The cold economy

Peters, Toby; Sayin, Leyla Working Paper The cold economy ADBI Working Paper, No. 1326 Provided in Cooperation with: Asian Development Bank Institute (ADBI), Tokyo Suggested Citation: Peters, Toby; Sayin, Leyla (2022) : The cold economy, ADBI Working Paper, No. 1326, Asian Development Bank Institute (ADBI), Tokyo This Version is available at: https://hdl.handle.net/10419/267759 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 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Suggested citation: Peters, T. and L. Sayin. 2022. The Cold Economy. ADBI Working Paper 1326. Tokyo: Asian Development Bank Institute. Available: https://www.adb.org/publications/the-cold-economy Please contact the authors for information about this paper. Email: [email protected]; [email protected]c.uk Toby Peters is a professor of cold economy and co-director of the Centre for Sustainable Cooling, University of Birmingham. Leyla Sayin is a research fellow at the University of Birmingham. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms. Working papers are subject to formal revision and correction before they are finalized and considered published. Asian Development Bank Institute Kasumigaseki Building, 8th Floor 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan Tel: +81-3-3593-5500 Fax: +81-3-3593-5571 URL: www.adbi.org E-mail: [email protected] © 2022 Asian Development Bank Institute ADBI Working Paper 1326 Peters and Sayin Abstract Lack of cooling and cold-chain access is a critical development challenge that has significant implications for people’s livelihoods, productivity, health, food, and nutritional security. While business-as-usual demand projections suggest 19 new cooling appliances will be sold every second by 2050, universal access to cooling is expected not to be a reality even at this rate of growth, leaving poor and vulnerable populations to suffer the consequences. The global demand for cooling is already pressuring the energy system and the environment and given all the social and economic benefits of cooling and cold-chain but also the environmental risks, there is now a major opportunity for governments and the private sector to develop and deploy sustainable, affordable, and resilient cooling solutions, and contribute to three internationally agreed goals simultaneously: the Paris Agreement; Sustainable Development Goals (SDGs); and the Kigali Amendment to Montreal Protocol. Achieving this will require a radically different approach to cooling and cold-chain provision that starts by asking what energy services are needed and explores ways to meet them with minimum environmental impact and cost, taking into account available renewable, thermal, and waste energy resources, synergies between processes and systems, and aggregation opportunities, rather than defaulting to electricity to generate cooling. Such a system-level approach sits at the core of the Cold Economy. Keywords: cold economy, cooling, cold-chain, energy demand mitigation, renewable energy, waste energy recovery, sustainable development, climate change JEL Classification: Q01, Q42, Q43, Q48, Q55, Q56, Q58 ADBI Working Paper 1326 Peters and Sayin Contents 1. INTRODUCTION ............................................................................................................ 1 2. THE COOLING CHALLENGE ....................................................................................... 2 2.1 Socio-economic Dimension: The Need for Cooling .......................................... 2 2.2 Environmental Dimension: The Vicious Cycle .................................................. 4 3. THE OPPORTUNITY ..................................................................................................... 6 4. HOW DO WE DELIVER THE COLD ECONOMY? ....................................................... 8 4.1 The Cold Economy .......................................................................................... 10 4.2 Barriers to Transitioning to the Cold Economy................................................ 12 4.3 Designing the System ...................................................................................... 15 5. CONCLUSIONS AND RECOMMENDATIONS ........................................................... 17 REFERENCES ........................................................................................................................ 19 ADBI Working Paper 1326 Peters and Sayin 1 1. INTRODUCTION Before the days of refrigerators and air-conditioners that most of us take for granted today, how did people preserve their food or cool their patients and medications at hospitals in the 1800s? Ice harvesting was a major industry during the 1800s and early 1900s. Entrepreneurs, such as the Boston “Ice King” Frederic Tudor, were harvesting ice with horses pulling ice cutters across frozen lakes, ponds, and rivers and shipping it around the world, as far as Europe, India, and even Hong Kong, China (Peavitt 2017). Despite the massive logistical challenges, there were 35 commercial ice plants in the US by 1879, and 2,000 by 1909 (IFCO 2017). The ice harvesting industry slowly “melted” away with the advent of electric refrigerators and their continued rise in the 1930s, with ice harvesting companies’ mottoes like “A block of Ice never gets out of order” and “Those who really