The economy-wide rebound effect from improved energy efficiency in Swedish industries–A general equilibrium analysis

•We model the rebound effect from efficiency improvements in industrial energy use.•We examine different assumptions that are important to the size of the rebound effect.•We find that rebound effects in the range of 40–70 per cent for the Swedish economy.•We conclude that technological development will lead to energy conservation.•We find that the rebound effect is lower if improvements in energy efficiency are costly.

The objective of this paper is to analyse the rebound effect from increased efficiency in industrial energy use in Sweden. Energy efficiency improvements can have significant micro- and macroeconomic effects that hamper the positive effect on real energy savings. To assess the size of the overall rebound effect in the Swedish economy, we apply a computable general equilibrium model. The results show that the economy-wide rebound effect depends on a number of factors, e.g. the extent of the energy efficiency improvement, how the labour market is modelled as well as whether the increase in energy efficiency is combined with a cost or not. We find that the rebound effect following a five per cent increase in energy efficiency in the Swedish industry lies in the 40–70 per cent range. When energy efficiency is only improved in energy-intensive production, the rebound effect becomes even higher. These findings are in line with the results in the literature.