The paper presents an energy and environmental extended input-output model combined with the life cycle assessment, applied to assess the energy and environmental benefits arising from the Italian policy of tax deduction for energy retrofit actions of buildings. The study allowed to assess the advantages due to the above policy, taking into account both direct and indirect energy saving and avoided CO2 emissions obtained with the retrofit actions and indirect energy consumption and related CO2 emissions due to the realization of the above actions. Moreover, the authors defined an original model to assess the indirect rebound effect caused by the energy saving actions. The obtained results showed that a reliable evaluation of the benefits arising from sustainable policies strongly depends on the indirect rate of the energy consumption and energy saving, that in the examined case study has the same order of magnitude of the direct one, and on the rebound effect, that can partially avoid the obtained benefits. The study represents one of the first Italian experiences aimed at assessing the effectiveness of sustainable production and consumption strategies. It can be used to support decision-makers in the selection of policies aimed at reducing energy and environmental impacts caused by final consumptions. (c) 2013 Elsevier B.V. All rights reserved.