The rebound effect on road freight transport: Empirical evidence from Portugal

Because a large proportion of total operating costs for transportation companies goes towards energy, a reduction in energy operating costs, brought about by an increase in fleet fuel efficiency, or an increase in operational efficiency, results in a change in the relative cost of road freight transportation. This fact could result in an increase in the demand for such services. If this is true, the result would be an increase in total fuel consumption. Consequently, that part of the energy savings obtained through the increased energy efficiency would be lost. The existence of a “Rebound Effect” is especially important in the road freight transportation sector and is crucial for the definition of a national energy policy.In this study, data from the road freight transportation sector in Portugal for the years of 1987 through 2006 was analyzed. It was determined that an increase in energy efficiency did not cause a backfire, but did cause a total direct rebound effect of 24.1%. In addition, fleet operators were more inclined to adopt operational efficiencies than technological fuel efficiencies as a means of increasing the total operational efficiency.

Research highlights
► We estimate a direct rebound effect for road freight transportation in Portugal.
► The functional form chosen was a log-log model and the estimation method used was the two stage least squares model.
► Increasing energy efficiency by 1% results in a reduction of 0.759% in energy consumption (a direct rebound effect of about 24.1%).
► Estimates of reduced fuel consumption without considering the direct rebound effect may be overestimated by about 0.87 million liters of diesel per year for each percentage point increase in energy efficiency.