Cooler Finance: The Business Case for Sustainable Cooling

Rising temperatures are threatening lives and economies worldwide. Heat-related deaths are nearing half a million annually, and productivity losses exceed $2 trillion. Access to cooling solutions that help people and businesses adapt to changing weather is more critical than ever.  Yet only 15 percent of 3.5 billion people who live in hot climates - most of them in developing countries – have access to cooling.  This lack of cold storage and refrigeration also hampers the preservation of life-saving medicines and contributes to the loss of approximately one-third of all food produced. 

Expanding access to cooling is essential, but it must be done sustainably.

Conventional cooling methods are a major contributor to global greenhouse gas (GHG) emissions, consuming 20% of electricity globally. With demand for cooling solutions expected to triple by 2050, this will lead to even higher emissions.

In fact, the Global Cooling Watch 2023 report found that left unchecked, cooling-related emissions could double by 2050 to reach 6.1 billion tons of carbon dioxide equivalent (CO₂e), most of them in developing countries. Emerging economies generate about two thirds of global cooling-related emissions and without further action this share could increase to 80 percent by 2050.  

That’s where sustainable cooling comes in. These approaches are increasingly seen as the best way to help people and products adapt to rising temperatures while minimizing the impact on the planet.  Some of them rely on energy efficiency, while others use insulation, shading, reflectivity, or innovative technologies like district or biomass cooling.

New Research Lays out a Business Case for Sustainable Cooling

The sustainable cooling sector is primed for growth. The new report 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 and is expected to grow to at least $600 billion by 2050. 

The report also 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. 

Supportive Policies Can Help Catalyze Private Investment

Most of the capital needed for scaling up sustainable cooling will need to come from the private sector. With projected market demand of at least $600 billion by 2050, governments and regulators have a critical role to play in making sustainable cooling in developing economies more attractive to private investors – with policies like 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.

A Track Record of Supporting Innovation

Sustainable cooling is an important area of growth for IFC.  Its new Sustainable Cooling Initiative aims to scale up financing and technical assistance through its “five by five” sustainable cooling plan, which addresses five cooling intensive sectors through five modes of engagement: 

The Initiative builds on two existing programs also supported by the government of the United Kingdom: the TechEmerge Program, which connects innovators worldwide to companies in emerging markets, and the EDGE Green Buildings Market Transformation Program. TechEmerge, which wrapped up in September 2024, matched high-potential cooling innovators with corporates and field-tested cooling solutions across ten developing countries.   And IFC’s successful EDGE Green Buildings Program, which has certified over 100 million square meters of green construction, includes cooling as part of its advisory and investment activities.

 A Global Effort Gathering Steam

In 2019, the Cool Coalition was launched, bringing together over 130 members to collaborate on science, policy, finance, and technology to address the growing demands for sustainable cooling . In 2023 the Global Cooling Pledge was introduced with ambitious goals: to reduce global cooling-related emissions by 68 percent by 2050, improve energy efficiency of cooling technologies by 50 percent by 2030, and to increase access to sustainable cooling for the most vulnerable.

With institutional support from governments and multilateral institutions, and smart policies to encourage private investment, sustainable cooling can help address the growing needs for cooling across developing countries without overheating the planet.