The climate-electricity nexus in the GCC: How rising temperatures drive electricity demand across Gulf states

The GCC region is warming at 0.49 degrees C per decade, nearly three times the global average, placing mounting pressure on electricity systems that already face extreme cooling demand. This study estimates country-specific income, price, and temperature elasticities of electricity demand for GCC countries over 1990-2022, using cointegration techniques. We find that a 1 degrees C increase in annual average temperature would raise annual electricity consumption by 3.1% (Bahrain) to 5.8% (Saudi Arabia), translating into 32.2 TWh of additional regional demand, and 16.8 Mt of CO2 emissions annually. The emission estimates are based on 2021 country-specific carbon intensities, reflecting each country's prevailing generation fuel mix (IEA, 2024; Ember, 2023). The additional generation would cost approximately $1.9 billion per year. Income elasticities range from 0.25 to 1.37, and price elasticities range from -0.08 to -0.61, revealing substantial cross-country heterogeneity driven by differences in appliance saturation, subsidy structures, and tariff reform histories. Decomposition analysis confirms that temperature, alongside population and income growth, is a first-order driver of electricity consumption, while the demand response to Saudi Arabia's 2016-2018 pricing reforms demonstrates that welldesigned tariff adjustments can partially offset climate-driven demand growth. The findings highlight the urgency of improvements in the energy efficiency of buildings, advanced cooling technologies, and continued pricing reforms to decouple electricity demand from rising temperatures in support of GCC net-zero aspirations.