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Seizing the benefits of cooling efficiency

Efficient and climate-friendly cooling is a crucial piece of the climate and sustainable-development puzzle. Without policy intervention, direct and indirect emissions from air conditioning and refrigeration are projected to rise 90 percent by 2050.

Record temperature highs across the world, increasing climate impacts, and the vast body of science pointing to the economic and social disaster that climate change could bring, call for urgent and strong action to cut greenhouse gas emissions. So far, this has not emerged. Current efforts on mitigation put the world on track for a temperature rise of over 3°C. The cooling industry needs to rapidly bend the curve and enhance the mitigation actions. A warming world will increase the need for access to cooling. An estimated 3.6 billion cooling appliances are in use.

The growing demand for cooling will increase global warming–from emissions of hydrofluorocarbons (HFCs) used in cooling equipment, and from CO2 and black carbon emissions from the mostly fossil fuel-based energy currently powering cooling. A transition to climate-friendly and energy-efficient cooling, however, would avoid these emissions and allow an increase in cooling access that would contribute substantially to the sustainable development goals (SDGs).

There are many ways to make this transition happen, particularly by building on the work of the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer. The implementation of the Kigali Amendment provides the opportunity to improve the energy efficiency of cooling equipment. Integrating refrigerant change and energy efficiency offers an excellent opportunity for quick and cost-effective emission reductions.

The timing of impact of the different recovery measures will vary. For example, cooling-system maintenance will increase employment in a relatively short period, whilst investing in more efficient equipment and buildings will take longer.

Key findings. Action under the Kigali Amendment to the Montreal Protocol on Substances that Destroy the Ozone Layer (Montreal Protocol) will phase down the production and use of hydrofluorocarbons (HFCs), and could avoid up to 0.4°C of global warming by 2100. The growing demand for cooling is contributing significantly to climate change. This is from both the emissions of HFCs and other refrigerants and CO2 and black carbon emissions from the mostly fossil fuel-based energy powering air conditioners and other cooling equipment. By combining energy-efficiency improvements with the transition away from super-polluting refrigerants, the world could avoid cumulative greenhouse gas emissions of up to 210–460 gigatons of carbon dioxide equivalent (GtCO2e) over the next four decades, depending on future rates of decarbonization.

There are several policy options and approaches to seize these benefits, including: International cooperation through universal ratification and implementation of the Kigali Amendment and global initiatives for efficient, climate-friendly cooling; development and implementation of National Cooling Action Plans; development and implementation of minimum energy-performance standards (MEPS) and energy efficiency labelling; promotion of building codes and system-wide and not-in-kind considerations; aggregation of demand for sustainable cooling technologies through public procurement and buyers’ clubs; programs to reduce peak demand; technician training to improve installation and servicing practices and facilitate adoption of new technologies; anti-environmental dumping campaigns; and increase public and private financing.

Impact of COVID-19 on cooling
The COVID-19 pandemic has created an extraordinary global health and economic crisis. Beyond the immediate impact on health, the current crisis has major implications for global economies, energy use, and CO2 emissions. The economy could decline by 6 percent in 2020, whilst energy demand which declined by 3.8 percent in 1Q20, could fall by 6 percent by the end of 2020. Global energy-related CO2 emissions could fall by 8 percent in 2020. This global economic downturn will also have an impact on investment in energy systems, including efficient climate-friendly cooling.

More specifically for cooling, the K-CEP program has identified high-impact opportunities where efficient, climate-friendly cooling could reduce emissions. These are: funds to bail out hard-hit sectors should be tied to the adoption of climate-friendly cooling solutions; rebates and incentives to promote cooling efficiency in the built environment, increasing demand for efficient appliances; supporting measures to encourage implementation of cooling retrofits and passive technologies; funding can be used to promote and also support initial capital investment now to realize future savings.

HFC emissions and opportunities for mitigation>The vast majority of HFC consumption is in the cooling sector, comprising refrigeration, air conditioning, and heat pumps (RACHP) in both mobile and stationary applications. More than half of the total HFC consumption for RACHP comes from emissions during the servicing of installed equipment. An estimated 65 percent of GWP-weighted HFC consumption comes from air conditioning and 35 percent from refrigeration. Assuming that cooling sectors continue to account for 86 percent of the GWP-weighted share of global HFC consumption, the cumulative direct emissions from these sectors without the Kigali Amendment could reach 78 to 90 GtCO2e by 2050, and as much as 216 to 350 GtCO2e by 2100.

The global RACHP market relies on approximately 16 pure HFCs and 30 blends, with GWPs ranging from under 100 to close to 15,000. The weighted GWP average is 2200. HFC134a, the most widely used high-GWP HFC refrigerant, has a GWP of 1360. To give just one example of a potential replacement, some hydrofluoroolefins (HFOs) have GWPs in the low single digits. In well over half of RACHP applications, lower GWP alternatives are fully mature and commercialized, and have an increasing market share. However, availability and usability among the different regions vary.

