Improving energy efficiency is likely to partially, or in extreme cases wholly, offset energy savings, case studies from Scotland and other parts of the UK show. They find that efficiency improvements lead to higher CO2 levels, as industry seeks to benefit from lower energy prices.
Businesses that produce a certain amount of output more cheaply consequently use more, not less, energy, the authors argue. Growing economies also mean that consumers have larger incomes at their disposal, increasing their energy usage.
Efficiency gains give energy-intensive industries in particular a competitive edge, directing consumer demand towards their goods. The increase in production then further raises energy demand, the study claims.
The research reveals that improving efficiency in Scotland's economy by 5% would lead to higher energy demand in most production sectors. However, when the improvements occur in the energy supply sector, demand will actually grow in excess of the efficiency gains.
The results thus sound the alarm for policymakers, indicating that complementary policies that take into account the market's response to changing prices and larger incomes must be devised.
"The presence of a strong rebound, or even a backfire, does not mean that efficiency-enhancing policies are irrelevant. Rather, it suggests that such policies alone are not enough to generate environmental improvements," the authors say. What is needed are complementary policies such as taxes on energy to maintain higher prices, they conclude.
Meanwhile, the EU has made energy efficiency a priority of its fight against climate change. One arm of its strategy is the new energy labelling scheme proposed by the European Commission in November 2008 (EurActiv 14/11/08).
The aim is to extend the scope of the existing Energy Labelling Directive to include all energy-related products, as well as instruments for public procurement and incentives.
Nevertheless, the Greens described the proposal as a "confusing new system of numbers and letters," giving consumers little clarity about what products are most efficient. They called for clearer standards, emphasising the importance of smart regulation in reaching the EU's energy savings target of 20% by 2020.
