Estimating long-term and short-term CO2 rebound effects of China’s urban residential sector: evidence from a dynamic econometric approach

Abstract

This study quantifies China’s urban residential CO2 rebound owing to improvements in energy efficiency. We use a dynamic econometric model (error corrected linear approximated almost ideal demand system, ECM-LA-AIDS) to examine the relationship between energy-efficiency promotion, energy consumption behaviour, and the CO2 rebound effect. An improvement in energy efficiency lowers the energy price, resulting in unbalanced short- and long-term energy consumption behaviours. Inconsistent short- and long-term energy-efficiency policies may lead to greater rebound effects. Therefore, this study estimates the residential energy-related CO2 (ECR-CO2) rebound effects considering both short- and long-term consumption patterns to provide targeted policies for controlling residential ECR-CO2. The results indicate that the short- and long-term urban residential ECR-CO2 effects differ across regions and provinces. Additionally, the direct rebound effect contributes more to the total ECR-CO2 rebound effect than the indirect rebound effect. Finally, at the national level, the urban residential ECR-CO2 rebound effects exhibit a U-shaped divergence, indicating that, among the 31 Chinese provinces considered, the ECR-CO2 rebound effect first converges and then diverges, owing to differences in the levels of technological progress.