Kiel Working Papers, Kiel Institute for World Economics
No 1618:
The Impact of Temperature Changes on Residential Energy Consumption
Sebastian Petrick, Katrin Rehdanz and Richard S. J. Tol
Abstract: To investigate the link between rising global temperature
and global energy use, we estimate an energy demand model that is driven by
temperature changes, prices and income. The estimation is based on an
unbalanced panel of 157 countries over three decades. We limit the analysis
to the residential sector and distinguish four different fuel types (oil,
natural gas, coal and electricity). Compared to previous papers, we have a
better geographical coverage and consider non-linearities in the impact of
temperature on energy demand as well as temperature-income interactions. We
find that oil, gas and electricity use are driven by a non-linear heating
effect: Energy use not only decreases with rising temperatures due to a
reduced demand for energy for heating purposes, but the speed of that
decrease declines with rising temperature levels. Furthermore we find
evidence that the temperature elasticity of energy use is affected by the
level of temperature as well as the level of income
Keywords: Climate change, energy demand, heating and cooling effect, temperature; (follow links to similar papers)
JEL-Codes: Q41,; Q43; (follow links to similar papers)
33 pages, April 2010
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