Rebound effect in China: Evidence from the power generation sector

When talking about energy conservation, "Rebound Effect" (RE) is always concerned, which defined as the increasing energy consumption relative to the counterfactual predicted by technological progress because of efficiency induced decrease in the real price of energy services. In this paper, we try to find a way to figure out the RE through calculating the substitution relations accord with the definition. Based on the trans-log cost function and considering the asymmetric impact on energy-cost share equation, the paper applies Allen-Uzawa substitution elasticity to establish the price-oriented analysis diagram of fossil-energy consumption RE. 'Using time series data, applying the joint method of the dynamic OLS (DOLS) and the seemingly unrelated regressions (SUR), the RE in China's electricity generation sector is estimated. The results showed that the RE is 11.6% in China's electricity generation sector if allowing for asymmetric price effects, which indicates that China's power generation sector generally displays a feature of energy saving.