Abstract
Energy efficiency can be represented by energy intensity, i.e., physical energy use per unit economic output. One percent energy efficiency improvement is expected to reduce one percent energy intensity and physical energy use to produce a given output. However, the real energy intensity and physical energy use may differ from the expectations due to output growth. How can we estimate the rebound effect of the energy intensity change? The present paper offers a method based on a general form of production function. The method does not require the assumption of profit maximization for producers. The energy intensity changes can come from both factor-augmented and factor-neutral technological improvement and substitutions between energy and other inputs in the production. In the calculation, the signal for policy-making is not plausible if potential energy use is assumed to change at the same rate as the observed energy intensity.
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