know prefer Ice” falling short in the face of the then-new technology (Bien 2014). From transporting blocks of ice across the world with ships, we have now arrived at a situation where projections suggesting 19 cooling appliances could be sold every second over the next 30 years (Peters 2018a). Today, we rely on cooling so much that cooling devices already account for more than 7% of all global greenhouse gas (GHG) emissions, significantly contributing to climate change, and hence to their own demand (K-CEP 2018). Space cooling alone was responsible for nearly 10% of the world’s total electricity consumption in 2016 with a 300% anticipated increase by 2050 without intervention (IEA 2018). Despite its anticipated growth and the associated impacts on energy systems and the environment, cooling has so far been largely ignored in the energy debate, with the focus mainly remaining on greening electricity, transport, and heat. This is a major problem, which could lead to serious long-term environmental and socio-economic consequences. As conventional cooling technologies are energy-intensive and highly polluting due to the refrigerants with high global warming potential (GWP), how we meet the booming cooling demand and integrate it into the changing energy system will play a critical role in meeting the ambitions of the Paris Agreement and Sustainable Development Goals (SDGs). The global challenge of meeting this cooling demand in line with our climate ambitions presents a fast-growing business opportunity for innovative and sustainable cooling technologies. These will be essential elements of the Cold Economy. However, they will not be enough to deliver cooling for all who need it sustainably nor will the high levels of investments in renewable energy we have been seeing over the last decade. Going back to the defensive mottoes of ice harvesting companies in the 1900s, they in fact inadvertently made an important point. Today, vast amounts of cold that is readily available often in our local natural environs (e.g., cold-water bodies), or is rejected by other processes (e.g., cold energy from liquified natural gas (LNG) regasification that is typically released into the sea), is wasted. This cold energy could be recovered to meet some of the cooling demand, but only if we stop assuming a singular path to make, produce, store, and transport cold, relying on electricity and chemical energy storage. Such a system-level approach sits at the core of the Cold Economy and starts by asking what energy services we need and exploring ways to deliver them with minimum environmental impact and cost, rather than defaulting to business-as-usual practices. ADBI Working Paper 1326 Peters and Sayin 2 2. THE COOLING CHALLENGE 2.1 Socio-economic Dimension: The Need for Cooling Cooling is vital to our ability to function in the modern world and improving human well-being, boosting economic growth, enabling sustainable urbanization, lifting hundreds of millions out of rural poverty, and delivering socio-economic development through the Sustainable Development Goals (SDGs). Without it, we would not have access to safe and nutritious food, the efficacy of medicines and vaccines would be compromised, workplaces and homes would be less comfortable for safe productive work, effective study, and pleasurable leisure, and the digital systems that underpin every aspect of contemporary life would be unable to operate. In 2019, 1.7 million deaths globally were linked to extreme temperatures. While extreme heat was responsible for around 20% of those (356,000 deaths, which is still a staggering number) compared to extreme cold, this number is set to rise significantly as the climate warms unless the effects are countered with affordable, accessible, effective, and sustainable cooling strategies. Indeed, the historical trajectory shows that deaths due to extreme cold increased by 31% from 1990 to 2016, whereas deaths attributable to heat increased 74% (Burkart et al. 2021). The infamous record-breaking 2003 heatwave in Europe, for example, made the severity of the issue more apparent. Fifteen thousand heat-related deaths were recorded in France, and around 70,000 across Europe (Robine et al. 2008). According to the UK Met Office, the temperatures reached in Summer 2003 are in fact likely to become a norm in 2040, and as a result, heat-related deaths per year could triple in England and Wales (UKHSA, NHS, and DHSC 2022; Zero Carbon Hub 2015). However, this is only a fraction of the picture, and what is often overlooked is that billions more deaths worldwide are in fact attributable to lack of access to cooling. Around 600 million people fall ill due to foodborne diseases, with around 420,000 of them dying annually, due in part to the lack of a food cold-chain that would ensure safety and quality of food consumed from farm to plate (Afshin et al. 2019; WHO 2022). Each day 25,000 people die from hunger, while the lack of effective refrigeration directly results in the loss of 526 million tons of food production annually (or 12% of the total food produced), which could feed an estimated 1 billion people (Holmes 2009, 25; IIF/IIR 2021). At the same time, more than 1.5 million people globally lose their lives due to vaccine-preventable diseases each year (The Children’s Hospital of Philadelphia 2014), again due