Do energy efficiency improvements reduce energy use? Empirical evidence on the economy-wide rebound effect in Europe and the United States

Increasing energy efficiency is often considered to be one of the main ways reducing greenhouse gas emissions. However, gains that reduce cost services result in use rebounding and potential savings being eaten up. Empirical research quantifies economy-wide rebound effect while taking dynamic economic responses improvements into account limited. We a Structural Factor-Augmented Vector Autoregressive model (S-FAVAR) allows us track how changes response an improvement accounting for vast range confounders. find effects 78% 101% after two years France, Germany, Italy, UK, US. This implies innovations alone may limited help future emphasizes importance tackling carbon emissions directly.