1. REBOUND EFFECT FOR UK RESIDENTIAL SECTOR
IAEE Conference, Singapore, June 18-21, 2017
Mona Chitnis (University of Surrey) Roger Fouquet (LSE) Steve Sorrell (University of Sussex)

2. Outline
Rebound mechanisms
Data overview
Model
Results
Discussion

3. Higher room temperature or leaving the heating on for longer
Rebound mechanisms for households
Total Rebound=Direct Rebound+Indirect Rebound
Indirect Rebound
Lower heating cost and
fuel bills
Lighting
More or less emissions
Less emissions
Higher room temperature or leaving the heating on for longer
Lower
running
cost for heating
Direct Rebound
More emissions

4. Measuring energy service price and Consumption
Data Sources
(e.g. DECC, ONS) pE E
Energy Price
(e.g. pence
per kWh)
Energy Consumption
(e.g. TWh for lighting)
Energy Efficiency
(e.g. lumen-hours per kWh)
Consumer demand is for energy Service (Heating, Cooling, Transport, Light, …) and not energy (fuel) itself. So the right thing is to focus on energy services rather than energy but many papers have focused on energy demand/rebound mainly because the efficiency data are not available.
Comparable with new Energy Sources or new Technologies
LR Divergences in Price of Energy and of Energy Services
So, especially for the Long Run, important to focus on Energy Services
Energy Service Price
(e.g. £ per lumen-hour)
Energy Service Consumption
(e.g. millions of lumen-hours)

5. Energy services in this presentation
Lighting
Heating
Wet and cold appliances
Other appliances
Cooking
Car transport
Explain what type of things/fuel they include
Heating and Cooking: electricity, gas, petroleum, coal

6. Average efficiency by energy service in the UK 1964-2015 (index, 1964=100)

7. Real price of energy services (index, 1964=100)
Real price of energy for services (index, 1964=100)

8. Consumption of energy services per equivalised person (index, 1964=100)
Energy consumption per equivalised person (index, 1964=100)

9. Total rebound estimation (in terms of CO2)
where:
Direct Indirect
: own-price elasticity of service s
: cross-price elasticity of service i with respect to service s
ui: CO2 intensity of service i
us: CO2 intensity of service s
wi: budget share of service i
ws: budget share of service s

10. Two stage budgeting model
Household expenditure
Energy services
Lighting
Heating
Wet and cold appliances
Other appliances
Cooking
Transport
Car
Other transport
Other goods and services
Stage 1
Stage 2

11. Almost Ideal Demand System (AIDS)
Stage 1:
r, z: 1, 2, 3
where:
wr=budget share of category r
Pz=price of category z
x=total expenditure per equivalised person
P=Laspeyres-like price index
Adding up:
Symmetry:
Homogeneity:
Explain the implication of each restriction.

12. Almost Ideal Demand System (AIDS)
Stage 2:
i, j: 1, …, 4
where:
wi=budget share of service i
Pj=price of service j
xr=total expenditure on services per equivalised person
Pr=Laspeyres-like price index
Adding up:
Symmetry:
Homogeneity:

13. Elasticities for two-stage budgeting model
Combined elasticities of stages 1 and 2 to obtain total price and expenditure elasticities for each energy and transport service (Edgerton 1997).
Within group elasticities:
Income elasticity
Uncompensated price elasticity
: Kronecker’s delta equal to one when r=s and zero elsewhere.
Total/between group elasticities:
Income elasticity
Uncompensated price elasticity
UK household annual time series data
Iterative Seemingly Unrelated Regressions (ISUR) method for system estimation

14. Estimated average elasticities
Total expenditure elasticities for energy services
Lighting
Heating
Wet & cold appliances
Other appliances
Cooking
Car transport
Expenditure elasticity
0.96
1.29
1.10
0.99
0.81
0.89
Total price elasticities for energy services
Price elasticity
Lighting
Heating
Wet & cold appliances
Other appliances
Cooking
Car transport
-0.936
0.381
0.088
0.059
0.036
-0.037
0.040
-0.696
0.065
0.031
0.044
-0.050
0.050
0.343
-0.922
0.049
-0.043
0.061
0.438
0.098
-0.939
0.064
-0.039
0.037
0.382
0.084
0.048
-0.917
-0.032
-0.004
-0.03
-0.006
-0.003
-0.54
Own-price elasticities except for heating generally look high though there is no other work to compare for appliances and cooking. Similarly, cross-price elasticities look generally high but no work too compare.

15. Estimated average rebound effects
Rebound effects between energy and transport services
Lighting
Heating
Wet & cold appliances
Other appliances
Cooking
Car transport
93.6%
-39.4%
-8.0%
-5.1%
-3.7%
1.8%
-3.9%
69.6%
-5.7%
-3.8%
1.4%
-5.5%
-39.3%
92.2%
-5.2%
Other appliance
-7.0%
-35.6%
-8.3%
93.9%
2.0%
-3.6%
-42.7%
91.7%
1.9%
0.7%
9.7%
0.6%
54.2%
Direct, indirect and total rebound effects for energy and transport services
Direct rebound
Indirect rebound (energy and transport services only)
Total rebound
Lighting
93.6%
-54.3%
39.31%
Heating
69.6%
-15.9%
53.68%
Wet & cold appliances
92.2%
-53.3%
38.92%
Other appliances
94.0%
-54.5%
39.40%
Cooking
91.7%
-57.8%
33.91%
Car transport
54.2%
13.1%
67.26%

16. Discussion Data assumptions and limitations
No backfire, but rebound is not negligible and should not be neglected
Indirect rebound plays an important role
Capital cost is within the expenditure on other goods and service/other transport categories
Indirect rebound of non-energy goods is neglected
Average rebound over the sample period
rebound over the sample period
Comparison with rebound based on energy/transport fuel demand

17. REBOUND EFFECT FOR UK RESIDENTIAL SECTOR
IAEE Conference, Singapore, June 18-21, 2017
Mona Chitnis (University of Surrey) Roger Fouquet (LSE) Steve Sorrell (University of Sussex)