Assessing the rebound effects of clean energy sectors and carbon tax on fossil fuels: A dynamic CGE-based analysis

Improving the efficiency of clean energy sectors is widely recognized as a key strategy for accelerating the low-carbon transition. While efficiency gains in fossil fuels often raise concerns about rebound effects, similar effects in clean energy may instead support cleaner production and energy structure optimization. This study aims to quantify the macroeconomic and environmental impacts of rebound effects resulting from clean energy efficiency improvements, with particular attention to sectoral differences and policy interactions. Using a dynamic computable general equilibrium (CGE) model, we evaluate how efficiency gains in hydropower, wind, solar, and nuclear energy affect economic output, energy demand, and carbon emissions. Unlike previous studies that treat clean energy as a single category, we disaggregate across technologies and incorporate a carbon tax scenario to explore potential policy synergies. The results show that clean energy efficiency improvements can lead to backfire effects, especially in the short term, by significantly increasing clean energy consumption. Carbon taxation reinforces these effects by further reducing fossil fuel use and supporting long-term climate goals. These findings highlight the importance of technology-specific analysis and demonstrate that aligning energy efficiency strategies with carbon pricing can produce complementary economic and environmental benefits, contributing to more effective and sustainable energy policy design.