Critical Levers to Scale Innovative, Energy-Efficient Cooling Technologies
Takeaways from the Global Leaders’ Perspectives
As we celebrate the two-year anniversary of the historic Kigali Amendment of the Montreal Protocol today, it is promising to see the growing discussion around the environmental impacts of current air-conditioning units and the need to replace harmful hydrofluorocarbons (HFCs) with more climate-friendly alternatives. Leaders from across the globe are echoing the need to develop and scale innovative comfort cooling solutions that can address one of the largest end-use climate risks the world is projected to face—the rapid adoption of air-conditioning. During the Global Climate Action Summit (GCAS) in San Francisco from September 12 to 14, Rocky Mountain Institute (RMI) and Conservation X Labs (CXL) hosted an affiliate event to discuss “the cooling challenge” of providing access to cooling for all, without warming the planet. I walked away from the event with new insights regarding the human health and development impacts when comfort cooling is not accessible, as well as the immense climate impact of the current 1.2 billion room air-conditioner (RAC) units in use today, expected to increase to at least 4.5 billion units by 2050. Therefore, it was apparent that in order to provide cooling technologies to people around the world without exacerbating the warming of the planet, a highly energy-efficient cooling technology needs to be developed and scaled to markets around the world.
Access to cooling: The difference between life and death
The event opened with a gripping and informative presentation from Rachel Kyte, CEO of Sustainable Energy for All (SEforALL), describing the human health implications when comfort cooling and cold chain technologies are not accessible to populations around the world. Kyte noted that “lack of access to cooling, and we take it so much for granted, can actually be the difference between life and death.” She also went on to describe the living situations for millions of adults and children around the world and how they will “need to have access in this warming world to cooling for comfort, cooling for survival, cooling for economic productivity, cooling for their food and food safety, and cooling for vaccines.” For me, it became apparent that while air-conditioning units were once thought of as a luxury appliance, comfort cooling is rapidly becoming a basic human need and enabler for health and productivity in many parts of the world in the wake of a warming planet, intensified urbanization, and population growth. More can be found in the recent SEforALL report, Chilling Prospects here.
Transforming the market: Achieving scalability of an energy-efficient air-conditioning unit
As the event progressed, I was further intrigued by the diverse perspectives provided by Amory Lovins (cofounder and chief scientist, RMI), Iain Campbell (senior fellow, RMI), Christie Ulman (climate director, Children’s Investment Fund Foundation [CIFF]), Nihar Shah (research scientist, Lawrence Berkeley National Laboratory), Paul Bunje (cofounder and chief scientist, CXL), and Satish Kumar (president and executive director, Alliance for an Energy Efficient Economy [AEEE]). These global leaders highlighted the growing need for comfort cooling in hot climates around the globe, the impending climate threat associated with increasing demand for cooling, and the potential to utilize innovation to disrupt the current air-conditioning market. Throughout the complex and insightful discussion, I became aware of three critical levers that could help to ensure the success of developing and globally distributing a highly efficient air-conditioning unit. The three critical levers that could ultimately allow for widespread scalability and market adoption are as follows.
1. Market disruption
Unlike technologies like solar photovoltaics and electric vehicles that have experienced rapid innovation due to increased investment in R&D and a growing marketplace, the air-conditioning industry has remained relatively stagnant due to a market failure. The complexity of understanding operating costs has driven consumers to buy air-conditioning units based largely on first cost. This has resulted in an industry focusing on what the market is currently demanding—units with low first costs, meeting minimum standards but costing many multiples of the initial cost to actually operate. Additionally, Lovins described the highly consolidated nature of the air-conditioning industry, noting that 70 percent of global RACs are produced in China and just two Chinese companies control over 35 percent of the global RAC production. Incumbent manufactures have not yet been incentivized by the market to revolutionize current technologies or make more efficient appliances accessible. Shah noted that “there are two fronts for the work—one is to make devices much more efficient than they are currently, and the other is to reduce the cost of the ones that are already more efficient.” Bunje highlighted that one way to signal the market is through prizes and competitions, noting that they can act as “important market signal[s] to the manufactures that are incumbent, static, and disincentived to innovate right now.” Initial market disruption is essential to begin the process of revolutionizing the current air-cooling industry. Bunje described this industry transformation as a domino effect that “gives market incentive to change what the business as usual looks like.” Stimulating the market through introducing disruptive technologies can help to catalyze the necessary changes to the air-conditioning industry.
2. Public mobilization
While disruptive technologies can be introduced into a market, Ulman highlighted the importance of mobilizing public awareness and consumer demand to scale technology and transform the air-conditioning industry. As regions continue to grow warmer and face degrading air quality, it is now becoming important to “link issues of efficiency with issues that consumers may care about a little bit more, like public health,” noted Ulman. Therefore, when evaluating the future of comfort cooling solutions and enhancing accessibility to people around the world, air-conditioning must become a topic that is addressed not only by HVAC manufacturers and energy companies, but also public health institutions, development agencies, and the general population. As Ulman asked, “How can we raise this topic in the priorities [of the general public] so that they are voting with their wallets and they are voting for their children’s health when investing in superefficient equipment?” Once the industry is jump-started to innovate due to disruptive technologies and public pressure, then arises the challenge and opportunity to get the appliances into the homes of families around the world.
3. Accessibility through financing mechanisms
Throughout the entire panel discussion, the topic of accessibility was paramount. However, the ways in which families and individuals have access to air-conditioning varies throughout the world. Therefore, financing mechanisms must be flexible and country- or region-specific. Kumar explained that “one of the major concerns is that it’s not just the operating costs, but also the first cost that is going to be fairly significant.” Therefore, along with a compelling technology solution must also come a variety of scaling mechanisms. These mechanisms could include on-bill financing, subsidies, incentives, and other structures that can help to prime the market for efficient technologies. Furthermore, structures like advanced market commitments (AMCs) could provide an avenue to reduce first costs, helping to lower market barriers to entry. While diverse financing mechanisms are critical to achieve scalability, support systems will be necessary in many parts of the world to assist with a transition to new energy solutions. Ulman explained that, from CIFF’s perspective, “we would deploy civil society support so that there is a group working not only to promote energy efficiency in the context of demand-side management, but also in the entire energy transition.” In order to get the innovative, energy-efficient cooling solutions into the hands of those that need them most, cross-sector work is required to effectively disrupt the industry, stimulate innovation, prime air-conditioning markets, and improve accessibility.
Promoting competition: Identifying a cooling solution through the Global Cooling Prize
Building upon the insights of these leaders and experts, it is clear to me that transforming the current air-conditioning market requires the utmost consideration of such factors as human health, current market barriers, accessibility through financing mechanisms, and ultimately, scalability. That is why a coalition led by RMI, CXL, AEEE, and CEPT University is launching the Global Cooling Prize—an innovation challenge to spur development of a residential cooling solution that has 5x less climate impact than typical air conditioners being sold on the market today. The evaluation criteria for the winning solution must meet guidelines on affordability and scalability, as well as other climate-focused criteria, such as refrigerants, water usage, and materials. When scaled, such a cooling solution has the potential to mitigate up to 0.5°C of global warming by 2100. To learn more about the Global Cooling Prize, visit globalcoolingprize.org and sign up to receive news alerts and updates about the prize.