Cooling the Warming Planet: A Conversation with Rusmir Music

The climbing temperatures worldwide are threatening lives and economies. 2023 was the hottest year ever, and each decade since the 1980s was warmer than the one before. The heatwaves have caused blackouts and emergency shutdowns in urban power grids from Mexico to Indonesia.?? Heat-related deaths are nearing half a million annually, and productivity losses have reached $2 trillion.??

With no letdown in rising temperatures, access to cooling is more critical than ever.? Yet only 15% of 3.5 billion people who live in hot climates - most of them in developing countries - have access to cooling.? Poor access to cold storage and refrigeration also makes it hard to store life-saving vaccines, and contributes to food losses, which currently make up approximately one-third of all food produced.??

As the world gets hotter, more populated, and more developed, demand for cooling solutions will only increase. Yet cooling is a major contributor to the global GHG emissions, which already consumes 20% of electricity globally, and the demand is expected to triple by 2050. The Cooling Watch Report found that left unchecked, cooling-related emissions could double by 2050 to reach 6.1 billion tons of carbon dioxide equivalent (CO2e), further contributing to climate change and global warming.?

We need to find a way to meet cooling needs without reinforcing a vicious cycle of more GHG emissions, leading to a hotter planet, requiring more cooling.?? Rusmir Musi? , IFC - International Finance Corporation 's Sustainable Cooling Lead, shares his views on scaling up sustainable cooling solutions in emerging markets.??

What is sustainable cooling??

Sustainable cooling includes cooling technologies and approaches that are accessible, affordable, and scalable and that minimize environmental impacts, aiming for near-zero cooling by 2050. These solutions are more climate friendly than conventional refrigeration or HVAC, and replace ozone-depleting refrigerants with greener alternatives, reducing direct emissions from refrigerant leakage and indirect emissions from the energy used to power the cooling equipment.?

How big is the cooling market??

A recent report IFC co-authored with UN Environment Programme called Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs, found that today, the cooling market in developing economies is approximately $300 billion, but in line with projected population growth, it is expected to grow to $600 billion, or more, by 2050.? This covers multiple segments of the cooling market, including space cooling, refrigeration, cold chains, and transport, with the largest growth expected in Africa and South Asia. And while passive cooling accounts for only 10% of the market today, this segment offers great growth potential, especially with adoption and effective implementation of building energy codes.??

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Additionally, investing in cooling will have a positive effect on other sectors of national economies through cost savings and positive climate impacts. We found that adopting sustainable cooling in developing economies could result in over $8 trillion in avoided costs by 2050 through lower electricity bills and reduced power infrastructure investments.?That figure comes from $5.6 trillion in electricity consumption costs, $800 billion in new equipment needs, and additional power infrastructure investments of $1.8 trillion required to satisfy peak demand.??

Finally, there are additional investment opportunities, estimated at approximately $800 billion, in meeting the cooling needs of vulnerable groups underserved by the market today. The public and the private sector can collaborate to leverage these opportunities effectively.??

What are the global efforts to support sustainable cooling??

In 2019 the UN Environment Programme launched the?Cool Coalition?– a group of over 130 members who are collaborating on science, policy, finance, and technology to meet growing demands for sustainable cooling.? At #COP28 climate conference in 2023, the Cool Coalition and COP28 UAE Presidency launched the Global Cooling Pledge with nearly 70 government signatories and more than 50 supporters from international organizations, international finance institutions and industry.??

The Global Cooling Pledge marks the world’s first collective effort to improve energy efficiency and reduce emissions from the sector. The Pledge aims to reduce global cooling-related emissions by 68 per cent by 2050, improve energy efficiency of cooling technologies by 50 per cent by 2030 and to increase access to sustainable cooling for the most vulnerable – all of which is needed to keep the 1.5°C goal in reach. IFC supported the Pledge through a letter issued by our Managing Director and we continue to work with UNEP and the Cool Coalition through global and country-specific initiatives.??

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What are the investment opportunities like in this space??

Most of the capital needed for scaling up sustainable cooling will have to come from the private sector. However, low awareness of the business case for investing in sustainable cooling as well as a lack of knowledge about the available financing solutions and new business models is limiting the amount of capital available for sustainable cooling in markets that need it most.??

