Rebound effects for residential electricity use in urban China: an aggregation analysis based E-I-O and scenario simulation

Technological progress is considered an important means of decreasing energy consumption. However, rebound effects caused by energy efficiency improvements directly affect the realization of energy savings and emission reduction. This paper focuses on the main theory and methodology of direct and indirect rebound effects. Using 30 sets of provincial panel data and national input–output data for China from 2007, this paper builds a co‐integrating equation, a panel error correction model, and an 8‐sector energy‐input–output model. We subsequently estimate the direct and indirect rebound effects of urban residential electricity use. The results indicate that in the long term the direct plus indirect partial rebound effect is 0.79; in the short term it is 0.78. Thus, the majority of the expected electricity reduction in Chinese urban residential energy consumption arising from efficiency improvement may be offset. These rebound effects impair the functioning of energy efficiency policies. Therefore, the Chinese government should not improve energy efficiency alone–they must also take into consideration the relevant energy‐pricing reforms when formulating energy policies.