Energy efficiency and energy rebound, intensity, and output effects in transport sector of Pakistan

According to Jevon’s paradox, energy efficiency leads to more energy consumption instead of low. So, calculating the size of energy rebound effect is need of the time to devise sustainable environmental and energy policies. This paper aims to analyze the impact of energy efficiency on energy consumption of transport sector in Pakistan by using time series data from 1980 to 2018. This incremental energy consumption channelizes through intensity and output effects. The study uses both Cobb–Douglas (C-D) and constant elasticity of substitution (CES) aggregate production functions to find the magnitudes of energy rebound effect. As the analysis of energy rebound effect is sensitive to the selection of data, model, and methodology. C-D production function deals with energy rebound effect, while CES provides extra information in the form of energy intensity and output effects along with energy rebound effect. The C-D function is estimated with linear estimation technique, while the CES function is estimated through nonlinear optimization method. The results indicate relatively low magnitudes of energy rebound effect in case of C-D function, e.g., 2% in the short run and about 36% in the long run while about 70% energy rebound, 63% energy intensity, and 7% output effect in the transport sector of Pakistan in the long run by using CES function. As anticipated, energy efficiency is less effective in terms of energy savings in transport sector due to energy rebound effect. Therefore, policy makers should incorporate energy rebound effect to achieve sustainable environmental goals along with economic growth path.