There are other strategies that could avoid additional HFC production/consumption and emissions: reducing demand for refrigerants and mechanical cooling; promoting use of not-in-kind cooling systems; using lower GWP alternatives in new equipment, and where necessary for safety, using alternative designs; reducing HFC refrigerant leaks through better design, manufacturing, and servicing; recovering and reclaiming or destroying banks of ODS and HFC refrigerants from products that have reached the end of their life. Currently, there is rarely funding nor incentive to do so and hence danger of leakage from storage tanks and discarded equipment; using lower and zero-GWP alternatives in retrofit of existing equipment, where appropriate; training technicians for best service practices; replacing older and used refrigeration and AC equipment; and halting the HCFC-22 feedstock emissions and the unwanted HFC-23 emissions from the production of HFC-22 feedstocks, and otherwise destroying HFC-23.

Energy-related emissions and opportunities for mitigation
The demand for space cooling is expected to triple by 2050. If the demand needed to deliver on the SDGs is taken into account, growth will be much higher. Air conditioning contributes 50–80 percent of peak demand in hot climates, and peak power is usually the most carbon-intensive, polluting, and costly. This shows that a net-zero electricity system may not be achieved without controlling growth in cooling. Moreover, demand for space cooling may grow faster than expected. The projected growth in residential and commercial space cooling capacity will leave substantial cooling needs unmet. AC ownership, in particular, rises very rapidly with income in countries with hot and humid climates. Demand in India, for example, has outpaced annual GDP growth, which has fluctuated between 5 percent and 8 percent since 2010. Production of room ACs has been growing at 13 percent per year since 2010 and demand for ACs is expected to grow by 11–15 percent per year over 2017–2027 period.

Refrigerant conversions, driven by the Montreal Protocol, have already catalyzed significant improvements in the energy efficiency of refrigeration and AC systems–up to 60 percent in some subsectors. Manufacturers who invested in improving the efficiency of their products as part of redesign for the CFC and HCFC transitions benefited from policies to improve the energy efficiency of cooling equipment that resulted in reductions in lifecycle costs to consumers, drove high-volume sales, and even reduced first costs. Similar improvements are expected under an HFC phase-down.

In general, it is difficult to estimate GHG emission-reduction potential precisely from increased energy efficiency because avoided emissions depend heavily on the assumptions made about the decarbonization rate of the global economy owing to other mitigation efforts. The world can avoid the equivalent of up to 210–460 GtCO2e over the coming four decades through efficiency improvements and the refrigerant transition, depending on future rates of decarbonization. This would require that starting in 2030, all stationary air conditioning and refrigeration equipment are replaced with the highest-efficiency and climate-friendly refrigerants, typical of the best technologies available.

Opportunities for reducing emissions
There are a number of strategies for reducing energy-related emissions from space cooling. These fall into two broad categories.

Improve the energy efficiency of space cooling equipment. Move to best available technology. Most ACs sold are 2-3 times less efficient than the best available on the market. Improve installation of new equipment and monitoring and maintenance of existing equipment. Adopt district cooling and system approaches. By connecting multiple buildings, district cooling systems can safely manage alternative refrigerants and target much higher primary energy efficiencies. Properly designed district cooling systems can benefit from larger chiller systems that can be up to three times as efficient as smaller individual units, and reduce peak power requirements. Reduce demand for cooling through improved building design and construction, management, shifts in user behavior. India has issued guidelines to encourage increasing temperature set points to 24°C in commercial buildings, which can save 20 percent in annual energy consumption compared to a 20°C set point.

Refrigeration opportunities. The energy use of refrigerating appliances can be improved by 50–60 percent by using the best technologies on the market, compared to average units in countries with existing energy-efficiency policies. Developing countries could attain energy savings of more than 60 percent by discouraging dumping of inefficient equipment in their markets and adopting measures like MEPS.

Policies and recommendations

Policies and financing strategies can promote fast HFC phase-down in parallel with improvements in energy efficiency of cooling equipment, and hence, are key to realizing the emission-reduction potential in the cooling sector. Billions of ACs and refrigerators that will be produced to meet the growing demand for cooling have not yet been designed or manufactured. Equally, much of the building stock in which this equipment will be used is yet to be built or is expected to be refurbished. There is, therefore, a large opportunity to shift the future of cooling by changing the trajectory of the technologies, solutions, and behaviors that drive cooling demand and determine its impacts.

Continuing international cooperation is essential to deliver fully on the climate-mitigation potential of the transition to low-GWP and energy-efficient cooling. Countries can ratify the Kigali Amendment and join one of many international initiatives to accelerate action. Initiatives include the Cool Coalition and the Efficient Cooling Initiative of the Climate and Clean Air Coalition.

