The Prevalence of Energy-Related Rebound Effects in the Transportation Sector

Master's thesis in Business administrationDue to society’s increased involvement for the environment, topics that concern energy use and greenhouse gas emissions have evolved substantially over the past few years. The rebound effect is a matter that measures if technological innovation or implemented government policies lead to the expected decrease in energy use (thereby decreased emissions), or if the environment is actually worse off after the implementations. The rebound effects are theoretically classified as a consumer or producer issue, but it also can be divided into a direct or indirect matter. This thesis is investigating the direct rebound effects in The Norwegian Transportation Sector on the consumer side and it also describes the underlying factors that affect travel demand. In addition, it establishes the present situation of electrical vehicle evolvement for the Norwegian population. Electrical vehicle policies by the Norwegian government are indeed incentivized implementations that are supposed to decrease the green house gas emissions. The implemented government policies might however be working against its own purposes on the rebound effect framework. The data analysis is based on data provided by the Institute of Transport Economics, as well as Statistics Norway and the Information Council for road traffic. The model used in the data analysis is build on the framework compiled by Sarah West (2004) in form of a derived indirect utility function. Some adjustments are however made due to data availability. The key findings of the thesis are that the Norwegian population is more elastic than other research usually concludes with, and the rebound effects lie in between 40 percent and up to 441 percent, indicating a very elastic population and the presence of a partial rebound or even backfire in some models. These results differ from other research papers about rebound effects, as it usually lies somewhere around 20 percent so one should be cautious with the interpretation of these findings. Because the rebound effect varies between models in such a significant manner, some of the models in the data analysis are not correct. However, the results indicate that the Norwegian population is very sensitive to price changes and government policies therefore need to be considered very carefully