Since the cooling market is projected to grow to at least $600 billion by 2050, there are ample investment opportunities in this space.? There are many diverse participants in the market – from equipment manufacturers to service providers and urban designers, from startups to multinational enterprises.? Some market actors may need seed capital and equity, while the others may be better served by debt financing, working capital loans, cooling bonds or carbon offsets. One size does not fit all, and finance solutions for the market need to be diverse enough to reflect these differences.? What’s clear is that mobilizing private capital to leverage these opportunities will be a win-win.?

One barrier to more adoption is that cooling is both no one’s business and it’s everyone’s business. For most businesses – ranging from hotels and offices to food and banking – cooling is hidden but something they very much need in order to keep running their operations, especially in light of the heat waves we recently experienced and which will keep increasing in intensity.

Passive cooling for buildings – for both new construction and retrofits – is one area where we see large opportunities. The market, at approximately $30 billion, is already significant but needs to expand dramatically to deliver near-zero emissions by 2050. IFC is working through bodies like the Global Alliance for Buildings and Construction and the Buildings Breakthrough to illustrate how our EDGE Green Buildings tool connect the technical side to the financing side, with calculation of return on investment for measures like this.??

Sustainable cooling needs to become as much of a fixture of development finance as other established climate-related areas such as carbon capture, renewable energy infrastructure, or battery technology which benefit from embedded institutional support from governments and multilateral institutions.?

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What policies can help scale up sustainable cooling in emerging markets??

Governments and regulators have a critical role to play in creating an enabling environment to make sustainable cooling in developing economies more attractive to investors. Some of the policies already used to encourage sustainable cooling include minimum energy performance standards and new building codes, systems approaches to supply chains, incentives to promote innovation, and the adoption of nature-based solutions for outdoor heat reduction.?

The governments should focus on financing underlying infrastructure and address the cooling needs of challenging market segments affected by affordability constraints. While developing country governments have limited spending power due to fiscal constraints, they can pursue public-private partnerships and encourage concessional funding, backstopping risk for private investors and attracting more capital to their economies.??

What is IFC doing in this space??

Sustainable cooling is an important area of growth for IFC.? We have developed a new strategy to scale up financing and technical assistance through its “five by five” sustainable cooling strategy, which addresses five cooling intensive sectors through five modes of engagement:

IFC’s sustainable cooling initiative is funded by the UK Government’s Department of Energy Security and Net Zero. The initiative builds on the experience of two existing programs, also funded by the UK Government - the TechEmerge Program and the EDGE Green Buildings Program:??

• ?TechEmerge provides funding and technical support to early stage, innovative cooling companies. This program matched high-potential cooling innovators with corporates and field-tested cooling solutions across ten developing countries.??Learning from TechEmerge allowed us to design IFC’s broader cooling strategy, aiming to catalyze IFC’s investments across the cooling spectrum and create demonstration projects in line with IFC’s strategy for sustainable cooling.???
• IFC’s very successful EDGE Green Buildings Program is key to the growth of sustainable cooling as space cooling accounts for approximately one-half of the total market.? The program has enabled over $95 billion in green-certified construction and includes cooling as part of its advisory and investment activities.? The Market Accelerator for Green Construction Program (MAGC) is a blended concessional finance program, also financed by the UK government, which aims to mobilize $2 billion in investments to help mitigate climate change and reduce greenhouse gas emissions.? As of the end of 2023, MAGC had facilitated over $800 million in investments in green building projects for financial institutions across seven countries.??

?IFC’s cooling portfolio also includes? a 25% equity investment in Tabreed, a district central cooling company serving real estate developers and building owners, and a $63 million investment in cold chain and temperature-controlled logistics? across 4 companies.??

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Where do you see this market going??

IFC has just completed cooling “road shows” in a number of countries, including Colombia, Pakistan, India, Thailand, and Vietnam. Working with local clients, we see a similar theme – once we help the businesses “see” the hidden side of cooling, they very quickly start realizing the benefits of switching to more sustainable solutions.

For example, in hot countries in South and South East Asia, cooling represents up to 50% of energy needs in real estate assets like hotels, offices, and shopping centers. In food production and cold chains, we can help firms reduce terrible food losses caused by lack of cooling. Our message to these firms is the same – cooling isn’t a new “thing” for them – in fact they are already using it. They can just do it better and protect their bottom line as much as protecting the planet.??

We are confident that the project preparation facility IFC is deploying through the support of the UK Government will create demonstration projects, with case studies that will further build the business case for action described in our report.?

Learn more:

IFC's Sustainable Cooling Program

Cool Coalition

Global Cooling Watch Report 2023

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