The paper presents one of the first Italian experiences assessing the effectiveness of sustainable production and consumption strategies. The authors developed an energy and environmental extended input output model, combined with the life cycle assessment, to analyse the role of the building sector in the reduction of Italian energy consumption and CO2 emissions. In detail, the model allows to assess the energy and environmental benefits arising from the Italian tax deduction policy for energy retrofit actions of buildings. Moreover, the authors defined an original model to assess the indirect rebound effect caused by the energy retrofit actions. The outcomes of the research point out that the assessment of the benefits arising from a specific sustainable, policy, strongly depends on: - the indirect energy consumed by industry to produce goods and services needed for the policy actuation; - the indirect energy saving, owing to the implemented policy, which in the examined case study has the same order of magnitude as the direct one; - the rebound effect, often neglected in the literature, which can partially avoid the obtained benefits. The model shows wide ranges of applicability to the European context, since it uses as input economic and energy data usually available at local and/or national level for many states in Europe. It may represent a useful tool to decision-makers in the selection of policies oriented to the reduction of energy and environmental impacts caused by final consumption. (C) 2013 Elsevier Ltd. All rights reserved.