The rapid increases of energy consumption and its corresponding carbon emissions in transportation sector threaten China’s energy security and ecological environment. The effectiveness of energy efficiency improvement is of great importance in achieving low-carbon passenger transport in China, while it depends on the magnitude of rebound effect. The feedback mechanism of energy efficiency improvement on energy consumption is straightforward: a higher efficiency means a lower real price of energy services, and hence the original energy conservation might be partly or even totally offset because of consumers' behavior changes responding to a lower price of energy services. Furthermore, the rebound of energy consumption would also result in the rebound of CO2 emissions due to the same reasons because most of CO2 emissions stem from fossil energy combustion. Therefore, a clear acknowledgement of rebound effect has important implication for the effects of energy saving and emission reduction by improving energy efficiency and informs policy makers more policy implications on energy and environmental issues. Particularly, regional heterogeneity in rebound effect might make the effectiveness varying in different regions. However, the heterogeneity in rebound effect and the policies to deal with it are still less studied. This paper fills the research gap by highlighting the role of heterogeneous rebound effect and carbon tax in achieving low-carbon urban passenger transport.
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