Decomposing the South African CO2 Emissions within a BRICS Countries Context: The Energy Rebound Hypothesis

26 September 2017
Publication Type: Policy Brief

The main purpose of this study is to test the hypothesis of the rebound effect for the South African case in the years between 1990 to 2014 by firstly, decomposing the driving forces of the changes in CO2 emissions of the country and secondly, comparing with the behaviors of other emerging economies such as BRICS. From a policy perspective, it is important not only to comprehend the factors that intensify the CO2 emissions of the country but since energy efficiency is globally promoted as a significant tool to control emissions from a demand-side, to examine whether energy efficiency improvements have indeed reduced CO2 emissions. The overall results of the decomposition exercise for the BRICS countries for the whole studies period suggest that the changes in CO2 intensity and energy intensity had a negative impact to the changes in CO2 emissions: in other words, as the energy intensity (energy consumption per unit of economic output) decreased for all the countries (possible technological developments), the emissions kept rising.

For South Africa specifically, the energy intensity was a negative contributor to CO2 emissions only for the last period examined (2008-2014). So for the last period, although the energy intensity was decreasing, the emissions kept increasing. This is an indication of the rebound effect from an improvement in the energy savings from a new technology or a policy. In South Africa, the period of 2008/09 was characterized by a mismatch between the electricity supply and demand in the country resulting in load shedding with serious consequences for the economy. As a result of this, various energy efficiency policies have been proposed and implemented since then but most importantly the price restructuring of 2008/09 with increases of up to 25% annually for the following years was a high incentive for consumers to save energy or adopt technologies with lower intensity of energy use. This might be a primary reason why the rebound effect as described in previous sections might have occurred.

Series title: Research Brief 130
1 September 2017
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