Heterogeneous direct rebound effect: Theory and evidence from the Energy Star program

Improvements in energy efficiency change the relative prices of energy services and thus the consumption of those services. This so-called direct rebound effect changes the energy savings that improved efficiency might otherwise achieve. This paper develops a theoretical model that shows the sign of the direct rebound effect depends on the type of energy service. Empirical evidence from the 2009 Residential Energy Consumption Survey data shows a negative direct rebound effect for Energy Star dishwashers and a potentially positive direct rebound effect for Energy Star air conditioners. Negative rebound effects amplify energy savings, while positive rebound effects offset energy savings from using more efficient technologies.