Does energy efficiency lead to energy savings?

11 May 2015
- for immediate release

Does energy efficiency lead to energy savings?

Do you leave the lights on longer than you used to now you are using energy efficient bulbs?

Improvements in energy efficiency are meant to curtail energy use rather than increase it —however this is not always the case.

Lincoln University senior lecturer Dr Baiding Hu is looking into this seemingly contradictory occurrence in the world’s biggest economy, and will be applying what he learns to the New Zealand economy.

He is on sabbatical at the Department of Economics at the National University of Singapore.
While there his research is concerned with “energy rebound effect” in China’s industrial sector.

The rebound effect refers to additional energy consumption due to energy efficiency improvement.

Dr Hu says the worst case scenario would be when the amount of energy saving resulting from efficiency improvement is completely offset by additional energy use.

“The economic argument for the rebound effect is that energy efficiency improvement reduces the effective cost of energy therefore consumers would want more of it. Since every government has its energy policy in terms of energy efficiency standards, such as building codes or car fuel economy, a rebound effect study has its policy implications.”

He is finding the energy rebound effect exists in China’s industrial sector.

“Over the 20 years to 2012, the rebound effect ranges from 10 per cent to nearly 80 per cent.”

This shows that over the period at least 10 per cent of potential energy savings due to energy efficiency improvement was lost, with a maximal percentage loss of 80 per cent, Dr Hu says.

“In terms of policy implications, since there are still energy savings (unless the percentage is more than 100), the Chinese Government’s current energy policy scheme should continue. “

As the rebound effect is still under 100 per cent, energy efficiency programmes have been working.

“If, on the other hand, the rebound effect is larger than 100 per cent, which is termed ‘backfire’, then there is a case for the Government to intervene with fiscal policy measures.”

He plans to conduct a study in New Zealand soon.

“To my best knowledge, there are no studies to evaluate energy rebound in the New Zealand economy.

“With what I have done so far for China, I am well prepared to undertake such a task and expect a relatively swift completion of it subject to data availability.”

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