Peak car and peak rebound? A closer look at recent trends in car travel in Great Britain

Direct rebound effects result from increased consumption of energy services that have become cheaper as a consequence of energy efficiency improvements. For example, more fuel-efficient cars may encourage more driving that may erode some of the potential fuel savings. But the size and nature of this response may change over time. These changes are particularly important for car travel, since the relationship between income and distance travelled has changed over the last 15 years. This study investigates how the direct rebound effect for car travel has changed in Great Britain since 1970. We employ aggregate time-series data on distance travelled, fuel costs, income and other relevant variables. We estimate the direct rebound effect from the elasticity of distance travelled with respect to the fuel cost of driving (£/km). Distance travelled has approximately doubled since 1970 but the rate of growth slowed around 2000 and is now on a declining trend. This pattern (‘peak car’) has been observed in several developed countries and predates the falls in income that followed the 2008 financial crisis. Our results suggest that the factors contributing to peak car may have also reduced the direct rebound effect. However, the results are sensitive to the inclusion of urbanisation in the specification and the stationarity properties of the data, so there remains considerable uncertainty over the drivers of recent trends.