Energy rebound effect in China: Measurement based on a variable coefficient production function

Abstract

The presence of the energy rebound effect (ERE) creates significant challenges in realizing the goals of energy-saving policies. Current literature measuring ERE based on production function faces two limitations. First, energy intensity is used as the indicator of energy efficiency, but reductions in energy intensity do not necessarily trigger ERE. Second, the assumption that input elasticities remain constant across regions and periods is unrealistic. To make up these defects, we propose a model using total-factor energy productivity as an indicator of energy-augmenting technology and develop a framework to measure ERE driven by advancements in energy-augmenting technology. Moreover, we employ a variable coefficient production function to measure the contribution of energy augmenting technology progress to output growth and further ERE. The findings demonstrate that, firstly, various inputs exhibit significant temporal and regional disparities in output elasticities. Second, the ERE is estimated to be 27.21 % on average in China, while a fixed-coefficient Cobb-Douglas model overestimates the ERE at 30.43 %. Third, regional and temporal disparities are evident in the ERE. Based on these conclusions, pertinent implications are put forward to inform the policymakers.