Here’s a recording of my talk at the recent AMS meeting: The Hidden Climate Tax: How Climate Change Increases Energy Demand and Costs For Society

Abstract: This study demonstrates how climate change is already driving large increases in electricity demand and total electricity costs. This occurs due to two things: hotter temperatures drive higher demand (mainly for cooling) and, as demand rises, price-setting mechanisms in the energy market increase the per-unit price. Thus, consumers are hit double: they must buy more electricity, and each unit of electricity costs more. Using the ERCOT energy market, results show that, compared to a 1950-1980 baseline climate, electricity demand in 2023 was 2.0 GW (4.1%) higher because of the extreme temperatures of that year — climate change contributed 45% of this increase, with the rest coming from short-term climate variability. Using data from the ERCOT wholesale market, we estimate that the total cost of electricity (the combination of higher demand and higher per-unit prices) increased by $295 per ERCOT customer, with most of this increase occurring during the summer. Climate change contributed about 28% of this ($2.2B, $83 per customer), while short-term variability contributed the other 72%. This is a regressive "climate tax" that all ERCOT customers must pay.