Efficient cooling can save $3.5 trn over next 10 years: Study

The highest level of savings in 2030 in absolute terms could be achieved in India – up to 530 TWh of electricity generation.

Efficient cooling can reduce these costs by up to 75 percent, equivalent to $3.5 trillion in financial cost savings and 7.6 GtCO2 in environmental cost savings, a new report says.

Rising demand for electricity is driven by various uses including space cooling which – particularly at certain times of the day – threatens the power sector’s ability to deliver secure, affordable and net zero power. The Power of Efficient Cooling, published by the Economist Intelligence Unit (EIU), highlights why it is in the interest of the power sector, policymakers and consumers to pay attention to cooling efficiency, and outlines priority actions that need to be taken to ensure that the contribution of efficient cooling to speeding up and reducing the cost of the race to net zero can be realised.

The report, which was commissioned by the Kigali Cooling Efficiency Program (K-CEP), estimates that without the implementation of sustainable cooling solutions, countries aiming to meet net zero emissions in 2050 are likely to miss those targets by up to eight years.
Space cooling is driving growth in electricity demand. Electricity demand for cooling is expected to grow almost twofold at an average annual rate of 6.1 percent to 2030. As per World Energy Outlook 2019 published by the International Energy Agency (IEA), space cooling is expected to account for the second-largest end-use of total electricity demand growth out to 2040, after industrial motors, and it accounts for more than the electricity used by electric vehicles (EVs). In India, the IEA expects space cooling to rise from 10 percent of peak electricity load in 2016 to 45 percent by 2050.

Of the $4.6 trillion, more than half (54 percent) of the costs are from generating and operating power plants to meet demand at peak hours. Also, as demand for space cooling rises, the risk of power outages increases. “If policymakers do nothing to improve the efficiency of cooling, it could result in costs of US$4.6 trillion and emissions of 10.1 GtCO2 by 2030. Even if stakeholders embrace a shift to renewables, the financial and environmental costs – $4.5trillion and 9.2 GtCO2 – will still be high,” EIU’s research finds.

Focusing on more efficient cooling can substantially reduce these costs. The report said, “Efficient cooling can reduce these costs by up to 75 percent, equivalent to $3.5 trillion in financial cost savings and 7.6 GtCO2 in environmental cost savings. It can also hasten the transition to net zero by up to eight years.”

Indirect emissions from space cooling in India are expected to increase from 55 MtCO2 in 2019 to 326 MtCO2 in 2030, despite an expected drop in the share of fossil fuels from 76 percent to 57 percent in the fuel mix.

According to the report, “Efficient cooling can expedite the transition to net zero at a lower cost, as well as providing benefits for all stakeholders, including governments, consumers and the power sector itself, given the right incentives.”

It suggests: Countries must roll out the best available AC technologies through regulations and standards. Taking a regional approach will make this most effective. Mark Radka, Chief of Energy and Climate Branch, United Nations Environment Programme (UNEP), states, “If you can get regions, such as ASEAN, to agree on efficiency regulations, then costs go down and problems with dumping and price competition become less of a problem.”

EIU’s analysis finds that a global transition towards the best cooling technologies for all new AC units could achieve a total reduction in electricity demand of 29-38 percent by 2030. The highest level of savings in 2030 in absolute terms could be achieved in India (up to 530 TWh of electricity generation), followed by China (up to 500 TWh) and the US (up to 160 TWh), the report said.