Impacts of climate change on electricity demand in China: An empirical estimation based on panel data
Introduction
The electricity sector is one of the sectors that are sensitive to changing climate patterns [1]. Changes in climate patterns can lead to shifts in the demand for electricity. Temperature changes significantly affect heating and cooling power requirements. For instance, global warming will result in an increase in electricity demand in hot summers because more refrigeration equipment will be used. As a secondary energy, electricity is difficult to store. As a consequence, it will result in excess capacity if too much power is supplied. However, if the supply of electricity is insufficient, the electricity supply may be limited and in severe cases, it may lead to electricity shortages, affecting economic stability. If we ignore the impacts of climate change on electricity demand, the planning for the power supply will be affected, resulting in an imbalance of power supply and demand. Therefore, with the intensification of climate warming, it is becoming increasingly important for policymakers to understand the impact of climate change on electricity demand.
It is particularly important for China to explore the impacts of climate change on electricity demand. Electricity is an important energy input. Due to the rapid development of economy and society, electricity demand in China is rising and has increased from 1.36 trillion kWh in 2000 to 5.97 trillion kWh in 2016 with an average annual growth rate of 9.69% [2]. However, the per capita electricity consumption in China is still much lower than that in developed countries. As shown in Fig. 1, China's per capita electricity consumption in 2015 was 4047 kWh, whereas the per capita electricity consumption in the USA and Japan was 12833 kWh and 7865 kWh respectively, which is 3.2 times and 1.9 times of that in China [3]. Moreover, with the further acceleration of urbanization and industrialization in the future, the electricity demand in China is expected to further increase [4]. In this case, a scientific analysis of the electricity demand in China is very necessary.
On the other hand, China has a vast territory and complex climatic conditions, and thus the electricity consumption shows great heterogeneity in regions with different climates (Fig. 2). The average level of electricity consumption is slightly lower in the northern region than that in the southern region. Specifically, the proportion of electricity consumption in most provinces in the northern region was in the range of 0%–2% in 2016, whereas the proportion in most provinces of the southern region was about 2%–4%. The electricity consumption in the Shandong province in the northern region accounted for more than 8% (9.02%) of the national electricity consumption in 2016; this value was slightly lower than that of Jiangsu (9.15%) and Guangdong (9.39%) in the southern region. Several reasons can account for this. First, the economic development is higher in the southern region than that in the northern region, especially in coastal areas, which requires more electricity. Moreover, the temperatures are higher in the southern region than that in the northern region, which means that the use of air conditioning and other high-electricity consumption equipment is larger in the southern region. Therefore, climate change has a relatively complex impact on the electricity demand in China. This study incorporates climatic factors into the electricity demand model and establishes an econometric model to analyze the impact of climate change on electricity demand using panel data of 301 provincial regions in China. Specifically, this research attempts to answer the following questions:
- 1)
Do climatic factors (temperature, rainfall, and sunshine duration) have an impact on per capita electricity demand in China and what is the impact degree?
- 2)
What are the impacts of different climate change patterns on electricity demand?
- 3)
What are the impacts of non-climatic factors (per capita GDP, industrial proportion, electricity price, urbanization process and technology progress) on per capita electricity demand in China?
Section snippets
Literature review
Many scholars have explored the influencing factors of electricity demand, including some macroeconomic factors such as economic development and population growth [[5], [6], [7], [8]], urbanization level [[9], [10], [11], [12]], and industrial structure [13,14]. For example, Sarwar et al. [6] analyzed the causal relationship among economic growth, electricity consumption, and population using panel data from 157 countries from 1960 to 2014. The results showed that there was a significant
Explanatory variables
There are many factors influencing the electricity demand, including economic development, urbanization, industrialization, technological progress, climate change, and policy adjustment. Therefore, considering the data availability and the problem of collinearity, this study focuses on the effects of climatic factors (temperature, rainfall, sunshine duration) and non-climatic factors (per capita GDP, industrial proportion, electricity price, and urbanization) on the electricity demand in China.
Changes in HDD and CDD
Because temperature is the main climatic influence factor on electricity demand [4,15], changes in the HDD and CDD in China during the sample period are analyzed first. Fig. 3, Fig. 4 reflect the change trends of the CDD and HDD in China from 1995 to 2016.2 During the investigated 22 years, the national level of HDD decreases by 7.95% and
Conclusions and policy implications
In this study, a climate change feedback model for electricity demand in an economic system is developed using panel data of 30 provinces in China from 1995 to 2016. Further, the per capita GDP, the ratio of the added value of the secondary industry to the GDP, the electricity price, and the urbanization rate are used as control variables. The degree of influence of climatic factors (temperature, rainfall, sunshine duration) on China's per capita electricity demand are estimated. Based on the
Further perspectives
Although this study has explored the impact of climate change on electricity demand in China by using an econometric model based on panel data, some limitations still exist. For example, the annual data do not fully reflect the impact of seasonal fluctuations of the climate on electricity demand. In addition, due to the unavailability of electricity price data in China, the consumer price index of water, electricity and fuel is used as the proxy variable of the electricity price in the
Acknowledgement
The authors gratefully acknowledge the financial support of the National Natural Science Foundation of China under Grants (no. 71503249, 71874193), Young Elite Scientists Sponsorship Program by CAST (2016QNRC001), Asia-Pacific Network for Global Change Research (CBA2018-02MY-Fan) and the Open Research Project of State Key Laboratory of Coal Resources and Safe Mining (China University of Mining and Technology) (no. SKLCRSM16KFC05). We also would like to thank Professor Henrik Lund and the
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