in part to the lack of a health cold-chain that would deliver life-saving vaccines and other temperature-sensitive medicines to those who need it without compromising their safety and effectiveness, jeopardizing the realization of universal health. Estimates suggest that 25% of vaccines reach their destination with degraded efficacy mainly due to failures within the cold-chains. Logistical issues alone are responsible for 30% of all scrapped pharmaceutical products, and 20% of temperature-sensitive products are damaged due to broken cold-chains (Barrowclough 2020). The importance of health cold-chains has become more pronounced with the COVID-19 pandemic. The world has faced the largest ever vaccination challenge with a high percentage of the population needing to be vaccinated in a short period of time. As of March 2022, 63.1% of the world’s population has received at least one dose of a COVID-19 vaccine. Yet only 12.9% of people in low-income countries have received at least one dose (Ritchie et al. 2020), and one of the underlying problems is the lack of adequate cold-chain infrastructure in these countries to maintain the efficacy of the vaccines from manufacturer to arm. ADBI Working Paper 1326 Peters and Sayin 3 Extreme heat also restricts physical functions and capabilities and reduces work capacity and productivity. It affects workers both in outdoor settings, such as the world’s 1 billion agricultural workers who are regularly exposed to high temperatures, and those who work in hot indoor settings, such as the 66 million textile workers who work in manufacturing facilities and workshops without air conditioning. Research suggests that temperatures above 24–26°C are associated with reduced labor productivity and that temperatures of 33–34°C can reduce the work capacity of a worker operating at moderate work intensity by 50% (Kjellstrom and Maître 2019). Increasing temperatures lead to high levels of discomfort and heat stress not only for humans, but also for animals, which can result in increased morbidity and mortality levels. For example, more than 17 million chickens died in India during the 2015 heatwave (Jadhav 2015). It can also result in productivity loss and reduced reproduction rates (Dash et al. 2016; Sejian et al. 2018). For example, multiple studies conducted in India suggest that heat stress can reduce milk production by between 5% and 50% (Belsare and Pandey 2008; Indian Dairy Association 2017). All of these come at a significant cost to economies, businesses, and livelihoods. For example, according to the Food and Agriculture Organization (FAO), the total food produced for human consumption but lost and wasted along the supply chain cost the global economy an estimated $936 billion a year 1 (FAO 2014). In 2018, Boston Consulting Group (BCG) estimated that annual food loss and waste may reach to 2.1 billion tons worth $1.5 trillion by 2030 (Hegnsholt et al. 2018). Another estimate by the FAO suggests food loss reduces income by at least 15% for 470 million smallholder farmers across the world (Rockefeller Foundation 2013). Access to food cold-chains would reduce food losses, which would in turn raise incomes of farmers by increasing the quality and proportion of their produce that reaches market. Moreover, the global cost of vaccine wastage due to products being exposed to temperatures outside of their recommended range is estimated to be $34.1 billion annually, not including the substantial physical burden and financial cost of illnesses that could be avoided with on-time delivery of effective and potent vaccines (Nagurney 2020). On the other hand, estimates suggest that every dollar spent on child immunization provides $44 worth of economic benefits in lowand middle-income countries (Ozawa et al. 2016). Extreme heat is expected to reduce productivity by as much as 12% in South Asia and West Africa by 2050, which may potentially result in up to a 6% gross domestic product (GDP) loss annually (Monsalve and Watsa 2020). Increased heat stress is projected by the International Labour Organization (ILO) to reduce total working hours worldwide by 2.2% and global GDP by US$2.4 trillion in 2030 (Kjellstrom and Maître 2019). Furthermore, lack of cooling access also raises concerns about equity across and within countries. Unfortunately, the burden of lack of cooling access will fall disproportionately on poor, disadvantaged, and often marginalized individuals and communities in developing countries that tend to be situated in some of the hottest parts of the Earth. This is an undue burden to start with, as developing countries are the ones who are the least responsible for, and least able to respond to, impacts of climate change. Moreover, from a gender perspective, women and girls face significant challenges in accessing cooling services and the benefits they provide. Especially in developing countries, women and girls typically spend more time at home engaging in domestic activities compared to men and boys. Inadequate space cooling at home harms their health, and lack of refrigeration reduces women’s ability to provide better quality food for the family. The lack of vaccine/health cold-chains also impedes access of women and their children to basic health services due to barriers, such as limited access to family income to pay for transportation to reach health services, constraints 1 Based on the 2012 market value. ADBI Working Paper 1326 Peters and Sayin 4 on leaving home without a male chaperone, and lack of time due to household chores. Furthermore, women comprise approximately half of the agricultural workforce in developing countries (FAO 2011). In sub-Saharan Africa, women are responsible for approximately 70% of the production, 90% of the processing and 80% of the storage of food (Vercillo 2016). Limited access to cooling and a food cold-chain can significantly reduce their yields and economic growth. 