Energy demand response to climate shocks in 2050

Energy demand response to climate shocks in 2050

A new study published in Nature Communications calculates the elasticity of energy demand to climate shocks, an essential information for the IAM and CGE modelling community.

In this new study drafted by IIASA, CMCC and Boston University, a global analysis was performed using temperature projections from 21 climate models around 2050 and population and economy projections from 5 SSPs. This information was fed into a statistical model to calculate changes in demand for three fuels and four economic sectors, determining how energy demand would shift relative to today’s climate under RCPs 4.5 and 8.5 around 2050.

The findings indicate that, compared to baseline scenarios in which energy demand is driven by population and income growth alone, climate change shocks increase the global demand for energy around 2050 by 11-27% for RCP 4.5 and by 25-58% for RCP 8.5. Moreover, climate change impacts will redistribute energy demand geographically, seasonally, as well as across income groups.

Major hotspots are identified not only in the tropics, but also in southern regions of the USA, Europe and China. Sector-wise, the largest increases are found in the industry and service sectors. The changes in energy demand from this study exclude any adaptation, which can significantly reduce actual energy consumption.

Indeed the present impact estimates are meant to be key inputs to Integrated Assessment (IAMs) and Computable general equilibrium (CGE) models, which can examine shifts in economic structure or technology between socioeconomic and climate scenarios driven by our ex-ante shocks. Ex-post energy consumption can be substantially moderated by intervening adjustments induced by changes in behaviors, prices, and technology across multiple markets and regions.

Starting from the database accompanying this paper, IAMs and CGEs modelers can now analyze how these market-driven adjustments ultimately affect household income and welfare, whose scale and scope depend on future changes in structural, technological, and market characteristics.