Exploring the limits for increasing energy efficiency in the residential sector of the European Union: Insights from the rebound effect

The residential sector is a major energy consumer and requires measures for improvements in energy efficiency. However, the gains in energy efficiency do not always result in energy conservation due to the rebound effect. Therefore, there is a need for the development of methodologies to analyze energy consumption and the rebound effect in the household sector. This paper proposes an econometric approach toward the estimation of the rebound effect based on the ODEX index. The proposed approach does not require assumptions about the underlying distributions of energy inefficiency. The case of the European Union member states is considered in the paper. Specifically, we estimate the rebound effect at the aggregate, sub-period, and country levels over the period of 2000-2015. The results indicate a decline in the rebound effect over the covered period, but with substantial spatial variations. The proposed approach can be applied as a reference along with the other available approaches to ensure the robustness of the analysis. Bulgaria, the Czech Republic, Estonia, Hungary, Italy, Romania, Slovenia, and Spain faced the most serious rebound effects, even leading to backfire.