2.2 Environmental Dimension: The Vicious Cycle If we rely only on the current climate commitments of the Paris Agreement, the global mean temperature is projected to be 3.4–3.9°C higher relative to pre-industrial times by the end of this century (UNEP 2019). In order to realize the ambitious 1.5°C target of the Paris Agreement, the Intergovernmental Panel on Climate Change (IPCC) recommends a target of net-zero CO2 emissions globally by around the mid-century, accompanied by deep reductions in non-CO2 emissions (such as hydrofluorocarbons (HFCs) from refrigerant leakage and/or spillage) (IPCC 2018). Conventional cooling technologies, such as refrigeration, air conditioning, and fans, already account for more than 10% of global fossil CO2 emissions, or 7% of all global greenhouse gas (GHG) emissions, 2 further warming the planet, in other words, contributing to their own demand (K-CEP 2018). HFCs are in fact the fastest-growing source of GHG emissions in the world due to the increasing global demand for space cooling and refrigeration (Rand, Jaeger, and Gencsu 2015). To this end, how we approach cooling provision will play a critical role in making the 1.5°C target a reality. Energy demand for space cooling is the fastest growing energy service in buildings worldwide. In 2016, more than 2,020 TWh of electricity was used for air conditioning. This was nearly 10% of the world’s total electricity consumption, and almost 20% of all the electricity used in buildings. While today only less than a third of households around the world own an air conditioner, 3 two in every three households around the world is expected to have one by 2050. Due to rising temperatures, increasing incomes and energy access along with other drivers, many cities in the developing world that currently have a low number of air conditioners will see a big increase in air-conditioning purchases. This surging and highly variable space cooling demand will add massive additional electricity loads to the energy systems. Left unchecked, the electricity demand for space cooling could reach 6,200 TWh in 2050, consuming as much electricity as all of the People’s Republic of China and India today (IEA 2018). In some hotter regions of the world, share of space cooling in electricity consumption already reaches staggering numbers. For example, 70% of Saudi Arabia’s electricity is used for air conditioning (Schlanger 2018). In India, the share of air conditioning in peak electricity load is projected to reach 45% in 2050 from 10% today in the absence of any intervention (IEA 2018). The projected increase in space cooling electricity consumption will consequently result in a substantial rise in GHG emissions associated with energy use. Without intervention, GHG emissions from space cooling energy consumption could almost double by 2050 from 2016 levels (IEA 2018). 2 In total, around 80% of the GHG emissions from cooling technologies is associated with indirect emissions from energy use, whereas 20% is associated with direct emissions from refrigerant use (Peters 2018a). 3 In 2018, air conditioner ownership was 90% among households in Japan and the US, however, among the 2.8 billion people living in the hottest parts of the world, air conditioner ownership was only 8% (IEA 2018). ADBI Working Paper 1326 Peters and Sayin 11 of time and place can be overcome by converting the waste cold into a vector or form that is storable and transportable, such as liquid air or nitrogen, allowing cold to be used at distant locations on demand. For example, liquid air energy storage (LAES) is a long duration energy storage technology, which uses liquefied air as storage medium and can be integrated with the waste cold from industrial processes, such as LNG regasification. LAES uses off-peak or excess electricity to produce liquid air, which is then stored in pressurized above-ground tanks. Exposure to ambient temperatures results in rapid regasification and a 700-fold expansion in volume, which is then used to drive a turbine and create electricity without combustion. When the air liquefaction is integrated with cold sources, LAES can store waste cold in addition to electricity. Hence, LAES provides an opportunity to utilize both surplus electricity and waste cold energy. Such bulk energy storage technologies also play a critical role in facilitating renewable energy expansion. Wind and solar power are the fastest-growing sources of electricity globally. These sources are intermittent and uncertain, placing stress on the energy system operation. They are also connected to the grid without rotating mass. Instead, they are connected through inverters, which electrically decouple them from the grid, and hence they do not provide inertia, leading to weaker and more unstable grids