Estimating the Direct Rebound Effect in the Residential Energy Sector: An Application in Spain - Green Energy and Efficiency: An Economic Perspective - page 178

energy price elasticity would not be correct. This paper uses cross-section data,
under the assumption that the exogeneity hypothesis holds.
A comparison of electricity demand models reveals that once energy sources are
controlled for the CO 2 emissions variable ceases to be signi

cant in electricity
consumption. The opposite occurs in regards to natural gas, where residential CO 2
emissions are found to have a signi cant link with consumption.

If the goal is to reduce electricity and natural gas consumption, households
should seek to reduce its CO2 emissions by improving some of the characteristics
of their dwellings such as the type of glass used, window frames, etc. In fact, using
natural gas as an energy source for heating and hot water along with upgrades in
building energy ef ciency ratings could increase the market value of dwellings.

It can also be concluded that one way of reducing residential CO 2 emissions is to
avoid the use of electricity as an energy source for heating and domestic hot water.
On the other hand, and looking closer at the selection model, it can be inferred, for
instance, that the use of natural gas can be encouraged by increasing household
income and informing families who rent their homes of its advantages as a fuel.
To sum up, this chapter provides empirical evidence to support the design of
policies with a view to reducing residential energy consumption and residential
CO 2 emissions. The direct rebound effects estimated are relatively high, so energy
ef

ciency increases in heating and hot water systems are likely to result in only a
slight decrease in energy consumption. Indeed, in the case of natural gas increased
energy ef

re). It is also dem-
onstrated that lower CO 2 emissions are associated with decreases in residential
energy consumption, with natural gas being the most sensitive fuel in this case.
Future research could be directed at analysing the trend over time in the direct
rebound effect as regards heating and domestic hot water, to check whether changes
in energy ef

ciency results in an increase in consumption (back

ciency are capable of producing greater savings in residential energy
consumption under different economic conditions.

Acknowledgments The authors would like to acknowledge nancial support from the European
Commission via the PURGE Project, GA No 265325 and from the Basque Government and the
University of the Basque Country via projects IT-642-13, UFI11/03, US12/09 and EHUA12/13.

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