The mutual effects of residential energy demand and climate change in the United States: A wavelet analysis

Abstract

This study examines the complex and time-varying relationship between residential energy demand (including electricity, geothermal, and solar energy) and climate change using wavelet analyses with monthly USA data from January 1990 to March 2023. The results show that residential energy demand and climate change indicators exhibit a time-varying interrelationship with cyclical and lag effects. Specifically, before 2021, a positive correlation between residential electricity demand and carbon dioxide (CO2) emissions in short-term frequencies was found, but the relationship reversed thereafter, with an increase in CO2 levels influencing and decreasing residential electricity demand. In the long run frequencies, the link between residential power consumption and CO2 emissions shifted over time, exhibiting inconsistent co-movement. The co-movements between residential geothermal and CO2 show predominantly positive correlations, with CO2 leading the relationship in the short run, while geothermal leads the co-movements in the long run. In both short and long-term frequencies, the dependency and co-movement between residential solar and CO2 are mixed, with residential solar leading to positive correlations and CO2 leading to negative correlations. Therefore, improved insulation, energy-efficient windows, and high-efficiency heating systems can all assist in reducing heat loss and the total energy demand for domestic heating and subsequently low CO2 emissions.