compared to traditional grids. Long duration energy storage technologies can offer ancillary services that the grid needs, such as inertia, and also help in addressing the intermittency issue associated with renewables. Developed by the University of Birmingham in 2015, the focus of the Cold Economy is on the efficient and effective integration of cooling with waste and renewable resources, and with the wider energy system, rather than individual technologies. The Cold Economy involves the development of integrated needs-driven—rather than demand-driven—resource-smart, system-level strategies first to mitigate the need for mechanical cooling, and second to understand and identify multiple cooling needs across buildings, food and vaccine/health cold-chains, transport and data centers, and explore aggregation opportunities, understand the renewable, thermal, and waste energy resources, and finally define the right portfolio of solutions that are fit for the economic, environmental, social, and cultural context, across behavioral changes, technology, skills, policy and regulations, finance, and business models to integrate those resources with service needs optimally and equitably. Rather than presupposing cooling demand, the Cold Economy approach focuses on the services that are needed that depend on cooling. In other words, it is about asking “what are the energy services needed?,” rather than “how much electricity is required?” The first stage of such a needs-driven approach is going back to first principles and understanding at a macrolevel how much cooling would be required to provide comfortable environments for all to live, study, and work; to deliver food from farm to fork without any quantity and quality losses to feed the surging populations; to ensure universal health access and deliver life-saving vaccines and medicines from manufacturer to arm without compromising their safety and effectiveness; to ensure our digital infrastructure runs smoothly. Simultaneously, at a microlevel, we need to understand how people use cooling today; and how they seek to maintain or enhance this level of cooling, and how much cooling they need today, and will need in the future. Such an approach will enable effective minimization of the demand for mechanical cooling, hence the energy system demand, better integration of cooling needs with the wider energy system, and development of “fit for purpose” and “fit for market” cooling technologies and practices. ADBI Working Paper 1326 Peters and Sayin 12 To summarize, realizing the Cold Economy requires: I. Minimizing the need for mechanical cooling through encouraging behavioral changes and passive technologies and approaches, II. Exploiting the opportunities for needs-based demand aggregation, III. Harnessing available renewable, thermal, and waste energy resources that are often readily available in the natural environs or are rejected by other processes, IV. Using thermal methods of storage rather than chemical-based batteries, V. Creating new finance and business models that create and share value equitably and lift financial barriers on clean cooling technologies and improve cooling access in urban as well as rural remote areas, rather than defaulting to extending grid electricity, VI. Creating skills and capacity in line with the technological progress to ensure adequate deployment, maintenance, and disposal, VII. Establishing an adequate policy and regulatory environment to bring clean cooling technologies and systems to market at scale (such as more stringent building codes and Minimum Energy Performance Standards (MEPS)). 4.2 Barriers to Transitioning to the Cold Economy 4.2.1 Equipment-based Projections, Rather Than Needs-based Projection efforts on the scale of the cooling challenge are often based on historical equipment trends driven by socio-economic parameters such as gross domestic product GDP and population growth. The major issue is that these projections do not capture the unmet needs and consider how these needs will change (both in terms of size and nature) with often highly localized drivers, such as consumer preferences, local food production trends, new technologies, and modal shifts. Therefore, the current projections (1) have a high tendency to underestimate the actual size of the cooling provision that we need to accomplish to achieve our developmental targets, and (2) do not provide a clear understanding about what the cooling and cold-chain provision will look like in the future considering a wide range of drivers. 4.2.2 Lack of Credible Data There is a lack of good-quality baseline data in many countries about equipment stocks, equipment sales, second-hand transfers of equipment, and refrigerant inventories as well as on the associated impact on the environment and energy systems. This is problematic as accurate baseline data are critical to understanding the real scale of the cooling challenge as well as to assess efficacy of any measures proposed. 