Developing Economies' Cooling Market Offers $8 Trillion Investment Opportunity

The cooling market in developing economies is forecast to grow from approximately $300 billion to at least $600 billion annually by 2050, as indicated by a report from the UN Environment Programme (UNEP)-led Cool Coalition and International Finance Corporation (IFC). The most rapid growth is expected in Africa and South Asia, where the market will multiply seven-fold and quadruple, respectively.

The report titled “Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs” emphasizes passive, energy-efficient, environmentally friendly, and economically viable cooling solutions. Notably, developing economies, currently responsible for two-thirds of global cooling-related emissions, are expected to double their cooling demand by 2050 due to factors like population growth, economic expansion, and urbanization.

Sustainable cooling technologies can potentially reduce cooling-related emissions by nearly half in these economies by 2050. The report emphasizes:
- Prioritizing passive cooling strategies such as insulation, reflective materials, green areas, and energy-efficient technologies.
- Enforcing stringent energy performance standards, new building codes, and accelerating the phase-out of climate-warming refrigerants.
- Adopting a systems approach to cold chains and large cooling infrastructure services while incentivizing innovation.

Makhtar Diop, IFC’s Managing Director, noted, “The sustainable cooling market represents at least a $600 billion opportunity for the private sector, potentially generating more than $8 trillion in benefits for developing countries. These nations are particularly vulnerable to the effects of rising temperatures and urgently need cooling solutions.”

The report stresses the need for significant upfront investments, estimating that bridging the gap in cooling access for households and SMEs in developing countries will require $400-800 billion, with further costs due to future demands.

Inger Andersen, UNEP Executive Director, highlighted, “As record temperatures continue globally, sustainable cooling is essential for healthy communities and a healthy environment. We must avoid solutions that exacerbate global warming and instead pursue sustainable, energy-efficient cooling.”

Key recommendations include improving data on cooling, financing; raising awareness; expanding best practice business models; increasing funding for pilot technologies; leveraging blended and concessional finance; and building on the Global Cooling Pledge to create a Sustainable Cooling Finance Partnership.

UNEP and IFC are committed to collaborating with governments, businesses, and stakeholders to de-risk investments and make sustainable cooling solutions accessible, particularly in low-income regions susceptible to frequent heatwaves.