Factors influencing rebound and reinforcement effects in companies

By 2030, Germany aims to reduce emissions by 55 percent compared to 1990 levels and by 2045, the country should be climate-neutral. However, although the energy policy of the last 30 years has led to an increase in nationwide energy productivity of over 60 percent, final energy consumption has barely fallen. This phenomenon is particularly evident in the industrial sector, where final energy consumption has remained almost constant despite increasing efficiency. 

Rebound effects can be a factor that contributes to this gap and thus counteracts environmental policy goals. A rebound effect means that increases in energy efficiency make the use of energy more attractive and can therefore contribute to increased energy consumption. So far, rebound effects have mainly been investigated in households. There are fewer studies on rebound effects in companies. There are even fewer empirical studies on factors influencing the occurrence of these effects.

The counterpart to the rebound effect is the reinforcement effect, which leads to additional savings as a result of increased efficiency. Reinforcement effects are desirable from an ecological and environmental policy perspective, as the socio-ecological transformation and energy transition must be accelerated against the backdrop of missed or inadequate environmental targets in the past.

This article empirically examines factors influencing rebound effects (and reinforcement effects) in companies and the mechanisms of their emergence.

With this in mind, the following research questions are examined:
1. which factors influence the occurrence of rebound effects (and reinforcement effects) in companies?
2. through which mechanisms do rebound effects (and reinforcement effects) occur in companies?

The study shows that the occurrence of rebound effects in companies is primarily related to the size of the company and the distribution of decision-making authority on energy efficiency issues within the company, as well as the company's objectives. Companies with stronger manifestations of these characteristics use the funds saved through energy efficiency measures ("EEM-slack") more frequently for production increases, which leads to direct rebound effects in particular. However, companies use these funds even more frequently for general corporate financing, seemingly regardless of the influencing factors. This makes it difficult to identify and therefore avoid rebound effects in a targeted manner. As it is a declared and prioritized goal of most companies to increase their production capacities, competitiveness and productivity, it is also obvious that the EEM slack that flows into general corporate financing is used in an energy-intensive manner. In this sense, it can be assumed that companies primarily experience indirect rebound effects. The fact that increasing productivity and production increases are prioritised also translates into internal company processes related to energy efficiency measures, which can lead to direct rebound effects. The expansion of production capacity or the passing on of cost savings to customers through lower prices as a result of energy efficiency measures is already planned in companies together with the efficiency measure. Hence, the EEM-slack is absorbed by the expenditure required to increase production.