4.2.3 Higher First Cost and Affordability The high upfront costs associated with sustainable cooling technologies limit the uptake of such technologies, especially in the developing countries where many consumers who need cooling the most are under financial limitations. For example, most consumers purchase air conditioners that are two to three times less efficient than those available on the market, the major reason being the high upfront costs (IEA 2021a). Similarly, the vast majority of small-scale farmers in developing countries ADBI Working Paper 1326 Peters and Sayin 13 cannot afford cooling technologies. For example, in sub-Saharan Africa (SSA), 62% of small-scale fresh produce farmers cannot afford cooling technology (Power for All 2021). To overcome this issue, financial incentives, such as subsidies for sustainable cooling technologies, can be effective in increasing the uptake. Microfinance institutions could enable vulnerable consumers to purchase new sustainable equipment technologies through mechanisms such as those that tie payment amounts to income generated. Equally, financial barriers and risk of investment could be addressed through business models such as pay-as-you-go (PAYG) and Cooling-as-a-Service (CaaS) that eliminate the need for customers to incur capital costs on asset ownership as well as maintenance costs. 4.2.4 Limited Financial Support for Research and Development The development of sustainable cold-chain has been slow due to limited research funding. For example, the EU spent only 0.22% of its total engineering research budget on cooling research in 2018 (Peters 2018b). Investment in research and development (R&D) is not only critical to accelerate technological innovation, but also to make solutions more affordable and accessible to all. 4.2.5 Lack of Awareness Amongst Stakeholders Consumers are often not fully aware of the emissions impact, energy consumption, maintenance requirements, and operating costs of cooling equipment they own. Equally, there is sometimes a lack of awareness about the availability and the lifecycle benefits of more sustainable equipment. This is also true for investors and donors, which poses the risk of the limited financial support available going to substandard interventions. This can potentially result in higher financial costs in the long run, with equipment and infrastructure needing to be replaced early or retrofitted to comply with new regulations and standards along with missed GHG mitigation opportunities. 4.2.6 Lack of Skills and Capacity in Developing Countries In many countries there are not sufficient numbers of trained technicians and engineers to deploy, operate, and maintain new technologies as well as safely decommission old systems, a problem compounded by new sustainable technologies that require an expansion in skills. Hence, there is a need for accreditation bodies and curriculum developers to be more agile in responding to trends in new cooling technologies and to modify and expand the curriculum accordingly. This is important in developing a cooling workforce with the right skill sets for the proper installation and maintenance of new technologies and innovative solutions, taking into consideration the digitalization of the sector and the rapid pace of advancements, demanding dynamic and continuous training. 4.2.7 Inadequate Legislation and Standards Equipment-labeling programs and minimum energy performance standards (MEPS) are powerful tools for governments to raise consumer awareness about the impact of equipment and drive inefficient and polluting equipment out of markets. However, many governments have yet to adopt minimum energy performance standards, and other measures effective in promoting sustainable technologies, and where standards exist, they are typically not ambitious enough to bring best-performing available technologies to market at scale. Labels and standards should set targets to encourage equipment manufacturers to continually produce more energy-efficient and lower GWP equipment. As a best-practice example, Japan’s Top Runner Program was designed to stimulate ADBI Working Paper 1326 Peters and Sayin 14 continuous improvement by setting energy efficiency targets for appliances based on the most efficient model available on the market (Future Policy 2014). Figure 5: Cold-chain System Design Source: Authors. ADBI Working Paper 1326 Peters and Sayin 15 Such lack of ambition in standards in developing countries along with a lack of robust monitoring and enforcement practices to prevent illegal imports also contribute to another problem: the dumping of substandard equipment to developing countries. This is because the developed countries impose typically higher equipment standards than the developing ones, and as a result the developing world faces the risk of becoming a dumping ground for equipment with low energy efficiencies and high GWP refrigerants. This can lock these countries into obsolete and substandard technologies for the next 15–20 years. For example, 75% of the refrigerators imported into Ghana from 2004 to 2014 were second-hand (GCI 2020). Apart from labels and standards, wider legislation that could encourage transition is also often weak and/or poorly implemented. The UK government has only recently announced plans to remove subsidies for red diesel used in transport refrigeration units in 2022 to encourage cleaner transport (HMRC 2021). However, this also requires financial support to assist businesses in transition. According to the Cold-Chain Federation (CCF), this change will add £100 m in additional cost to the supply chain (Global Cold Chain News 2021). Equally, the cooling sector demands more clarity from governments about their decarbonization strategies to trial and adopt new technologies to reduce the risk of investment. For example, according to a survey conducted by the CCF, “lack of clarity on what to invest in” is the top barrier to achieving net-zero emissions in the cold-chain with 53%, followed by “lack of technology” with 24% (CCF 2021). 