Environmental policy instruments to prevent rebound effects in companies

Rebound effects can counteract climate and energy policy goals because they reduce energy savings and thus reduce the ecological effectiveness of energy efficiency measures. Accordingly, it is in the interest of environmental policy to reduce or even avoid rebound effects. A policy instrument discussed in research as particularly effective is CO2 pricing. A high CO2 price counteracts rebound effects because the use of energy remains expensive even after an efficiency measure and it is worthwhile to save (fossil) energy after increasing efficiency. 

In reality, however, market prices for CO2 are not sufficient to effectively avoid rebound effects. There is a widespread opinion among experts that a policy mix is necessary that, in addition to an effective CO2 price, also includes other instruments in order to effectively avoid rebound effects. The ReInCent research project has developed approaches for policy instruments for this policy mix. In this report these approaches are evaluated. The report thus examines the question of which environmental policy instruments can meaningfully accompany the pricing of CO2 in order to effectively avoid rebound effects in companies. 

The evaluation is carried out based on the criteria of ecological effectiveness, coherence, administrative practicality and acceptability. The evaluation uses research literature as well as qualitative interviews with policy experts and energy managers from companies. 

Overall, it can be seen that the overarching approaches perform better in the evaluation than the approaches linked to individual funding instruments. This is not least because the ARIs inherent in the instrument conflict with the objectives of the individual funding (coherence), and the associated effort for companies (acceptability) and administration (practicality) is not in proportion to the ecological benefit (effectiveness). 

Binding rebound-sensitive transformation concepts received the best rating of the overarching instruments for avoiding rebound effects. Transformation concepts address companies' need for a uniform framework to guide the planning and implementation of their transformation and fit into existing processes for the decarbonization of industry (acceptability). In this sense, they represent a helpful framework for reducing energy consumption and CO2 emissions. In addition, they do not conflict with other instruments and fit well into the existing policy mix (coherence). It is easy for the administration to check the existence of a transformation concept and its follow-up, for example as part of energy audits (practicality). By formulating a final consumption target path that must be adhered to, the instrument sets a company-wide energy consumption cap that counteracts rebound effects (effectiveness). 

Corresponding rebound-sensitive transformation concepts should define clear responsibilities for the transformation in the company, set up a fixed budget for energy and sustainability management, formulate medium and long-term CO2 and energy end consumption paths and provide for the active pursuit of these paths. 

Regardless of the price level, the concepts represent a company-wide framework for saving energy and avoiding rebound effects. Rising CO2 prices reduce the payback times of energy efficiency and decarbonization measures. The instruments therefore have a complementary effect to the CO2 price. They can also work synergistically with energy management systems. Corresponding concepts should be accompanied by existing subsidies for energy efficiency and the creation of transformation concepts and an expansion of energy consulting offerings.