Temperature fluctuations and energy consumption

Introduction This study investigates how temperature fluctuations affect energy consumption across countries. In the context of global warming and increasingly interconnected energy markets, temperature-related shocks may influence energy demand not only through direct heating and cooling needs, but also through oil price volatility, industrial structure adjustment, and cross-country spillover effects. Methods We construct a balanced monthly panel dataset covering 34 countries from 2008 to 2024. Measures of energy consumption, temperature fluctuations, oil price volatility, and industrial structure upgrading are constructed using cross-country sources, including Economist Intelligence Unit reports, WMO and NOAA climate data, the World Uncertainty Index, and the World Development Indicators. The empirical analysis combines country and time fixed effects, LASSO-based variable selection, Post-LASSO estimation, instrumental-variable estimation, robustness tests, and heterogeneity analysis. Dynamic international spillovers are further examined using a TVP-VAR-DY framework. Results The results show that temperature fluctuations significantly increase energy consumption. This finding remains robust after addressing endogeneity, controlling for climate trends and seasonality, using alternative estimation methods, replacing the climate indicator with ENSO, and excluding observations from 2020. The effect is stronger in fossil-fuel-dependent countries and developing economies, while it is weaker in economies with lower fossil fuel dependence and more advanced industrial structures. Mechanism analysis indicates that oil price volatility plays a more important role in the short run, whereas industrial structure upgrading becomes more relevant over longer horizons. The TVP-VAR-DY results also reveal sizable cross-country spillovers in energy consumption shocks. Discussion These findings suggest that climate variability can amplify energy demand pressures and transmit shocks across countries through both market-based and structural channels. The results highlight the need for coordinated policies that combine short-term energy market stabilization with long-term energy transition, industrial upgrading, and climate adaptation strategies, especially for more vulnerable and fossil-fuel-dependent economies.