Energy Efficiency Research And Development: Consumption- And Environment-Centric Perspectives

The quest to develop technologies with minimal adverse environment impact has led to investments in research and development (R&D) targeted at developing energy-efficient technologies or improving the energy efficiency of existing technologies. Despite the increased focus on energy efficiency R&D, studies that examine their impact on environmental performance over time are lacking. Invoking the rebound effect and the ecological modernization theory, we hypothesize relationships between energy efficiency R&D with energy consumption, and emissions, and test them using panel data for OECD countries from 1987 to 2009. Econometric analysis suggests that energy efficiency R&D is negatively associated with per capita emission only. This suggests that any investment in energy efficiency achieves the objective of reducing the adverse environmental impact, thus positively contributing to the environment. The results further suggest that concerns about energy efficiency R&D may be misplaced as it is reducing adverse environmental impact without any significant association with energy consumption. Thus, the rebound effect, which postulates that increased energy efficiency results in more energy consumption, is not valid in the present context. We further examine the growth of improvement in environmental performance over time and show that the effectiveness of energy efficiency R&D remains consistent over time. This suggests that carbon neutral policies are plausible. Implications for research and practice are discussed.