4.2.8 Lack of Reliable Energy Access in Developing Countries In many communities in developing countries, electricity sources are unreliable or non-existent. Around 789 million people today still do not have access to electricity in their homes or communities (IEA et al. 2020). Due to a combination of high electricity tariffs and lack of access to electricity, many cooling services today typically rely on expensive fossil fuels with significant environmental impact in these countries. Unreliable energy access also limits the viability of some new technologies in these countries. For example, CO2 refrigerant systems are significantly more susceptible to loss of full charge during power outages (Merrett 2020). 4.3 Designing the System The key is, prior to undertaking system design work, to quantifiably set goals in terms of the benefits and impacts based on economic and social priorities, taking full account of the requirements of the Paris Agreement, the Kigali Amendment, and the SDGs. These goals should cover benefits that need to be achieved across social, economic, and environmental dimensions rather than solely focusing on energy efficiency gains and associated cost savings. Second, it is essential to understand the size and location of the cooling needs to be addressed along with available renewable, thermal, and waste energy resources as well as climatic, demographic, socio-cultural parameters, existing infrastructure, policy and regulatory landscape, and available skills and technical expertise, which will inform the system design analysis to determine the optimal portfolio of levers and interventions (across behavior changes and passive solutions, technologies, services, policy and regulations, and finance and business models) that match the cooling needs and deliver the greatest net benefits equitably. ADBI Working Paper 1326 Peters and Sayin 16 In the design stage, what is needed is to take a systematic approach to cooling provision, which defines the seven elements of a cooling system as use, make, store, move, manage, finance and regulate: Make Harness unused resources such as cold-water bodies (e.g., lakes, aquifers) and cool air, renewable energy (e.g., wind, solar), waste cold (e.g., cold energy from LNG regasification) and heat, or ambient heat sinks (e.g., ground source, sky cooling) Store Store energy thermally, in physical mass (e.g., thermal walls) or phase-change materials (e.g., ice) to make use of cyclical changes in ambient heat sinks and supply of (electric) energy at lower costs Move Use new energy vectors and materials to move thermal energy Use Reduce cold loads by lowering cooling demand (e.g., insulation, building aspect, shading, natural ventilation, white roofs), increasing equipment efficiency, and substituting refrigerants with high GWP. Highlight behavior change and demand mitigation strategies likely to be effective, whilst maintaining required service levels. Note that technology, services, policy, and financial solutions can all be used to help drive consumer behavior in the direction of efficiency, and shift meeting the cooling need towards more sustainable technologies. Behavioral change and the other four solution categories, as in addition, modal shifts can substitute for cooling solutions, with much lower energy use (e.g., transportation of vaccines by airborne drones in rough terrain) Manage Build skills and capacity in line with the technology development to ensure the correct installation, maintenance, and disposal. Make cooling systems smart for real-time monitoring of cooling needs and performance, load adjustments and integrated system management and storage Finance Develop new finance and business models to improve access to cooling and facilitate equitable distribution of costs and benefits (e.g., servitization models), taking into account marginalized individuals and communities, as well as women and girls Regulate Bring clean technologies and sustainable design approaches to the market through building codes, labeling programs and MEPs to incentivize building developers to adopt more sustainable design approaches and equipment manufacturers to produce more energyefficient and lower-GWP equipment as well as to foster innovation, regulate consumer choice and raise consumer awareness about the impact of clean technologies. Implement robust monitoring and enforcement mechanisms to prevent illegal imports of equipment and non-quota/counterfeit refrigerants. To deliver cooling with minimal climate and environmental impact, the strategy is to use a “reduce-–shift–improve” approach, adding in the intervention of “aggregate.” These four interventions can simultaneously support cooling system transition, facilitating both early wins and the deep systemic changes to reduce both direct and indirect cooling GHG emissions through mitigation of cooling needs; move to highly energy-efficient mechanical technologies with the phase down of high GWP refrigerants; optimize the use of all