Is the rebound effect useless? A case study on the technological progress of the power industry

The paper innovatively divides technological progress's actual emission mitigation effect into technical emission mitigation effect, rebound effect, and substitution effect. Then, taking the power sector as an example, the paper applies a dynamic recursive multi-sector computable general equilibrium model to simulate technological progress and explore its effects. The results indicate that the level of the rebound effect somehow is the trade-off between emission reduction and economic growth and social welfare. Price regulation in the power sector can significantly reduce the rebound effect, economic growth, and social welfare. We find that technological progress could affect economic indicators through commodity and factor markets in mechanism analysis. If the commodity market is distorted/regulated, the factor market will be the only market that directly reacts to the progress. We cannot hold that technological progress has been offset because of the rebound effect. To some extent, the benefits of technological progress may not just be emissions mitigation. Based on our conclusion, several specific implications are proposed. • We provide a wider perspective on how to evaluate the impact of rebound effect. • The rebound effect is the result of maximum behavior of the activities. • Controlling the commodity price may significantly reduce rebound effect. • Rebound effect seems to be a trade-off between economy and energy consumption.