The world could become a little cooler

December 23, 2019

Cool runnings

Megacities are predicted to multiply by 2030, and this growth is likely to come from emerging economies, including Mexico, Indonesia, Brazil, India and China. Over the next decades, we are likely to see a collision of what could be two of the most powerful structural trends in the global economy: on the one hand, huge swathes of the population will continue to migrate from rural to urban areas; on the other, our awareness of, and willingness to take action on, climate change will reach unprecedented levels.

So what does all this have to do with air conditioning? Nearly 40% of all energy-related CO2 emissions globally come from buildings,1 and of that the vast majority is demand for heating and air conditioning (AC). And this trend is set to continue. According to the International Energy Agency (IEA), energy demand for building cooling will triple by 2050 in the IEA’s baseline scenario and double in the most efficient cooling scenario (assuming all end markets adopt the most efficient AC units available).

AC is a vital ingredient to boost economic growth in rapidly urbanizing emerging markets – the long-term demand case is clear. But if we look at current AC penetration levels, it is also apparent that in the countries that are predicted to experience the highest urbanization growth, which also have some of the hottest and most humid climates, penetration is extremely low! The opportunity for more energy-efficient AC systems to gain share in these rapidly urbanizing and hot climates is evident over the longer term.

Ed Geall, thematic analyst, Newton Investment Management

1Global Alliance for Buildings and Construction, January 2019.

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