available renewable, thermal, and waste energy sources, and by harnessing opportunities for demand aggregation. The resulting mix of technologies and design solutions will then need to be assessed with respect to barriers across policy and regulations, skills, affordability, as well as equity concerns. This will enable understanding where current policies and regulations perform well, and where they need to be redefined and/or enhanced, alongside the finance and business models that need to be developed, and the gaps that need to be closed in skills and capacity. Through iteration, the mix of levers and interventions that will deliver the greatest net benefit equitably with minimum risk will be determined. The cost–benefit analyses should quantify and incorporate wider social and environmental benefits where possible, in addition to energy cost savings that the system will deliver to improve the scope of return on investment. Some of these benefits are the direct products of avoided GHG emissions, such as significant improvements of health or productivity increases through improved thermal comfort. While not always straightforward, quantifying these benefits will result in a more meaningful valuation process and reveal ADBI Working Paper 1326 Peters and Sayin 17 the true value of levers and interventions. Even when the quantification is not possible, such as due to lack of data, it is important to at least identify these benefits to extract the strategic value of actions. After implementation, the net benefit that has been achieved and its distribution across beneficiaries should be analyzed and evaluated against goals that were set in the first stage. This is a continuous and dynamic process that requires iteration due to the changes that are constantly emerging within the whole system. These include changing cooling needs due to many complex and often interconnected drivers, ranging from climate change, rising incomes, urbanization, changing consumer preferences to unexpected events (such as the rapid increase in cold-chain demand due to COVID-19), changing regulations, changing climate and developmental targets, changes and improvements in technologies, innovations, and the rapid pace of digitalization, among others. In short, the system requires constant monitoring of the impacts of implemented actions to see whether they are fostering the development of a sustainable and resilient cooling and energy system or whether some adjustments need to be made. Hence, it is crucial to measure the impact across social, economic, and environmental dimensions and to monitor the progress made towards sustainable development as well as the climate and environmental goals, targets, and commitments. 5. CONCLUSIONS AND RECOMMENDATIONS Demand for cooling is on a rapid growth trajectory, with projections suggesting that the number of air conditioners and refrigerators could increase to 9.5 billion globally by 2050. But the one thing that is not clear to many is the difference between need and demand. The distinction is critical to understand in the context of cooling, with the latter incorporating an important dimension: delivering cooling for everyone who needs it, not just to those who can afford it. One of the main problems is that the current demand projections typically underestimate the scale of the challenge, which contributes to a lack of ambition in infrastructure and technology development, which ultimately could have far-reaching social, economic, and environmental consequences, preventing both SDGs and climate targets from being met. Therefore, firstly, the volume of cooling provision and cold-chain required to meet the cooling needs across food, health, and thermal comfort must be assessed and quantified, and the different ways the communities seek to maintain or enhance this cooling level to meet their health, economic, and comfort needs must be identified. Second, rather than presupposing a top-down technical solution, possibilities of demand mitigation through the redesign of systems, the aggregation of demand, modal shifts, the use of waste or currently untapped resources, as well as support for existing cooling practices and behaviors must be explored. Understanding the challenges from a whole-system perspective is essential for identifying gaps and seizing the opportunities for mitigation and adaptation. Such an approach will require consensus building and engagement of all stakeholders at all levels—industry, private sector, governments, academia, development institutions, and civil society, among others. Bringing together different sectors and parties is an immense challenge, but there is also a wide range of sources of knowledge, technical assistance, finance, policy initiatives, and political processes that already exist and offer routes that can help to drive cooperation in meeting the cooling challenge. There is now a great opportunity to get the cooling right both for the people and the planet. The ultimate and long-term objective is to maximize the sustainability of ADBI Working Paper 1326 Peters and Sayin 18 the cooling and wider energy system globally, ensure system and community resilience, and enable an equitable and just transition, considering cooling needs ranging from thermal comfort to cold-chains. 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