The energy rebound effect in households: Evidence from urban and rural areas in Beijing

Abstract

With Beijing facing greater pressure for energy conservation, improving energy efficiency becomes more necessary. However, the energy rebound effect may weaken this energy-saving effect. Using the LA-AIDS (Linear Approximation of the Almost Ideal Demand System) model and simulation analysis, this paper evaluates the energy rebound effects of different commodity groups in Beijing’s urban and rural households during 2000–2019. Then, the Slutsky decomposition equation is introduced to decompose the energy rebound caused by the substitution and income effects. Results suggest that: (1) The energy consumption of urban and rural residents shows a partial rebound in most years, and the energy rebound effect of rural residents exceeded that of urban residents after 2010. (2) The income effect from commodity price changes is the main source of the energy rebound effect both in urban and rural households. (3) The commodity groups Residence, Household facilities & Services, Transportation & Communication and Health care & Medical services have the same influencing direction on the energy rebound effect in urban and rural residents, while the commodity groups Food, Tobacco & Alcohol, Clothing and Culture, Education & Entertainment have different influencing direction. Finally, suggestions are provided for alleviating the energy rebound effect of households in Beijing.