Direct rebound effect on urban residential electricity use: An empirical study in China

Though improving energy efficiency is an important approach to decrease the energy consumption, the rebound effect caused by technology progress negatively affects the effectiveness of energy efficiency policies. This paper empirically investigates direct rebound effect of urban residential electricity use in China. Using China's 30 provincial government panel data from1996 to 2010, we build a co-integration equation and a panel error correction model to analyze the direct rebound effect. The results indicate that an obvious rebound effect in the Chinese urban residential electricity consumption does exist. Specifically, the long-term rebound effect is 0.74, while the short-term rebound effect is 0.72. Therefore, the rebound effect significantly impairs functions of energy efficiency policies. For this reason, Chinese government should take the rebound effect into consideration when formulating energy policies.