An economy-wide rebound effect analysis of Kenya's energy efficiency initiatives

Abstract

Adoption and improvement of energy efficiency is one of the recommended pathways to tackle the problems of growing energy demand and greenhouse gas emissions. However, studies show that rebound effects from energy efficiency improvements can erode anticipated energy savings. This paper elucidates the rebound effect arising from energy efficiency initiatives in Kenya. The study uses Index Decomposition Analysis to assess the drivers of Kenya's total primary energy supply. The paper then adopts the neoclassical growth model in the empirical analysis of energy and carbon rebound effects at the macro-economic level. Cobb-Douglas production function is further applied using Solow growth model and energy as a factor of production to approximate technological progress. Results of decomposition of energy supply show that energy intensity and affluence are the drivers with the most significant effect on energy supply while population has less critical effect. Average energy and carbon rebound effects show partial rebounds of 15.64% and 31.41%, respectively. These results imply that there is need to accelerate the pace of transitioning to green energy as the ultimate solution to minimizing environmental impacts arising from energy use and tackling climate change.