Template-Type: ReDIF-Paper 1.0
Title: The Effect of Temperature on Energy Use, CO2 Emissions, and Economic Performance in German Industry
Author-Name: Jakob Lehr
Author-Email: jakob.lehr@uni-mannheim.de
Author-Name: Katrin Rehdanz
Author-Email: rehdanz@economics.uni-kiel.de
Classification-JEL: Q41, Q54, D22, L60
Keywords: Temperature, Manufacturing, Climate Change, Energy Use, CO2 Emissions, Gross Output, Germany


Abstract: This paper represents an addition to the scanty empirical evidence relating to the impact
of temperature on the manufacturing sector. To study the effect of temperature on CO2
emissions (energy use) and plants’ economic performance, we combine daily temperature
information from 11,000 German municipalities with the German census of the manufacturing
industry for the period 2004 - 2017. We find that temperature affects industrial emissions
significantly. Low temperatures cause a large and robust increase in CO2
emissions as a reflection of heating requirements. For example, one additional day with a mean temperature
below -6°C increases the average plant’s emissions by ≈ 0.15% or 6t CO2
relative to a day with mean temperatures between 12°C and 15°C. Evidence for increased emissions from
electricity consumption due to cooling needs is less consistent. We extend our analysis to
encompass the effect of temperature on economic performance. While finding consistent
evidence for a negative effect of cold days on gross output and labor productivity, results
for hot days are mixed. Finally, we interpret our estimates against the backdrop of climate projections.


Note: 
Length: 51
Creation-Date: 2023-12
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp489
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2023_489