Global Rebound Effects Viewed Through the Returns on Investment in Energy Efficiency

This paper re-examines the relationship between global Gross Domestic Product (GDP), Primary Energy Use (PEU) and Economic Energy Efficiency (EEE) to explore how investment in energy efficiency causes rebound in energy use. Assuming GDP is a measure of final useful work, we construct and fit a physical nonlinear dynamic model to global GDP, PEU and EEE data from 1900 - 2018 and use it to estimate how energy efficiency investments relate to output growth and hence rebound effects. We illustrate the effects of future deployment of enhanced energy efficiency investments using two scenarios through to 2100. The first maximizes GDP growth, requiring energy efficiency investment to rise ~2 fold. Here there is no decrease in PEU growth because rebound effects dominate. The second scenario minimizes PEU growth by increasing energy efficiency investment ~3.5 fold. Here PEU and GDP growth are fully decoupled as rebound effects are minimal, although this results in a long run zero output growth regime. We argue it is this latter regime that is compatible with the deployment of enhanced energy efficiency to meet climate objectives. However, while output growth maximising regimes prevail, all efficiency-led pledges on energy use and emissions reduction appear likely to fail