Why do rebound effects matter?

The magnitude of rebound effects determines how effective efficiency improvements are at contributing to lasting reductions in total energy use (and therefore greenhouse gas emissions). Energy efficiency is frequently cited as the single greatest contributor to emissions reduction. The problem is that all of these estimates are based on an assumption: that energy efficiency reduces energy demand in a linear, direct, and one-to-one manner. An X% gain in efficiency leads to an equivalent X% reduction in total energy use. The economy is anything but direct, linear, and simple, especially when responding to changes in the relative price of goods and services. If we don’t accurately and rigorously account for rebound effects, we risk over-relying on energy efficiency to deliver lasting reductions in energy use and greenhouse gas emissions, and we might fall dangerously short of climate mitigation goals.