9 Quantification and valuation of direct rebound effects
Requirements of the guidance
9.1 The rebound effect is an umbrella term for a number of mechanisms which reduce the size of the 'energy savings' achieved from improvements in energy efficiency.
9.2 Direct rebound effects can occur where households who have their fuel bills reduced due to the measures installed use some of the financial savings to consume more energy to increase the temperature of their homes and so take additional thermal comfort. This is known as comfort taking. The implications of comfort taking are that the savings that are projected to arise from the installation of energy savings measures may not be realised to the same extent in-situ 14. Without adjusting for these direct rebound effects the estimated energy and carbon savings can be over-stated.
9.3 Indirect rebound effects occur where the money saved from energy efficiency savings are spent elsewhere in the economy, which may include more carbon intensive expenditure (e.g. international flights). Indirect rebound effects have also been defined so as to include the impacts associated with embodied energy associated with the energy efficiency measures.
9.4 When valuing direct rebound effects (such as comfort taking) the guidance requires that the full retail price (including tax) should be used. This is because consumers are willing to pay at least the full retail price for the comfort benefit. No guidance is provided on indirect rebound effects, although these are normally dealt with at an economy wide, rather than policy level.
Application of guidance to pilots
9.5 As described above rebound effects are specifically related to policies and measures that deliver energy savings. On this basis the consideration of rebound effects was important for the policy pilots that targeting energy consumption within households (i.e. EAP, HIS).
9.6 Rebound effects may also be potentially important for the SRDP project at the holiday park, since the installation of the boiler may change the relative cost of delivering hot water and heating. However, insufficient information was available to quantify this impact adequately. Likewise the impact of the Alexander Dennis project was not quantified.
9.7 For the EGIP, the extent to which rebound effects will be applicable is uncertain, since the users of the improved service will not benefit directly from the reduced energy consumption. However, similar impacts may also be associated with time savings, i.e. the induced demand from the improved service, which in turn may influence level of energy consumption.
9.8 The approach to quantifying direct rebound effects in each of the pilots is summarised in the Table below.
Table 9.1 Impacts on final energy consumption within pilots
| Rebound effects | Methodology |
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EGIP | The extent of any direct rebound effects from consumers is uncertain, as they may not benefit directly from any energy savings. However, similar effects may be associated with the time savings delivered by the new service which is likely to induce modal shift and associated energy savings. | The Transport Model for Scotland is a multi-purpose forecasting toolkit developed by Transport Scotland to assist in the investigation and assessment of different policies and strategies on land-use and transport provision. This model has been used in the original assessment and included the analysis of the potential modal shift from road to rail. This assumes that new passengers will use the rail line as a result of the improvements (induced demand). The model accounts for the behavioural relationships of different modal transport and users. The outputs from the modelling suggested that that the change in modal shift is relatively insignificant in the overall scheme. |
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EAP | Direct rebound effects will arise from the fact that the energy savings measures mean that it will cost the householder less the deliver the same level of warmth. Consequently, they may decide the take use some of the energy bills savings on increased warmth. | On the basis of research commissioned by Defra, current appraisals of UK energy efficiency polices in the domestic sector assume that comfort taking reduces the emissions savings by 40% for all insulation measures installed in households in low income areas. This assumption has been assumed to hold true for the savings from the EAP in Scotland. In addition, research suggests that after a home has reached a comfortable temperature of approximately 21ºC in the living area further bill savings will not be taken as increased comfort. To account for this, when considering a whole house approach, comfort taking has only been applied to insulation measures within existing policy appraisals i.e. comfort taking has not been applied to heating measures. This approach has been followed in the appraisal of the energy savings from the EAP. |
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HIS | Direct rebound effects will arise from the fact that the energy savings measures mean that it will cost the householder less the deliver the same level of warmth. Consequently, they may decide the take use some of the energy bills savings on increased warmth. | On the basis of research commissioned by Defra, current appraisals of UK energy efficiency polices in the domestic sector assume that comfort taking reduces the emissions savings by 40% for all insulation measures installed in low income areas, with a factor of 15% used for measures installed outside of low income areas. This assumption has been assumed to hold true for the savings from the HIS in Scotland. |
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SRDP | In the holiday park example the project is not assumed to influence the level of energy consumption (in delivered terms) as the level of energy demand is assumed to remain the same. However, it will change the source of energy from electric heating and hot water to a biomass boiler. It is conceivable that the change of fuel may influence the cost of providing heating which may in turn influence the level of demand. However, it is not clear if the cost of heating will be paid directly by the users of the park or indirectly as part of the overall holiday park tariff, in which case it cannot be specified if the users will directly benefit from any price changes and modify their behaviour accordingly. On this basis we have assumed that the project does not lead to any direct rebound effects. However, the owners of the holiday park may choose to spend any financial savings on more energy intensive consumption. | No direct rebound effects are expected to arise. |
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SEG | Rebound effects have not been considered as the impacts are too uncertain | Rebound effects have not been quantified. |
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Comments and recommendations from the pilots
9.9 The issue of direct rebound effects is most applicable to the two policies targeting energy consumption within households.
9.10 Whilst a number of research studies have been commissioned to examine the evidence on comfort taking within households there still remains a great deal of uncertainty over the values. Whilst this uncertainty relates in part to the influence of technical underperformance of measure also, it is clear that the assumptions used for comfort taking can have an important bearing on the overall results. In particular, whether the measures are assumed to be installed in low income households, or not, will influence the level of assumed comfort taking by more than a factor of two. For policies that act upon households this requires an approximation of the split of household types.
9.11 Based upon this analysis the following recommendations can be made with respect to the carbon appraisal guidance:
- The current guidance provides limited information on how direct rebound effects are defined or the existing evidence on the potential levels of rebound. Whilst this is a detailed issue, further explanation would provide a greater awareness of the issue, and understanding of the circumstances where it might be appropriate, and its overall importance. It would also ensure that comfort taking is evaluated consistently.
- Reference to existing research on comfort taking, including the factors used in existing policy appraisal would be useful.
- For completeness, some commentary on indirect rebound effects would also be useful, if only to state that they should be assessed at an economy wide, rather than individual policy level.
9.12 No major issues or challenges were faced during the valuation of the direct rebound effects. Likewise no areas were identified where the guidance should be modified to reflect the circumstances in Scotland.