The Cambridge Centre for Climate Change Mitigation Research published some interesting research last week. The Centre predicts that half the carbon emissions savings made from greater fuel efficiencies will be wasted by a corresponding rise in fossil fuel use.
Terry Barker, the Centre’s Director, says that the politicians have not considered what he called ‘the rebound effect’. “The rebound effect is not very welcome to politicians because they have been thinking that energy-efficiency programmes are the answer to climate change”. He continues:” it’s not nearly as good an answer as they thought. Efficiency programmes will have to be ramped up to achieve the same targets”.
So how does the rebound effect work? Say a manufacturer makes fuel efficiencies and saves costs. This enables the manufacturer to pass on these cost savings to its customers with reduced prices. But this gives the customers more money to spend, thereby increasing production. And using more energy.
This might be simplistic. People might save the extra money, for instance. With the severe effects of the economic downturn, conspicuous consumption is rapidly becoming unfashionable. This might continue as the world’s economies recover.
But the politicians would do well to heed the Centre’s warnings. Nobody really knows what will happen.