Avoided economic impacts of energy demand changes by 1.5 and 2 °c climate stabilization

Energy demand associated with space heating and cooling is expected to be affected by climate change. There are several global projections of space heating and cooling use that take into consideration climate change, but a comprehensive uncertainty of socioeconomic and climate conditions, including a 1.5 °C global mean temperature change, has never been assessed. This paper shows the economic impact of changes in energy demand for space heating and cooling under multiple socioeconomic and climatic conditions. We use three shared socioeconomic pathways as socioeconomic conditions. For climate conditions, we use two representative concentration pathways that correspond to 4.0 °C and 2.0 °C scenarios, and a 1.5 °C scenario driven from the 2.0 °C scenario with assumption in conjunction with five general circulation models. We find that the economic impacts of climate change are largely affected by socioeconomic assumptions, and global GDP change rates range from +0.21% to -2.01% in 2100 under the 4.0 °C scenario, depending on the socioeconomic condition. Sensitivity analysis that differentiates the thresholds of heating and cooling degree days clarifies that the threshold is a strong factor that generates these differences. Meanwhile, the impact of the 1.5 °C is small regardless of socioeconomic assumptions (-0.02% to -0.06%). The economic loss caused by differences in socioeconomic assumption under the 1.5 °C scenario is much smaller than that under the 2 °C scenario, which implies that stringent climate mitigation can work as a risk hedge to socioeconomic development diversity.