Conference Agenda

This paper examines theoretically and empirically how extreme temperatures may affect

the energy efficiency of manufacturing firms. A conceptual framework outlines the various

mechanisms linking temperature and energy efficiency which we test by applying a semi-

parametric model to firm-level and climatic data from 2007 to 2015. Results show that

compared to temperate days (15-20°C), each additional day with temperatures below -5°C

or above 30°C reduces energy efficiency by 1.20% and 0.51%, respectively. Cold extremes

are found to drive the majority of short-term losses. Mechanism analysis suggests that

temperature indirectly affects energy efficiency by impairing firms’ financial health, which

lowers investment in energy-efficient technologies. The impact is greater for private,

small, and financially constrained firms, and differs across sectors. Temperature-induced

inefficiency added approximately 233,700 tons of coal equivalent or around 0.01% of total

manufacturing energy consumption, thereby aggravating both carbon emissions and local

air pollution. Climate projections point to considerable future losses, underscoring the

need for targeted adaptation policies in the manufacturing sector.

Economic development, rising temperatures, and climate policy will have profound implications for electricity systems worldwide. Using hourly data on electricity demand for over seventy countries, we provide new global evidence on how temperature affects electricity demand for heating and cooling, including how this relationship depends on the adoption of electric appliances for cooling and heating. Combining our estimates with climate and development projections, we show that changing temperatures, incomes, and levels of electrified heating will jointly increase electricity demand for heating and cooling globally by mid-century, with peak demand increases substantially exceeding average demand changes. In warm regions, increased temperatures and growing adoption of air conditioning will raise electricity demand for cooling. In colder regions climate-driven reductions in heating demand could be offset - and even reversed - by the expansion of electric heating. Our findings underscore the importance of incorporating appliance adoption and peak demand dynamics into electricity system planning under climate change.

Climate change is expected to reduce demand for space heating while increasing demand for cooling, with important implications for energy systems and climate adaptation. We study the historical and projected impacts of climate change on U.S. natural gas consumption, a sector closely linked to temperature through its role in building heating and electricity generation. Using a flexible empirical framework that relates state-level natural gas demand across residential, commercial, industrial, and electricity-generating sectors to population-weighted, continuously measured heating and cooling degree days, we capture nonlinear and climate-dependent temperature responses. Optimal models, selected from over 151 million specifications via cross-validation, explain up to 98 percent of out-of-sample variation in sectoral demand.

We provide new evidence on climate adaptation by linking weather sensitivity to long-run climate. Colder regions exhibit substantially lower sensitivity to heating shocks, consistent with costly investment in building robustness. Interpreting this sensitivity–climate gradient through a welfare-theoretic framework, our work aims to recover the implicit costs and benefits of adaptation. Ongoing work extends this analysis using empirical designs that adapt recent panel approaches to allow climate-dependent slopes, incorporate cross-tail spillovers, and increase within-state identifying variation via downscaling and reformulated long differences. Forward-looking projections indicate that rising cooling demand will outweigh declines in heating demand, highlighting challenges for energy systems and the importance of integrating adaptation with energy transition policies.

This paper examines the determinants of energy efficiency in the new EU member states, with a focus on the roles of energy prices, energy price uncertainty, and governance. Using sector-level panel data for seven countries over twenty-one years, we estimate a stochastic energy distance frontier model using the consistent true fixed approach. From the frontier analysis, the estimated energy efficiency scores are relatively high and robust across samples. Although heterogeneities exist, eliminating existing inefficiencies will on average provide efficiency gains of up to 21%. From our key findings, higher real energy prices are associated with lower technical inefficiency, consistent with the price-discipline hypothesis. In contrast, energy price uncertainty has a robust inefficiency-increasing effect: sectors exposed to more volatile energy prices exhibit poorer energy efficiency performance. This effect is stronger in the pre-accession period and weakens after EU accession, implying that greater exposure dampens the inefficiency response. Furthermore, we find uncertainty to be more disruptive to energy efficiency in low energy-intensive sectors. Regulatory quality is unexpectedly associated with higher inefficiency, attributed to short-run adjustment costs linked to regulatory tightening. Finally, EU accession and the initial phase of the global financial crisis are associated with inefficiency improvements, while inefficiency rises during the peak crisis year. The study’s findings show that in liberalized energy markets, improving energy efficiency requires more than just the appropriate energy price levels. It also requires stable and credible price signals, consistent with the importance of policy frameworks that reduce price uncertainty and support long-term energy-efficient investment.