476 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 61, NO. 3, AUGUST 2014 Energy Efﬁciency Beneﬁts: Is Technophilic Optimism Justiﬁed? Rohit Nishant, Thompson S. H. Teo, and Mark Goh Abstract—Despite the increased focus on making energy more efﬁcient, research has rarely examined the temporal impact of energy efﬁciency on environmental performance at the national level. Using archival data, we conduct an econometric analysis that provides empirical evidence indicating the negative effects of the rebound effect and the positive effects of technology. Our results suggest that an increase in per capita energy consumption does not lead to an increase in emissions, but it could negate the envi- ronmental beneﬁts arising from energy efﬁciency. However, energy efﬁciency leads to an increase in per capita emissions for developed countries. Post hoc results show that energy efﬁciency inﬂuences the three sectors (household, services, and industrial) differently on per capita energy consumption and emissions. Implications for research and practice are discussed. Index Terms—Emissions, energy efﬁciency, rebound effect, technophilic optimism. I. INTRODUCTION T HERE has been growing concerns about climate change, the harmful ramiﬁcation of industrial development and urbanization. Findings from the Intergovernmental Panel on Climate Change (IPCC), formed by the United Nations (UN), support the view that greenhouse gas (GHG) emissions con- tribute to global warming. Speciﬁcally, energy consumption yields GHG emissions accounting for more than 80% of to- tal CO 2 emissions [1]. Nations increasingly focus their initia- tives on curbing the adverse environmental impacts of energy consumption. However, energy consumption directly impacts economic progress [2]. As such, countries focused on economic development cannot afford to curtail their energy consumption. Hence, two major challenges confront the energy dilemma. Countries must reduce the adverse environmental impact of en- ergy consumption, but they also need to consume energy for industrialization. Countries can meet the twofold challenge if Manuscript received April 8, 2013; revised October 22, 2013 and February 4, 2014; accepted March 5, 2014. Date of publication May 1, 2014; date of current version July 15, 2014. Review of this manuscript was arranged by Department Editor J. Sarkis. R. Nishant is with the School of Business, National University of Singapore, 119077 Singapore, Singapore (e-mail: Rohit.nishant@nus.edu.sg). T. S. H. Teo is with the School of Business and School of Computing, National University of Singapore, 119077 Singapore, Singapore (e-mail: bizteosh@ nus.edu.sg). M. Goh is with the School of Business, National University of Singapore, 119077 Singapore, Singapore, and also with the RMIT University, Melbourne, Vic. 3001, Australia (e-mail: bizgohkh@nus.edu.sg). Color versions of one or more of the ﬁgures in this paper are available online at http://ieeexplore.ieee.org. Digital Object Identiﬁer 10.1109/TEM.2014.2314703 they can improve the ratio of the usable energy output to in- put, i.e., “energy efﬁciency” [3]. Put simply, if they reduce the energy required to provide goods and services, then they will require less energy to support their current levels of consump- tion, causing less energy loss from converting inputs to out- puts and also reducing emissions. Thus, improving energy ef- ﬁciency can reduce the GHG emissions associated with energy consumption [3]. Moreover, energy efﬁciency reduces energy dependence, although the advantages are again tied to energy consumption. Hence, we examine whether energy efﬁciency improves a country’s environmental performance or causes un- intended consequences, such as increased consumption. “Energy efﬁciency is widely viewed as an inexpensive way to reduce aggregate energy consumption and thus GHG emis- sions” [4, p. 4]. The International Energy Agency (IEA), IPCC, and others have recommended energy efﬁciency for combat- ing global warming [5]. Besides, several analyses conclude that energy efﬁciency would be cost-effective for reducing energy consumption and improving economic welfare [6]. However, whether energy efﬁciency is effective is still debatable. Being energy efﬁcient may actually increase energy consumption, a consumption-centric rebound effect. In contrast, the ecological modernization theory (EMT) suggests that technological ad- vancement can address environmental problems. Mitchell [7] labels this view as “technophilic optimism.” Hence, the con- trasting perspectives on energy efﬁciency necessitate a study on both views for empirical support. There are microlevel studies on energy efﬁciency as it im- pacts household energy demands [8], an industry-level study on energy efﬁciency in Sweden’s manufacturing sector [9], and studies on speciﬁc energy services such as automotive transport and space cooling in developed nations [10], [11]. However, no study has yet examined the impact of energy efﬁciency on emissions and energy consumption across countries. Thus, we pose three research questions. RQ1: What is the relationship between energy efﬁciency and energy consumption? RQ2: What is the relationship between energy efﬁciency and emissions? RQ3: Does energy consumption mediate the relationship be- tween energy efﬁciency and emissions? This study makes several contributions. First, we empiri- cally examine the relationships between energy efﬁciency, en- ergy consumption, and emissions. We provide evidence that energy efﬁciency impacts environmental performance. Our ﬁnd- ings indicate that technology can potentially address chal- lenges such as global warming, but energy efﬁciency has un- intended consequences, such as signiﬁcant increases in energy 0018-9391 © 2014 IEEE. Personal use is permitted, but republication/redistribution requires IEEE permission. See http://www.ieee.org/publications standards/publications/rights/index.html for more information.