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A cooling opportunity for Multilateral Development Banks

Cooling comprises nearly 10% of global electricity consumption

Ahead of the World Bank’s Annual Meetings and related events next week, Multilateral Development Banks (MDBs) must begin integrating ‘cooling considerations’ into investments to match growing shareholder awareness and rising demands for action on cooling energy efficiency.

The importance of cooling

The last five years have been the hottest on record. Making it apt that at the start of this year, the Kigali Amendment to the Montreal Protocol entered into force, focusing on reducing emissions by phasing out the refrigerants used in conventional cooling technologies, usually fluorinated gases, or F-gases.

“MDBs are ideally placed to deliver sustainable cooling at scale”

Countries are also accelerating the phasedown by enhancing energy efficiency standards of cooling equipment – often supported by the Kigali Cooling Efficiency Program. Efficient and clean development of cooling can significantly contribute towards respecting the Paris temperature limits. Moreover, temperature limits will help keep cooling needs in check, reducing the scale of the challenge it poses.

Cooling comprises nearly 10% of global electricity consumption and can be a significant portion of peak demand during hot periods. In China and India, energy use for space cooling doubled between 2010 and 2017. Most of the 135m air conditioners installed annually are under half as efficient as the most advanced available technology. Over the last three years, temperatures were 6% higher than normal over the cooling season in the 20 most prosperous countries, leading to an increased 400 TWh [terawatt-hour] of consumption, equivalent to the annual consumption of all buildings in Africa.

Unmet cooling needs extend well beyond buildings. They impact food and medicine cold chains, mobility and industry.

Ensuring full access to cooling to protect vulnerable people from the effects of heat extremes and broken cold chains could mean energy demand as high as 15,500TWh in 2050. That is two thirds of today’s global power demand – even if aggressive efficiency and demand-response standards for cooling equipment are pursued.

The role of the MDBs

MDBs promote economic and social development in client countries, primarily through financing and technical assistance. At the recent UN Climate Action Summit, MDBs committed to increasing mitigation and adaptation financing, as well as introducing a framework for Paris Agreement alignment. Delivering on the Kigali amendment and action on efficient clean cooling are complementary to these targets.

All major MDBs have a majority shareholding that supports greater action on cooling, either through ratification of the Kigali Amendment or through the development of a National Cooling Action Plan (NCAP). The EU and a further 28 countries that receive MDB funding now either have an NCAP or are developing one. These are essential, providing a basis from which MDBs can design cooling projects based upon the priorities of each client country.

Systemic cooling solutions

The quickest option for delivering cooling efficiency gains and reducing indirect emissions is through higher mandatory energy efficiency standards for equipment. However, this is not a silver bullet, as reducing reliance on ‘conventional cooling’ requires growing access to cooling services that stay within Paris limits. This can be achieved through ‘cooler’ urban planning, adopting passive cooling techniques and stress-testing infrastructure for heat-resilience.MDBs are ideally placed to deliver sustainable cooling at scale because they already work in many relevant areas such as sustainable infrastructure, urban development, green buildings and energy access. The first step is to recognise the strategic significance of cooling within current investments. The World Bank has a new programme to ensure efficient cooling is included in projects and to help countries develop necessary market infrastructure, financing mechanisms, and policies and regulations to deploy sustainable cooling. MDBs should aim to align with this approach.

Further initiatives MDBs can undertake include, but are not limited to:
· Supporting the inclusion of cooling and National Cooling Action Plans in the revision of countries Nationally Determined Contributions (NDCs).
· Incorporating cooling considerations into technical assistance, for example conducting city level cooling feasibility studies.
· Ensuring cooling considerations are incorporated into project appraisal by avoiding or mitigating heat island effects and enhancing infrastructure heat wave resilience.
· Providing financing for solutions including reflective ‘cool surfaces’, district cooling systems in cities and off-grid systems in remote areas.
· Engaging with government and the private sector to implement regulation on updated building codes or new business models, such as ‘Cooling as a Service’.
· Enabling information sharing across client countries, acting as a window for countries to access cooling specific knowledge.

What are the Multilateral Development Banks currently doing?

Many MDBs are delivering cooling solutions or committed to further action. For example:
· The World Bank Group is committed to integrating clean and efficient cooling across its portfolios.
· The European Bank for Reconstruction & Development (EBRD), African Development Bank (ABD) and Asian Infrastructure Investment Bank (AIIB) are committed to scaling up cooling finance initiatives. The AIIB is working on cooling public procurement in Bangladesh.
· The Asian Development Bank (AsDB) and International Finance Cooperation (IFC) are members of the District Energy in Cities Initiative. The AsDB funded the design of a cooling initiative in Ningbo City, China and the IFC has funded a district cooling pre-feasibility study in Thane City, India.

MDBs have an immediate opportunity to encourage and support client countries’ integration of cooling actions – both on mitigation and adaptation – into the next round of NDCs. Shareholder countries of MDBs should demand further action, recognising that strategic cooling investments can directly contribute to MDBs’ social and economic development mandates.

Importantly, it will also allow MDBs to align with the activities announced at the UN Climate Action Summit by the Cool Coalition. The Coalition (of which E3G is a part) is a global network of businesses, governments, cities, financial institutions, academia and NGOs who are working to expand access to cooling while reducing climate impacts. MDBs can benefit from knowledge sharing with Coalition members. Simultaneously, pushing MDBs to align more closely with the Paris agreement will bolster Coalition efforts to transform cooling for a climate safe world.

James Hawkins works across the International Financial Institutions and Political Economy Mapping teams at E3G.