The environmental impact of eco-innovations: the case of EU residential electricity use

Even though environmental innovations are generally considered a key element towards a green growth strategy, especially for the case of energy efficiency innovations, the impact on climate goals has been subject to a long-running debate. On the one hand, energy efficiency innovations provide a huge cost-effective CO₂ reduction potential. On the other hand, increasing energy efficiency implies cost reductions which in turn may lead to increased consumption due to the so-called rebound effect. Our study investigates the long-term environmental impact of energy efficiency innovations on the EU-27 residential electricity demand (excluding heating systems) using a detailed bottom-up modelling approach. Assuming a rebound effect of 10 %, we show that the diffusion of energy efficiency technologies with current policy levels provides savings of around 140 TWh and additional 270 TWh may be saved through additional policy measures accelerating the diffusion and development of new technologies until 2030. By contrast, assuming a (rather pessimistic) rebound effect of 40 %, the savings are reduced to around 95 and 180 TWh until 2030, respectively. We conclude that there is a clear case for ambitious policies to support energy efficiency innovations for the residential sector, which ideally should be complemented by measures to limit the rebound effect.