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Economic Impact of Energy Consumption Change Caused by Global Warming

Author

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  • Peter A. Lang

    (Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, Australian National University, Canberra, ACT 2601, Australia)

  • Kenneth B. Gregory

    (P.Eng. (Non-Practicing), Life Member of The Association of Professional Engineers and Geoscientists of Alberta (APEGA), 1500 Scotia One, 10060 Jasper Avenue NW, Edmonton, AB T5J 4A2, Canada)

Abstract

This paper tests the validity of the FUND model’s energy impact functions, and the hypothesis that global warming of 2 °C or more above pre-industrial times would negatively impact the global economy. Empirical data of energy expenditure and average temperatures of the US states and census divisions are compared with projections using the energy impact functions with non-temperature drivers held constant at their 2010 values. The empirical data indicates that energy expenditure decreases as temperatures increase, suggesting that global warming, by itself, may reduce US energy expenditure and thereby have a positive impact on US economic growth. These findings are then compared with FUND energy impact projections for the world at 3 °C of global warming from 2000. The comparisons suggest that warming, by itself, may reduce global energy consumption. If these findings are correct, and if FUND projections for the non-energy impact sectors are valid, 3 °C of global warming from 2000 would increase global economic growth. In this case, the hypothesis is false and policies to reduce global warming are detrimental to the global economy. We recommend the FUND energy impact functions be modified and recalibrated against best available empirical data. Our analysis and conclusions warrant further investigation.

Suggested Citation

  • Peter A. Lang & Kenneth B. Gregory, 2019. "Economic Impact of Energy Consumption Change Caused by Global Warming," Energies, MDPI, vol. 12(18), pages 1-29, September.
    • Handle: RePEc:gam:jeners:v:12:y:2019:i:18:p:3575-:d:268500
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    References listed on IDEAS

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    Cited by:

    1. Ronan Connolly & Michael Connolly & Robert M. Carter & Willie Soon, 2020. "How Much Human-Caused Global Warming Should We Expect with Business-As-Usual (BAU) Climate Policies? A Semi-Empirical Assessment," Energies, MDPI, vol. 13(6), pages 1-51, March.
    2. Dumiter Florin Cornel & Turcaș Florin Marius & Boiţă Marius, 2023. "Oil Shock Impact Upon Energy Companies Investment Portfolios. Trends and Evolutions in the Energy Consumption Sector," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 33(1), pages 1-27, March.
    3. Matthew J. Burke, 2020. "Energy-Sufficiency for a Just Transition: A Systematic Review," Energies, MDPI, vol. 13(10), pages 1-14, May.

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