Technological progress and energy rebound effect in China׳s textile industry: Evidence and policy implications

Although energy efficiency improvement can reduce energy consumption, reduction of the effective price will also increase the demand for energy services. Part of this reduction is then offset because of the energy efficiency improvement. The magnitude of this energy rebound effect is one of the important factors that must be considered in the formulation and implementation of energy policies. The textile industry is a traditional pillar industry in China. It is an important part of the national economy and contributes significantly to international trade. This study uses the Morishima elasticities of substitution (MES) model combined with asymmetric energy prices, trans-log cost function, and other econometric methods to establish a framework to measure the rebound effect in China׳s textile industry. The empirical results of this paper indicate that the rebound effect for China׳s textile industry is 20.991%. This reveals that energy efficiency improvement is conducive for energy saving to a certain degree. Notwithstanding, these results also prove that energy efficiency improvement is not the only way for China׳s textile industry to realize energy saving and emission reduction. Finally, based on the analysis, future policy priorities are suggested.