Climate Models May Overestimate Energy and Emission Savings

According to a new study, headed by researchers from the University of Sussex Business School and the University of Leeds, the models used for creating global climate scenarios may overestimate the emission and energy savings realized from enhanced energy efficiency.

Steve Sorrell, Professor of Energy Policy in the Science Policy Research Unit (SPRU) at the University of Sussex Business School.
Steve Sorrell, Professor of Energy Policy in the Science Policy Research Unit (SPRU) at the University of Sussex Business School. Image Credit: University of Sussex.

The researchers reviewed a total of 33 studies and found that economy-wide rebound effects may deplete about 50% of the emission and energy savings from enhanced energy efficiency.

Such rebound effects emerge from businesses and individuals who respond to the advantages of better energy efficiency, like cheaper lighting, heating and travel.

Such responses boost industrial competitiveness, raise productivity, and enhance quality-of-life and they also decrease the economy-wide energy savings.

The latest analysis contends that economy-wide rebound effects are bigger than generally believed, which may partially explain the close associations between GDP and energy consumption over the last 10 decades.

It is expected that enhanced energy efficiency will play a crucial role in fulfilling the objectives of the Paris Agreement, contributing as much as 40% of the foreseen reductions in global greenhouse gas (GHG) emissions over the next 20 years.

But the new study also indicates that the models employed by the International Energy Agency (IEA), the Intergovernmental Panel on Climate Change (IPCC) and others do not sufficiently capture these economy-wide rebound effects.

Consequently, their situations may underestimate the upcoming demand for global energy. The absence of policies to reduce these rebound effects would make it more difficult to achieve the Paris Agreement targets.

The study authors argued that global energy modelers should consider the rebound effects more seriously and look for ways to capture the entire range of effects within their climate scenarios.

The authors also proposed the use of carbon pricing to reduce the rebound effects as well as the targeting of energy efficiency policies to increase their environmental and economic benefits.

Rebound effects are notoriously difficult to estimate, but our understanding has improved enormously over the last decade. What we show here is that 33 studies from different countries using very different methodologies all reach broadly the same conclusion—namely that economy-wide rebound effects are large. Unfortunately, the models we rely upon to produce global energy and climate scenarios do not adequately capture these effects. This needs to change.

Steve Sorrell, Professor of Energy Policy, Science Policy Research Unit, University of Sussex Business School

Dr Paul Brockway, University Academic Fellow in the School of Earth and Environment at the University of Leeds, stated: “If global energy use is higher than we expect, we may need to place more reliance on low-carbon energy supply and negative emission technologies to meet our climate goals. This will require political will, ambitious policies, large-scale investment, extensive land use, and crucially, significant lead times.”

We therefore need to take rebound effects seriously - and to find ways to maximise energy savings whilst continuing to improve quality-of-life.

Dr Paul Brockway, University Academic Fellow, School of Earth and Environment, University of Leeds

In a new article recently published in the Renewable and Sustainable Energy Reviews journal, the investigators observed that in spite of the steady growth in incomes, several global energy scenarios that comply with the Paris Agreement goals expect little or no growth in global energy demand.

But there is minimal precedent for such important 'decoupling' of energy usage from GDP.

Only a handful of nations have managed to develop their economies while decreasing energy consumption, but then only for a short duration of time.

Present global trends are in the other direction with global energy use growing quickly in the years before the COVID-19 pandemic.

The research team, including academics from the University of Leeds, the University of Sussex, the University of Massachusetts Amhurst, Calvin University, IFP Energies Nouvelles, and the Institut Louis Bachelier, assessed 21 studies in total, in which macroeconomic models were used to calculate the economy-wide rebound effects from a wide range of energy efficiency enhancements in different sectors and countries.

The researchers discovered that among the 21 studies, 13 had used a standard method of 'computable general equilibrium' modeling and calculated the rebound effects of 50% or more—indicating that more than 50% of the possible energy savings were 'taken back' by numerous behavioral and economic responses.

The mean estimate and the median estimate of the rebound effects from all these studies were 58% and 55%, respectively, with a few studies identifying that the energy savings were altogether eliminated.

The researchers also assessed 12 other studies in which a range of other techniques were used to calculate economy-wide rebound effects, and the team observed that these effects provided an even higher mean estimate of 71%.

Next, the researchers assessed four of the 'integrated assessment models' employed by the IPCC, along with the global energy models employed by Shell, BP, the US Energy Information Administration (EIA), and the International Energy Agency (IEA).

They observed that a majority of these models captured only certain mechanisms that contribute to the rebound effects, or included them in a streamlined manner. In certain cases, the process of calibrating scenarios mostly precluded the analysis of rebound effects.

Global energy models risk overestimating the potential for energy savings if they do not fully account for the multiple channels of the economy-wide rebound. Nearly all the scenarios for keeping global temperature increase to a manageable level rely on heavily improved energy efficiency so understanding the potential for rebound - and what mitigates it—is critical.

Dr Gregor Semieniuk, Assistant Research Professor at the University of Massachusetts Amherst

“Now is the time to re-examine rebounds in global climate scenarios to ensure that our expectations for energy savings are well-founded,” Dr Semieniuk concluded.

Journal Reference:

Brockway, P. E., et al. (2021) Energy efficiency and economy-wide rebound effects: A review of the evidence and its implications. Renewable and Sustainable Energy Reviews.

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