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Economic Impact of Energy Consumption Change Caused by Global Warming

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Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, Australian National University, Canberra, ACT 2601, Australia
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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
*
Author to whom correspondence should be addressed.
Energies 2019, 12(18), 3575; https://doi.org/10.3390/en12183575
Received: 28 June 2019 / Revised: 23 August 2019 / Accepted: 27 August 2019 / Published: 19 September 2019
(This article belongs to the Section Energy Economics and Policy)
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. View Full-Text
Keywords: economic impacts; global warming; climate change; energy consumption; empirical data; impact function; damage function; FUND economic impacts; global warming; climate change; energy consumption; empirical data; impact function; damage function; FUND
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MDPI and ACS Style

Lang, P.A.; Gregory, K.B. Economic Impact of Energy Consumption Change Caused by Global Warming. Energies 2019, 12, 3575.

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