Scandinavian Working Papers in Economics

CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

No 2017:1: The Rebound Effect in Swedish Heavy Industry

Golnaz Amjadi (), Tommy Lundgren (), Lars Persson () and Shanshan Zhang
Additional contact information
Golnaz Amjadi: CERE and the Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S-901 87, Umeå, Sweden
Tommy Lundgren: CERE and the Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S-901 87, Umeå, Sweden
Lars Persson: CERE and the Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S-901 87, Umeå, Sweden
Shanshan Zhang: CERE and the Department of Forest Economics, SLU, Postal: Department of Economics, Umeå University, S-901 87, Umeå, Sweden

Abstract: Energy efficiency improvement (EEI) benefits the climate and matters for energy security. The potential emission and energy savings due to EEI may however not fully materialize due to the rebound effect. In this study, we measure the size of rebound effect for the two energy types fuel and electricity within the four most energy intensive sectors in Sweden – pulp and paper, basic iron and steel, chemical, and mining. We use a detailed firm-level panel data set for the period 2000-2008 and apply Stochastic Frontier Analysis (SFA) for measuring the rebound effect. We find that both fuel and electricity rebound effects do not fully offset the potential for energy and emission savings. Furthermore, we find 2 CO intensity and fuel and electricity share as the two main determinants of rebound effect in Swedish heavy industry. Our results seems to imply that it matters both to what extent and where to promote EEI, as the rebound effect varies between sectors as well as between firms within sectors.

Keywords: Energy efficiency improvement; Rebound effect; Stochastic Frontier Analysis

JEL-codes: D22; Q40

38 pages, January 31, 2017

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