Climate change and electricity consumption—Witnessing increasing or decreasing use and costs?

Abstract

Climate change affects the need for heating and cooling. This paper examines the impact of gradually warming climate on the need for heating and cooling with an econometric multivariate regression model for five countries in Europe along the south–north line. The predicted changes in electricity demand are then used to analyze how climate change impacts the cost of electricity use, including carbon costs. Our main findings are, that in Central and North Europe, the decrease in heating due to climate warming, dominates and thus costs will decrease for both users of electricity and in carbon markets. In Southern Europe climate warming, and the consequential increase in cooling and electricity demand, overcomes the decreased need for heating. Therefore costs also increase. The main contributors are the role of electricity in heating and cooling, and the climatic zone.