Beyond the energy sector, cooling is central to human health and prosperity. Cooling is also integral to a number of critical industries such as healthcare and the food system and it enables labour productivity and protection from extreme heat.
Sustainable cooling can both mitigate global warming and help people adapt to its effects. In 2017, cooling accounted for 17% of global power consumption, with demand expected to triple by 2050. Without intervention, direct and indirect greenhouse gas emissions from cooling are set to rise 90% by 2050.
The fastest growth in cooling demand will be seen in the developing world, due to rising incomes, urbanisation and increasing temperatures from climate change. Development Financial Institutions (DFIs) will play an important role in the cooling sector as key providers of technical and financial assistance. DFIs are standard setters, with their support having long-lasting effects.
However, in the developing world, cooling and particularly air-conditioning (AC), is often misperceived as a niche market or a luxury. For over one billion people, this ‘luxury’ is an unmet necessity, both in the face of rising temperatures and for economies to develop.
Sustainable cooling provides a rare opportunity to achieve a triple win, by mitigating climate change, supporting adaptation, and facilitating sustainable development. Doing cooling well will support progress in three major international agreements: the Paris Agreement, the UN Sustainable Development Goals and the Kigali Amendment to the Montreal Protocol.
DFIs are starting to recognise this and are looking to integrate cooling into their work beyond the energy sector. Given cooling’s importance and potential impact, faster progress is needed.
Mainstreaming cooling into DFI operations entails a rapid process of learning by doing. This can be made more efficient by pooling experience and know-how amongst DFIs as they share common barriers. There are already tools and networks to help accelerate this, starting with the consideration of the Kigali Amendment in their policies.
Common barriers to progress include
- The perception of cooling as niche; this means cooling receives limited strategic support from DFI leadership and is not systematically measured or tracked.
- DFIs may not have their own energy efficiency standards and may use local standards which are highly variable.
- Environmental assessments of projects may not pick up cooling as an issue.
- Lastly, DFI finance of cooling projects is impeded by both the small ticket size of individual projects and by member countries’ preferences to seek finance for larger, more visible projects. This also comes up against the view of air conditioning as a luxury.
Potential solutions to overcome these barriers.
- At the institutional level, placing a greater emphasis on cooling within mainstream priorities. Also, appointing a flag waver to help boost awareness, break down sectoral silos, and map DFI cooling-specific projects and activities with impacts in health, agriculture and cities. DFIs can draw upon existing external resources and share expertise amongst themselves.
- Financial and Technical Assistance from DFIs can support better cooling outcomes. Cooling can be better integrated into country diagnostics and partnership guidelines. DFIs can give support to local financing intermediaries to improve cooling solutions and increase awareness of potential opportunities. Demonstration projects can reduce and manage perceived risk to attract other financial players. Aggregating projects at a regional rather than national level could create a critical mass while mitigating country-specific risks.
- DFI engagement at the country, devolved and department level is important to highlight cooling implications across the wider economy, beyond energy. Engagement at all levels is key for illustrating the interaction between cooling and wider national climate efforts such as Nationally Determined Contributions and National Development Plans. COVID-19 poses a challenge but also an opportunity for countries receiving support to strengthen their health systems by investing in resilient and responsive cold chains, as well as improving hospital cooling systems. DFIs can ensure countries do not lose sight of opportunities to build long term sustainability into short term recovery measures. Doing so will set the tone and outcomes for years to come.
Getting cooling right offers DFIs the opportunity to support countries to boost economic activity, sustainability, and resilience whilst meeting three international commitments – the Paris Agreement, Sustainable Development Goals and the Kigali Amendment.
Read the full briefing, Cool Development Banks, here.
Photo by Omar Chatriwala on Flickr.