Rebound effect
A response in which efficiency gains lead to changes in behaviour or activity that offset part of the expected saving.
Example
Cheaper energy per kilometre can encourage additional driving.
The catch
The size of the effect is context-dependent and requires measurement.
In more depth
Rebound effect, explained.
A rebound effect is why efficiency upgrades often save less energy than engineering estimates predict, and it comes in layers. The direct kind is extra use of the same service, such as heating a home to a higher temperature after insulation. Money saved can also flow into flights or gadgets with their own emissions, which economists call indirect rebound. Across a whole economy, cheaper energy services can lift output and demand.
Reviews of the evidence generally find that rebound erodes part of an efficiency saving, and cases where consumption grows enough to cancel the whole saving are the exception. The response is to pair energy efficiency with policies that keep the overall signal pointing down, such as carbon pricing or standards. In evaluations, treat projected savings as an upper bound until metered consumption confirms them.