National Cooling Action Plans can help integrate policies that are addressed separately, and accelerate the transition to low-GWP and high efficiency cooling. It enables policy makers to send market signals and create favorable conditions for a streamlined transformation that provides investment security to producers and end-users, while maximizing preparation for anticipated future requirements. National plans can include other policies as well as up-front incentives and regulations to drive the market, alongside longer-term signals. This can help lower barriers for first-movers. National Cooling Action Plans–like those adopted in China, India, and Rwanda–combine high-level policy ambition with strategies addressing the entire value chain. Governments can use NCAP to identify opportunities for incorporating efficient cooling into the enhanced Nationally Determined Contributions of the Paris Agreement on Climate Change.

MEPS, key for improving equipment efficiency as part of the transition to low-GWP cooling. MEPS are highly effective tools to increase the energy efficiency of standardized mass-manufactured equipment like refrigerators and ACs. These policies are part of a toolbox that can be complemented by labelling schemes as well as up-front incentives like consumer rebates and industry tax relief. Labelling programs promote the sale of energy-efficient cooling technologies. Consumers can make informed decisions based on a variety of indicators. With developments in performance, labelling programs are best designed to account for future improvements and provide for regular upgrades of the labels. A policy guide on market transformation for refrigerating appliances and ACs covering these issues has been prepared by UNEP under the U4E program. Regional cooperation and the adoption of common standards and efficiency tiers would enable manufacturers to capitalize on scale and drive down costs while increasing availability of efficient and lower-GWP cooling equipment. Policymakers can give their markets a clear policy trajectory and increase investor confidence. MEPS and energy-efficiency programs need to be coordinated with safety standards and technical requirements for low-GWP alternatives to achieve a transition to efficient and climate-friendly cooling. These should be combined with the continued development and introduction of technical and safety standards for low-GWP HFC alternatives, as well as training and capacity building for relevant stakeholders.

Aggregating demand through public procurement and buyers’ clubs can speed adoption and reduce the cost of super-efficient refrigeration and air conditioning equipment. Public procurement and private buyers’ clubs pool the state’s or private members’ collective buying power to make purchases of large quantities of products at lower prices than would be available independently, while simultaneously demanding newer, energy-efficient, and higher-quality models. The strategic use of this consumer power is a key transformation tool to address what otherwise could be higher initial costs of super-efficient ACs, and can help next-gen technologies penetrate the market faster. Energy service companies are one mechanism for financing bulk procurement programs.

Utility regulation can reduce peak demand and offer incentives to purchase efficient cooling equipment and thermal storage technologies. Decisions by consumers whether to buy efficient cooling equipment and how to operate the equipment has a significant impact on electric utilities. Consequently, various strategies have been used by utilities to promote the purchase of efficient cooling equipment and to limit demand for electricity during peak periods. These include charging higher prices for electricity during peak periods, offering subsidies for the purchase of more efficient systems, and encouraging largescale utilization of thermal storage as in district energy, and information or awareness campaigns. The use of Energy Efficiency Obligations (EEOs) has been existing in many countries to finance and drive the uptake of energy efficiency. This includes financing of replacement programs to remove inefficient technology and accelerate the adoption of high-energy performance technologies, and provide for capture and recycling of refrigerants.

Financing can accelerate the HFC phase-down and energy-efficiency improvements. Funding can complement labelling and standards programs and speed up the transition to low-GWP refrigerants and energy-efficient equipment. To support the HFC transition from the Multilateral Fund of the Montreal Protocol, there are international, national, and private financing mechanisms that could support the energy-efficiency transition. Other mechanisms include equity, commercial or concessional loans, guarantees and risk-sharing facilities, technical assistance grants, market-based instruments, and fiscal incentives or penalties. Business models that treat cooling as a service allow the private sector to work with both the public and private sectors in phasing down HFCs while improving efficiency. A current challenge is the absence of coordination between funding from the Multilateral Fund for refrigerant replacement and funding for energy efficiency from the Green Climate Fund, Global Environment Facility, and other climate funds. This is inefficient and potentially expensive if cooling systems are optimized for one objective at a time, requiring multiple changes in equipment. The development of innovative financing and utility on-bill financing for efficient equipment can support the transition. Much of the investment required to achieve the transition could be self-funded by purchasers or as part of loans for new equipment. Private finance can step in, but governments also have a role to facilitate investment opportunities. Tracking and benchmarking access to sustainable cooling finance, which is still lacking, should be a clear focus of governments and financial institutions.

Based on Cooling Emissions and Policy Synthesis Report: Benefits of cooling efficiency and the Kigali Amendment, a UNEP and IEA report.-TVJ Bureau

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