As Temperatures Reach Extremes, Electricity Consumption Increases with Socioeconomic Status

Note: This figure shows the impact of a day at each temperature (compared to a day at 20°C) on per capita electricity consumption, for the richest 20% (high-income), next 20% (middle-income), and poorest 60% (low-income) of the present-day global income distribution.
Source: Estimating a Social Cost of Carbon for Global Energy Consumption, Nature, October 2021

Energy consumption is viewed as one of the most climate-sensitive sectors of the global economy, with temperature considered a key determinant of the type and quantity of energy we consume. However, that relationship looks very different if you are not among the richest 40 percent of the world’s population, landmark results from the Climate Impact Lab discovered this year.

The study revealed a deep divide between wealthy and poor populations when it comes to energy use, a divide that is likely to persist as the planet warms and cooling technologies like air conditioning become increasingly critical. Using data from 146 countries over 40 years, the study quantified the effect of temperature on electricity and direct fuel consumption across residential, commercial, and industrial end-uses—measuring how this effect differs across income levels and climate zones. The authors used these globally representative, data-driven results to project the future impact of climate change on consumption of electricity and other fuels consumption in 24,378 globally comprehensive geographic regions. Their novel approach reflects the effects of behavioral adaptations like air-conditioning adoption that populations in each region undertake as they become more affluent and exposed to warmer climates.

On hot days (average temperature 35°C/95°F) in wealthy locations, the study finds per-person electricity consumption soars, especially among the richest 20 percent. This reflects access to air conditioning, present in 90 percent of homes in the United States. However, these costly technologies are largely out of reach for today’s lower-income populations—only 5 percent of homes in India have air conditioning. The lack of access to air conditioning is reflected in the data. For the poorest 60 percent, extreme heat results in virtually no increase in electricity consumption. In contrast, direct consumption of fuels used for heating increased on cold days for all but the poorest 20 percent—reflecting the widespread use of fuels like natural gas, oil and coal for heating around the world.

The globally comprehensive analysis of energy consumption is part of the Climate Impact Lab’s effort to estimate how individual households, businesses and industries around the world will be affected by climate change at a local level, with the goal of producing an improved estimate of the social costs of greenhouse gases for use in climate policy. Based on the findings of this study, emitting one additional ton of carbon dioxide today results in a modest reduction in future global energy spending ($1 to $3 per ton), driven mainly by declines in the need for heating through fuels such as coal, natural gas and oil, and the slow uptake of air conditioning in today’s developing world. This represents the first peer-reviewed, empirically derived estimate of the global cost of climate change for a single sector of the economy

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