$8 trillion opportunity in sustainable cooling solutions for developing economies

The cooling market in developing economies is expected to grow from around USD 300 billion to at least USD 600 billion annually by 2050, according to a report released today by the UN Environment Programme (UNEP)-led Cool Coalition and International Finance Corporation (IFC). The fastest growth in cooling is expected in Africa, which will see the market multiply by a factor of seven, and South Asia, which will quadruple in size.

The report prioritizes passive, energy-efficient, environmentally friendly, and economically viable cooling solutions. The report, “Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs,” 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 urbanization.

The report finds that sustainable cooling technologies can slash cooling-related emissions by almost half in 2050 in developing economies. This requires:

• Prioritizing 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,
• A systems approach to cold chains, large cooling infrastructure services, and incentives to promote innovation. 

IFC’s Managing Director, Makhtar Diop, highlights the 600-billion-dollar sustainable cooling market as a potential investment opportunity for developing countries, aiming for near-zero emissions by 2050, highlighting the need for affordable, scalable solutions.

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 USD 400-800 billion, in addition to future increases in demand.

UNEP Executive Director Inger Andersen emphasizes the need for sustainable, affordable, and energy-efficient cooling solutions to meet global cooling demands while supporting climate, health, food security, and economic development. This report encourages governments, private businesses, and multilateral banks to harness financial instruments for resilience.

Key recommendations include improving data on cooling, capital costs, and financing; raising awareness; expanding the 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 transition to sustainable cooling requires an enabling environment to make developing economies more attractive to investors. UNEP and IFC are committed to working with governments, businesses, and other stakeholders to de-risk investments and ensure sustainable cooling solutions are accessible to all, especially in low-income regions most prone to increasingly common heatwaves.