Air conditioning and electricity expenditure: The role of climate in temperate countries

Abstract

This paper investigates how households adopt and use air conditioning to adapt to climate change and increasingly high temperatures, which pose a threat to the health of vulnerable populations. The analysis examines conditions in eight temperate, industrialized countries (Australia, Canada, France, Japan, the Netherlands, Spain, Sweden, and Switzerland). The identification strategy exploits cross-country and cross-household variations by matching geocoded households with climate data. Our findings suggest that households respond to excess heat by purchasing and using air conditioners, leading to increased electricity consumption. Households on average spend 35%–42% more on electricity when they adopt air conditioning. Through an illustrative analysis, we show that climate change and the growing demand for air conditioning are likely to exacerbate energy poverty. The number of energy poor who spend a high share of income on electricity increases, and households in the lowest income quantile are the most negatively affected.