The need for affordable, sustainable cooling investment solutions that do not cause a spike in global energy demand has never been so high.
New research from Sustainable Energy for All (SEforALL) and Climate Policy Initiative (CPI), published as part of the Energising Finance research series, highlights how improved tracking of cooling investment is essential to meeting the global cooling challenge.
The Energising Finance research series consists of in-depth primary research and analysis by SEforAll and partners that examines supply and demand for finance across two key areas of energy access: electricity and clean cooking.
The report, titled Chilling Prospects: tracking sustainable cooling for all 2020, argues that current cooling finance datasets are too narrow in the types of investment identified and tracked as cooling solutions. For example, some datasets only track investment in active cooling equipment, such as air conditioners and refrigerators. They do not capture investments in various passive cooling solutions, such as energy-efficient building design and heat-resilient landscape architecture.
As demonstrated in SEforALL’s Chilling Prospects research, increased investment in passive cooling solutions is imperative to manage the energy demands of cooling. Providing everyone with air conditioners is not an option if we wish to reduce overall energy consumption in the fight against climate change.
The other shortcoming with the current tracking of cooling investment is that databases lack project-level or transaction-level information.
Chilling prospects for access to global cooling
The report says as global temperatures rise it is becoming clear that a dramatic expansion of air conditioning and the associated energy demand could have serious environmental consequences. At the same time a lack of access to cooling, particularly for those working outdoors, poses a significant challenge to economic development.
In 2019 the International Labour Organisation estimated that by 2030 the global economy would suffer lost productivity to the tune of $2.4 trillion annually, due to heat stress. That is the equivalent of 80 million full-time jobs.
The figures are alarming but don’t show the disproportionate impact on developing economies experiencing increases heat stress and its long term impact on economic growth. The report points out it is developing economies, and the sectors that support their growth, that will face the most significant productivity penalty because of a lack of access to sustainable cooling.
Developing a new way to track cooling investment
Across 54 high impact countries, 1.02 billion people among the rural and urban poor remain at high risk from a lack of access to cooling. This includes 318 million people living in poor rural areas and 699 million living in poor urban areas. A further 2.2 billion lower-middle-income people lack access to clean and efficient cooling. In Africa, the rural poor population grew to 204 million in 2020 whereas in Asia the number of urban poor grew to 484 million.
Brian Dean, Head of Energy Efficiency and Cooling at SEforALL, said: “Without precision in knowing how much finance is flowing to different types of cooling solutions in different places, there is no foundation for informing policy and investment decisions that will deliver sustainable cooling for all.”
Have you read?
Taking notes from a greening sustainable business
In response, the report proposes a new framework for tracking cooling investment that will enable transaction-level tagging for cooling finance, allowing development banks and national governments to better understand the scale, scope and climate orientation of cooling investments, informing their policies and strategies.
The Framework for Tracking Cooling Investment provides clear guidance on how to categorise a wide range of cooling activities, which can be tagged by development banks and data providers based on their cooling orientation, climate orientation, solution type and purpose. This tagging system could integrate seamlessly with the Organisation for Economic Co-operation and Development’s existing investment data collection and verification approach.
The Chilling Prospects report argues that the framework should be further developed and piloted in partnership with financial actors and data providers, and eventually implemented as a universal standard to track finance for cooling commitments and investment, helping decision-makers identify gaps between the two.
Applying this Framework for Tracking Cooling Investment will lead to a more robust and useful set of cooling investment data. For example, not only will stakeholders be able to identify overall investment levels in cooling, but they will be able to segment which solutions are being supported. This segmentation is pivotal for knowing whether enough investment is being dedicated to sustainable cooling solutions or whether there is a bias towards energy-intensive solutions that undermine a low-carbon transition.