California Institute for Energy and Environment (CIEE)

One of the obvious modes of adaptation to higher temperatures due to climate change is the increased demand for cooling and decreased demand for heating in the built environment. California’s residential sector uses relatively little electricity for heating, and it is therefore expected that the demand for electricity will increase as households operate existing air conditioners more frequently, and in many regions, will install air conditioners where there currently are few. This paper provides reduced form estimates of changes in electricity consumption due to increased use of installed cooling equipment under a hotter climate. This study adds to the literature by incorporating the change in temperature responsiveness due to likely increases in air conditioner penetration under climate change using a two-stage method. It shows that taking into account these capital investments may lead to higher projections of electricity consumption. These increases in projected electricity consumption were mapped to the ZIP codes in the study data. The paper shows suggestive evidence that more Caucasian and wealthy ZIP codes are projected to experience relatively smaller increases in consumption, while ZIP codes with a higher share of Latino population are projected to experience larger increases in consumption