The role of modal substitution in rebound effects within US freight transportation

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Abstract

Energy efficiency improvements can create rebound effects that increase energy use. We have studied rebound in US freight transportation and found that substitution across transportation modes can be an important rebound mechanism. The sign of the rebound effect depends on whether the improved efficiency induces substitution with more or less fuel-efficient modes. We used detailed US microdata to model shippers’ freight mode choices and simulate how these choices change under energy efficiency standards. Under a policy approximating US heavy-duty truck fuel economy standards, we found that rebound can be positive or negative in individual market segments. However, the overall effect substantially reduces the gains from improved truck fuel efficiency. Energy savings are reduced by around 20% because shipments switch from rail service to the improved, but still less fuel-efficient, truck service. Similar substitution rebound effects could occur in other settings where producers choose between technologies with different energy efficiencies.

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Fig. 1: Characteristics of freight shipments from the CFS.
Fig. 2: Mode choice probabilities with improved truck fuel economy.
Fig. 3: Estimated average cross-price elasticities.
Fig. 4: Rebound effect due to modal substitution.

Data availability

The Commodity Flow Survey Public Use Microdata are publicly available from the US Census Bureau (https://www.census.gov/programs-surveys/cfs/data/datasets.html). Fuel price data are publicly available from the US Energy Information Administration (https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emd_epd2d_pte_nus_dpg&f=m and https://www.eia.gov/dnav/pet/hist/eer_epjk_pf4_rgc_dpgD.htm). Replication data for this paper are available via Zenodo at https://doi.org/10.5281/zenodo.11264966 (ref. 51).

Code availability

All code used to conduct the study is available at https://github.com/jehdukeegr/Freight-Mode-Rebound.

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Acknowledgements

We thank the Alfred P. Sloan Foundation for supporting this work. We also thank A. Jha and seminar participants at the UC Berkeley Energy Institute at Haas and the National Bureau of Economic Research conference on Transporting Energy for helpful comments.

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Authors and Affiliations

  1. Department of Economics, University of California at Davis, Davis, CA, USA

    James B. Bushnell

  2. The National Bureau of Economics Research, Cambridge, MA, USA

    James B. Bushnell

  3. Department of Economics, University of Colorado at Boulder, Boulder, CO, USA

    Jonathan E. Hughes

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Contributions

J.B.B. and J.E.H conceptualized the study and acquired the funding. J.E.H. developed the software. J.B.B. and J.E.H conducted the formal analysis and wrote and edited the paper.

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Jonathan E. Hughes.

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Bushnell, J.B., Hughes, J.E. The role of modal substitution in rebound effects within US freight transportation.
Nat Energy (2024). https://doi.org/10.1038/s41560-024-01568-w

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