy efficiency improvements like cleaner cars, making the goals of the Paris Agreement even harder to hit.

Improvements to energy efficiency, from LED lights to better steel-making arc furnaces, are seen by many authorities as a top priority for cutting carbon emissions. Yet a growing body of research suggests that human behaviour and economics mean a major chunk of anticipated efficiency savings are lost.

A team led by Paul Brockway at the University of Leeds, UK, looked at 33 studies on the economy-wide impact of a phenomenon known as the rebound effect. First comes the direct rebound: for instance, when someone buys a more efficient car, they may take advantage of that by driving it further. Then comes the indirect rebound: fuel savings leave the owner with more money to spend elsewhere in the economy, consuming energy. This contributes to the macro effect of growing the overall economy.

Although the 33 studies used different methods to model the rebound effect, they produced very consistent estimates of its impact, leading Brockway and his colleagues to conclude that the effect erodes, on average, 63 per cent of the anticipated energy savings.

“We’re not saying energy efficiency doesn’t work. What we’re saying is rebound needs to be taken more seriously,” says Brockway.

The idea that increased efficiency may not deliver the hoped-for savings dates back to the Jevons paradox, named after the economist William Stanley Jevons who, in 1865, observed that more efficient coal use was leading to more demand for coal. The last review of the economy-wide rebound effect was in 2007. The new analysis is the first to pull together the explosion of research since.

Worryingly, the influential energy models that governments and companies rely on to examine how future emissions and energy demand may unfold aren’t good at capturing the rebound effect. The team looked at 17 scenarios from energy models, including ones used by the International Energy Agency, the UN climate science panel, BP, Shell and Greenpeace. “Most of the models missed out large numbers of the channels which contribute to rebound effects,” says Steve Sorrell at the University of Sussex, UK, a co-author of the new study. One scenario assumed a rebound effect of just 10 per cent.

“The message is these rebound effects do definitely need to be incorporated in any scenarios. If they haven’t been incorporated, emissions are likely to be even greater,” says Roger Fouquet at the London School of Economics.

If the rebound effect does prove to be as big as suggested, it means future global energy demand will be higher than expected and the world will need far more wind and solar power and carbon-capture technology than is currently being planned for. “It’s fair to say it will make it harder to meet the Paris targets if we don’t properly account for rebound effects in modelling and policy,” says Brockway.

But that doesn’t mean nothing can be done to limit the rebound effect. One answer is to double down on energy efficiency and do twice as much to achieve the same effect, says co-author Gregor Semieniuk at the University of Massachusetts Amherst.

Sorrell says more carbon pricing, as well as more ways to capture the financial savings from efficiency and force them into investment in green technology, could also help us tame the rebound effect.

Journal reference: Renewable and Sustainable Energy Reviews, DOI: 10.1016/j.rser.2021.110781