Assessing Macro‑economic Effects of Climate Impacts on Energy Demand in EU Sub‑national Regions

European policy makers are increasingly interested in higher spatial representations of
future macro-economic consequences from climate-induced shifts in the energy demand.
Indeed, EU sub-national level analyses are currently missing in the literature. In this
paper, we conduct a macro-economic assessment of the climate change impacts on energy
demand at the EU sub-national level by considering twelve types of energy demand
impacts, which refer to three carriers (petroleum, gas, and electricity) and four sectors
(agriculture, industry, services, and residential). These impacts have been estimated using
climatic data at a high spatial resolution across nine Shared Socioeconomic Pathway (SSP)
and Representative Concentration Pathway (RCP) combinations. The impacts feed into a
Computable General Equilibrium model, whose regional coverage has been extended to
the sub-national NUTS2 and NUTS1 level. Results show that negative macroeconomic
effects are not negligible in regions located in Southern Europe mainly driven by increased
energy demand for cooling. By 2070, we find negative effects larger than 1% of GDP, especially
in SSP5-RCP8.5 and SSP3-RCP4.5 with a maximum of − 7.5% in Cyprus. Regarding
regional differences, we identify economic patterns of winners and losers between
Northern and Southern Europe. Contrasting scenario combinations, we find that mitigation
reduces adverse macro-economic effects for Europe up to a factor of ten in 2070, from
0.4% GDP loss in SSP5-RCP8.5 to 0.04% in SSP2-RCP2.6.