The risk of energy hardship increases with extreme heat and cold in Australia

Climate change is altering temperature distribution globally, leading to increased average temperatures, more frequent and intense heatwaves, and, in some regions, more extreme cold spells. This shift has far-reaching consequences, including the exacerbation of social issues like energy hardship. Energy hardship, characterized by the inability to afford essential energy services, is a growing global problem affecting vulnerable populations in both developed and developing countries. Historically, heating demands were the primary driver of energy costs; however, recent decades have seen a rise in energy costs associated with cooling homes during heatwaves, highlighting climate change as a significant factor. Increased energy demand during extreme temperatures arises from a shift from outdoor to indoor activities and the use of cooling/heating devices. The inability to meet these increased energy costs has detrimental consequences for health, financial stability, and overall well-being. While existing research focuses mainly on the impact of cold temperatures, limited and mixed evidence exists regarding the effects of extreme heat and the interplay of both extremes on energy hardship, particularly when considering the intensity, duration, and frequency of temperature events. This study aims to bridge this gap by investigating the combined influence of extreme heat and cold on energy hardship in Australia, analyzing vulnerabilities across various demographic groups, housing conditions, and neighborhood characteristics, and projecting future risks under different climate change scenarios.

Previous research on temperature and energy hardship has primarily focused on cold temperatures and heating needs, with some institutions defining fuel poverty solely in terms of heating difficulties. Studies using electrical disconnection as an outcome have shown an association between extreme heat and increased disconnections among low-income households in California and remote Australian communities. However, studies directly linking climate change and energy hardship present mixed findings, some showing increased energy poverty with warmer temperatures and others suggesting alleviation. Given the implications of both extreme heat and cold on energy demand, more research is needed to understand the complex relationship between climate change, extreme temperatures, and energy hardship, considering the intensity, duration, and frequency of temperature events, and exploring how vulnerabilities may change in a changing climate.

This study utilized data from the Household Income and Labour Dynamics in Australia (HILDA) Survey (2005-2021), a nationally representative longitudinal study. The dataset included 269,500 observations from over 30,000 individuals. Energy hardship was assessed using several measures: (1) the proportion of household income spent on energy; (2) the risk of spending >10% of household income on energy; (3) a low-income, high-cost (LIHC) metric; and (4) the risk of utility payment arrears. Extreme temperature metrics, including average annual maximum and minimum temperatures, number of heatwave/coldwave events, and average duration of these events, were derived using the Excess Heat Factor (EHF) and Excess Cold Factor (ECF) approaches developed by the Centre for Australian Weather and Climate Research. These metrics account for long-term and short-term temperature anomalies. Multivariate fractional polynomial (FP) regressions were employed to model the effects of extreme temperatures on energy hardship, controlling for various factors and adjusting for clustering at the individual level. The models were stratified by individual, household, and neighborhood-level factors to assess vulnerabilities. Finally, the study projected future changes in energy hardship under moderate (RCP 4.5) and high (RCP 8.5) emissions scenarios using climate models from the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Bureau of Meteorology (BoM).

The study found a significant positive relationship between the intensity, frequency, and duration of extreme heat and cold and the risk of energy hardship. Increased average annual maximum temperature was associated with a higher risk of spending >10% of income on energy, experiencing LIHC, and having utility bill arrears, particularly in colder regions. Conversely, lower average annual minimum temperatures increased these risks more significantly in warmer areas. The effects of extreme heat were greater in colder areas, and vice-versa for extreme cold, highlighting regional disparities and the potential for unexpected hardship in areas unaccustomed to certain extremes. Analyzing vulnerabilities revealed that older individuals, lone-person or single-parent households, and renters were most susceptible to energy hardship. These vulnerabilities were partially offset by good housing quality and renewable energy installations. Neighborhood-level factors also played a role, with areas lacking greenspaces or renewable energy installations showing higher risks. Climate projections under both RCP 4.5 and 8.5 scenarios indicated a substantial increase in the risk of energy hardship, ranging from 0.1%–2.6% (RCP 4.5) and 0.6%–3.3% (RCP 8.5) in the long run. The increase in energy hardship risk from the short to long run was lower for the RCP 4.5 scenario. This emphasizes that energy hardship will persist despite mitigation efforts, with vulnerable groups facing heightened risks.

This study provides strong evidence that climate change is exacerbating energy hardship in Australia, impacting various demographic groups unevenly. The findings address the research question by demonstrating the significant and non-linear effects of extreme heat and cold on energy hardship and highlighting specific vulnerabilities. The results underscore the importance of considering both extreme heat and cold when addressing energy hardship, especially in regions experiencing unusual temperature events. These findings are significant because they contribute to a better understanding of the complex interactions between climate change, social vulnerability, and energy poverty. The identification of protective factors (e.g., quality housing, renewable energy) and vulnerable groups informs the development of targeted interventions and policies.

This research highlights the growing challenge of energy hardship driven by climate change in Australia. Future energy hardship will likely be more significantly affected by extreme heat. The uneven distribution of risk across different populations necessitates targeted interventions focusing on housing quality, renewable energy access, and social support for vulnerable groups. Future research could explore the effectiveness of specific adaptation strategies, investigate regional variations in detail, and analyze the long-term impacts of energy hardship on health and well-being.

The study relies on self-reported data on energy expenditure from the HILDA survey, which might be subject to recall bias. The projections are based on climate models with inherent uncertainties, and the actual impacts might deviate from the predictions. The study is focused on Australia and its findings might not be directly generalizable to other regions with different climatic conditions and socio-economic contexts.