Financing the push to sustainable cooling

USA: A new report aims to help investors and providers of cooling solutions, as well as private, public and international financiers, identify the commercial potential in sustainable cooling.

Led by the UN Environment Programme’s Cool Coalition and International Finance Corporation (IFC), the report builds on the United Nations Environment Programme’s (UNEP)-led Global Cooling Watch, released in 2023, that highlighted the urgency of adopting “accessible, affordable and scalable” cooling solutions that do not harm the planet.

The cooling market in developing economies is expected to double to at least $600bn per year by 2050, but the fastest growth, however, is expected in Africa, which will see the market multiply by a factor of seven, and South Asia, which will quadruple in size.

Entitled, Cooler Finance: Mobilising Investment for the Developing World’s Sustainable Cooling Needs, the report finds developing economies – currently generating two-thirds of global cooling-related emissions – are set to double their cooling demand by 2050 due to population growth, economic expansion, and urbanisation.

The report highlights the need for significant upfront investments. Closing existing shortfalls in access to cooling for households and SMEs in developing countries will require $400bn to 800bn, in addition to future increases in demand.

Adopting sustainable cooling solutions, as opposed to inefficient equipment that uses more power, could cut emerging economy consumers’ electricity bills by as much as $5.6 trillion over the next 25 years, the report says. It would also reduce the amount of new investment needed in additional power generation to meet peak electricity demand by $1.8 trillion.

This would require prioritising passive cooling strategies like insulation, reflective materials, enhancing green areas and energy-efficient technologies, enforcing minimum energy performance standards and new building energy codes and a faster phase down of climate warming refrigerants.

The report also calls for a systems approach to cold chains and large cooling infrastructure services, and incentives to promote innovation. 

“The sustainable cooling market represents at least a $600bn opportunity for the private sector, which could generate more than $8 trillion in benefits for developing countries,” said IFC MD Makhtar Diop. 

“These nations are especially vulnerable to the deadly effects of rising temperatures and are urgently in need of cooling solutions.”

Key recommendations include improving data on cooling, capital costs, and financing; raising awareness; expanding use of best practice business models and financing tools; increasing seed and high-risk funding for pilot technologies; leveraging blended and concessional finance; and building on the Global Cooling Pledge to create a Sustainable Cooling Finance Partnership.

The report – Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs – is available on the IFC website.