Rebound effect of energy efficiency in China's construction industry: a general equilibrium analysis

China has set ambitious targets to reduce its carbon intensity by 2020. Improved energy efficiency is an important strategy to achieve this goal. However, the rebound effect may act as a major obstacle to fully realizing the potential for energy savings. As one of three major energy consumption sectors in China, the construction industry is vital to reducing carbon emissions. This paper established a static computable general equilibrium (CGE) model to study the rebound effect of different energy sources used in the construction industry. The main energy sources used in the construction industry are coal, oil, natural gas, and electricity, and the conclusions show that the largest rebound effect was found for improvements in natural gas efficiency, with an average of 99.20%, while the lowest was for improvements in electricity efficiency, with an average of 83.47%. Moreover, the rebound effect of the primary energy sources (coal, oil, natural gas) was greater than the rebound effect of the secondary energy source (electricity). Our conclusions indicate that improving the energy efficiency in the construction industry will have a positive impact on GDP and on the mitigation of carbon emissions, and the presence of the rebound effect is significant, especially with regard to electricity sources. The implications of the results are that policymakers should primarily focus on improving the efficiency of electricity. In addition, this paper suggests that the rebound effect can be reduced by removing fossil fuel subsidies and imposing a carbon tax.