01/30/2019

How Will a Warming Climate Influence Global Energy Demand?

Econometric analysis of the relationship between extreme temperatures and fuel consumption in different sectors of developing and developed economies points to amplification of regional and global energy demand by 2050.

The Science

Understanding how energy demand responds to weather shocks helps clarify the ways in which the energy sector can adapt to potential future climate warming. Empirical climate change economics studies have derived reduced-form responses of energy consumption to temperature using statistical models estimated on high-frequency observations within countries like the United States. Researchers at Boston University and University of Venice (Italy) extend this work to the global scale by estimating five economic sectors’ demands for three final energy carriers across more than 80 countries, and linking the resulting responses to Earth system model temperature projections.

The Impact

Rising temperatures will increase warm-season cooling demand—met by electricity, while simultaneously reducing cool-season heating demand—met by a range of fuels. The net national energy consumption impact depends on countries’ climate, fuel and sectoral mix, and income level. The findings make it possible to project, on a worldwide basis, where amplification or attenuation of demand for different final energy carriers will be likely to occur under uncertain climate futures, thereby facilitating integrated assessment model projections of the climate change consequences for energy trade, welfare, and emissions.

Summary

Econometric analysis of the response of energy demand to temperature and humidity exposure were combined with future scenarios of climate change and socioeconomic development to quantify the impacts of future climate warming on final energy consumption across the world. Globally, changes in climate circa 2050 have a moderate impact on energy consumption of 7 to 17 percent, depending on the degree of warming. Impacts vary in sign and magnitude across regions, fuels, and sectors. Climatically induced changes in energy use are larger in tropical regions. Almost all continents experience increases in energy demand, driven by the commercial and industrial sectors. In Europe, declines in residential energy use drive an overall reduction in aggregate final energy. Energy use increases in almost all Group of 20 (G20) economies located in the tropics, while outside of Europe, G20 countries in temperate regions experience both increasing and declining total energy use, depending on the incidence of changes in the frequency of hot and cold days. The effect of climate change is regressive, with the incidence of increased energy demand overwhelmingly falling on low- and middle-income countries, raising the question whether climate warming could exacerbate energy poverty.

Principal Investigator(s)

Ian Sue Wing
Dept. of Earth & Environment, Boston University

Funding

The U.S. Department of Energy Office of Science, Biological and Environmental Research supported this research as part of the Program on Coupled Human Earth Systems.

References

De Cian, E., and I. S. Wing. “Global energy consumption in a warming climate.” Environmental and Resource Economics. 72, 365-410 (2019). [DOI: 10.1007/s10640-017-0198-4]