Electrification with more energy-efficient combined-cycle power plants has been featured prominently in the US energy system for multiple decades. This empirical analysis estimates the role of efficiency improvements for natural gas plants on the use of coal and natural gas for U.S. electric generation. The estimates are based upon actual technical improvements in energy efficiency (measured as declining heat rates) rather than strong economic priors like price elasticities. The estimates underscore that the meaning of the rebound effect will have an important policy content with very different interpretations. Natural gas heat rates improved by 16.3% since 2001. Over the same period, these improvements caused a 21.8% drop in natural gas use, a 6.6% decline in fossil fuel use, and a 2.0% decrease in carbon dioxide emissions associated with these fuel use adjustments. JEL Classification: Q41, Energy: Demand and Supply; Prices; O33, Technological Change: Choices and Consequences; Diffusion Processes
Hillard G. Huntington (Fri,) studied this question.