Sustainable Cooling: Mobilizing Investment to Address Global Heat Challenges

The report highlights the urgent need for sustainable cooling solutions in developing countries, projecting a 600 billion dollars market opportunity by 2050. It emphasizes the importance of private investment, government policy, and international collaboration to address rising cooling demand while reducing emissions.

The "Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs" report, released in September 2024, is a collaborative effort between the International Finance Corporation (IFC) and the United Nations Environment Programme (UNEP)-led Cool Coalition. This report explores the pressing need for sustainable cooling solutions across developing countries. It highlights the role of cooling in addressing climate change, improving public health, reducing food loss, and enhancing economic productivity. As the planet warms, the lack of access to sustainable cooling solutions for over 3.5 billion people, mainly in hot climates across developing countries, has become a significant challenge. The rising demand for cooling, if not addressed sustainably, could increase greenhouse gas emissions, as two-thirds of global cooling-related emissions currently come from these nations. This creates a critical dilemma expanding access to cooling while curbing emissions. The report, authored with contributions from climate experts and economists, emphasizes that solving this dilemma will require a massive surge in private sector investment, supported by international cooperation and ambitious policies.

Impact of Inadequate Cooling on Vulnerable Populations

The consequences of inadequate cooling are vast. Extreme heat increases morbidity, mortality, and productivity losses while food and medical supply chains suffer without adequate refrigeration. About one-third of global food production is wasted, partly due to insufficient cold storage and transportation infrastructure. The most vulnerable populations, including women and children, are disproportionately affected by these shortcomings. In terms of healthcare, weak vaccine cold chains contribute to thousands of preventable deaths, particularly among children in low-income regions. The report outlines that while developing countries must expand access to cooling, they must do so without exacerbating climate change. This can be achieved through sustainable cooling technologies that reduce electricity consumption, emissions, and future infrastructure needs. The report identifies passive cooling techniques such as better building designs, reflective materials, and urban tree planting alongside more energy-efficient cooling technologies as key strategies.

A dollars600 Billion Market Opportunity by 2050

With demand for cooling expected to grow, the report projects a market opportunity for sustainable cooling that could exceed 600 billion dollars annually by 2050. The scale of this opportunity comes from rapidly rising populations, urbanization, and global warming, particularly in regions such as Africa and South Asia. Sustainable cooling could provide a triple win: improving human well-being, supporting economic development, and mitigating climate change. If investments are scaled up, sustainable cooling solutions could save developing economies over dollars8 trillion in energy and infrastructure costs over the next 25 years. By transitioning to efficient cooling technologies and passive cooling strategies, the report estimates that electricity consumption could be reduced by 42%, benefiting consumers through lower energy bills while simultaneously reducing greenhouse gas emissions. In turn, governments could avoid nearly 1.8 trillion dollars in new investments in power infrastructure needed to meet peak electricity demand. Furthermore, adopting these strategies could lead to a reduction in cooling equipment costs by 800 billion dollars by 2050.

Barriers to Scaling Sustainable Cooling Solutions

Despite these significant opportunities, the report underscores the many barriers to scaling up sustainable cooling. It identifies market fragmentation, regulatory hurdles, and a lack of awareness of sustainable cooling's benefits as key challenges. Moreover, financing gaps remain, particularly in regions where affordability and access to electricity limit the adoption of sustainable technologies. The IFC and UNEP argue that public and private sectors need to collaborate more closely to overcome these obstacles. They call for the development of financial instruments that address the diverse needs of cooling markets, such as revolving funds, concessional finance, and cooling-as-a-service business models. A central theme of the report is the need for concessional funding to support the most vulnerable populations who face the highest risk from heat exposure but have the least access to cooling solutions.

Government Leadership and Policy Interventions

The report also emphasizes the critical role of governments in creating enabling environments for sustainable cooling investments. National cooling plans, supported by international organizations, should be designed to integrate passive cooling strategies, enforce higher energy efficiency standards, and foster innovation in cooling technologies. Governments are also encouraged to lead by example by prioritizing sustainable cooling in public procurement processes. Public-private partnerships will be essential in expanding cooling access, and regulatory frameworks need to be strengthened to reduce investment risks. Ultimately, the report concludes that mobilizing private investment at the necessary scale will require significant international collaboration, market data improvements, and ambitious policy reforms.

The Future of Cooling in Developing Regions

The report estimates that closing current cooling gaps in developing countries will require investments ranging from 400 billion  dollars to 800 billion dollars, depending on the region. The largest growth in demand is expected in Africa, where the market for cooling is projected to grow sixfold, and in South Asia, which could see a fourfold increase by 2050. These regions also present the greatest investment opportunities for sustainable cooling solutions. The findings of the report make a strong case for businesses and investors to prioritize sustainable cooling, not only because of the development impact but also due to the significant long-term financial benefits. In conclusion, scaling up sustainable cooling is a pivotal part of both development and climate strategies, offering a path to improve billions of lives while also meeting global climate goals.