This study, which can be downloaded below, discusses the government’s apparent assumption that the costs of the UK’s energy and climate change policies will be offset by energy efficiency measures, both in domestic households and in businesses, leading to a reduction in energy consumption (i.e. energy conservation).
The following three terms appear widely in our discussion:
By “shortfall” we mean the degree to which an energy efficiency measure fails to operate at the expected level, or under-performs in real world conditions, resulting in smaller energy savings than are anticipated by an engineering analysis or policy models.
By “rebound” we mean the tendency of a user, which might be an individual or a household or a business, to use more of an energy service when it becomes cheaper because of an efficiency improvement. For example, a household might tend to heat more of a house to higher temperatures after applying insulation. In the domestic sector and in relation to heat this is sometimes referred to as “comfort taking”. Rebound reduces the energy saving expected from the measure.Some authors would describe this as “direct rebound”, and use the term “indirect rebound” to refer to the increases in energy consumption in a household or a business that result from the fact that money has been saved, and may be spent on some other energy-consuming activity. For example, a household the energy bills of which had fallen might choose to eat out more often, thus increasing energy consumption in the wider economy.
When rebound is so large that it increases energy consumption beyond that which was the case before the efficiency improvement, it is called “backfire”. The classic example of “backfire” is the steady improve-ment of steam engine efficiency in the nineteenth century, which encouraged the progressively wider use of such engines, thus dramatically increasing overall fuel consumption. Theoretically, backfire can also occur in domestic situations, a key historical example being lighting, where lighting costs in 2000 had fallen to 1/3000th of the costs in 1800 but the per capita use rose 6500-fold.