Technological progress and rebound effect in China's nonferrous metals industry: An empirical study

Abstract

As one of China's mainstay and six major energy-intensive industries, the nonferrous metals industry faces the intense contradiction between economic growth and energy & environment constraints. Technological progress does not only realize the energy savings, but also causes rebound effect by promoting output growth. Although the rebound effect is an important topic, there is still very little empirical research that focuses on the nonferrous metals industry in China. Using the LMDI method and the total factor productivity model (to calculate parameters), we estimate the size of the rebound effect in China's nonferrous metals industry over the period 1985–2014. According to the results, the average rebound effect is approximately 83.02% with a downward trend, which indicates that most of the expected energy savings are mitigated. The rebounds with a strong fluctuation are comparatively discussed in various periods, suggesting that China cannot count only on technological progress to save energy and reduce emission. Furthermore, the government should apply economic instruments, such as energy pricing mechanism reform, resource tax, and carbon tax, as supplements to realize the targets of energy conservation and emission reduction. Additionally, optimizing sub-sector structure and promoting substitution also play a significant role in the mitigation of the rebound effect.