Cooler Finance: Unlocking Sustainable Space Cooling for a Warming World

As global temperatures continue to rise and extreme heat events intensify, the demand for space cooling in homes, offices, schools, and healthcare facilities is soaring. Without a transition to sustainable solutions, this growing demand risks escalating emissions and overloading already strained energy systems.

On 20 March 2025, the International Finance Corporation (IFC), the Global Alliance for Buildings and Construction (GlobalABC), and the United Nations Environment Programme (UNEP) Cool Coalition co-hosted Cooler Finance: Sustainable Space Cooling for All, a webinar focused on the findings from the joint IFC–UNEP Cool Coalition report Cooler Finance: Mobilizing Investment for the Developing World’s Sustainable Cooling Needs. The session brought together policymakers, industry leaders, and technical experts, such as Colombia’s ACAIRE association, to explore how innovative finance and technology solutions can unlock scalable, energy-efficient cooling, particularly in emerging markets where cooling demand is set to grow fastest. Projected annual investment in space cooling could reach $332 billion by 2050 (over half of the total $600 billion annual market), underscoring the need for both passive and active solutions to achieve near-zero emissions while ensuring equitable access to cooling worldwide. The event marked the second instalment in the Cool Talks webinar series, spotlighting emerging priorities across the cooling sector.

Cool Coalition Global Coordinator Lily Riahi welcomed participants and set the stage by framing cooling as a critical lever for both climate mitigation and adaptation. She emphasized that improved financing mechanisms are integral to the Global Cooling Pledge, reminding attendees that “Cooler finance is a defining issue, as each year brings higher greenhouse gas emissions and more extreme heat, leaving vulnerable communities struggling to survive.”

The Global Cooling Pledge, launched at the 2023 United Nations Climate Change Conference (COP28), and co-chaired by the United Arab Emirates and Brazil, now counts over 70 government Signatories and 80 non-state supporters committed to cutting cooling-related emissions by over 60% by 2050. Anchored in the science-based date provided in the Global Cooling Watch 2023, the Pledge outlines 14 national targets across efficiency, refrigerants, access, and nature-based solutions—offering a clear roadmap for coordinated, cross-sectoral action.

In his opening remarks, Jonathan Duwyn, Programme Management Officer at GlobalABC, noted how sustainable cooling intersects with the buildings and construction agenda, particularly in terms of “passive-first” design approaches. “We must come back to solutions rooted in local climates—construction techniques, technologies, and design that can limit the need for mechanical cooling,” he said. Duwyn highlighted the Passive Cooling Group, and announced a new fact sheet summarizing insights from the Cooler Finance report for the buildings and construction sector. He urged stakeholders to embrace passive design as the most impactful energy efficiency measure, and to take advantage of available financial mechanisms to scale implementation.

Passive cooling principles include thoughtful building orientation, natural ventilation, shading, improved insulation, and nature-based approaches to mitigating urban heat. These strategies prove particularly vital in lower-income contexts, where high upfront costs for mechanical cooling can be prohibitive.

Opening the webinar from the finance perspective, Diep Nguyen-Van Houtte, Senior Manager for Innovation and Business Development at the IFC, underscored how building-focused interventions can drive large-scale impact, given that most human activity takes place indoors. “Almost everything we humans do happens in buildings,” she said. “That’s why cooling for green buildings is one of the five pillars of IFC’s Sustainable Cooling Initiative.” Van Houtte reflected on a decade of impact through IFC’s EDGE Green Building Program, which has certified more than 110 million square meters globally, translating to approximately $110 billion in green investments. She also introduced IFC’s “five-by-five” cooling strategy, a targeted approach to address the five priority cooling sectors through five engagement pathways, serving as a timely catalyst for market transformation.

Moving to presentations, Gennai Kamata, Associate Programme Officer at UNEP, drew from the Cooler Finance and Global Cooling Watch reports to highlight how passive solutions can cut cooling demand by up to 24% by 2050, saving an estimated $3 trillion in equipment costs and avoiding 1.3 billion tons of CO₂ emissions. “Passive cooling is not new—it’s cost-effective, low-tech, and already available. What’s missing is awareness and integration into design,” he noted. Kamata stressed that although active cooling currently dominates the market, passive approaches represent a cost-effective, low-hanging opportunity, particularly in low-income settings where affordability and resilience are key. He showcased the Cool Coalition’s work in Cambodia to demonstrate cool roof technologies and the development of a Passive Cooling Companion Guide to support national policy integration. He also emphasized the value of tools like IFC’s EDGE platform in helping architects and developers assess return on investment and long-term energy savings.

For the second presentation of the session, Bolivar Monroy, Technical Director at ACAIRE, showcased real-world applications in space cooling from recent high-performance building projects across Latin America and beyond. Monroy revealed that while inefficient cooling systems account for massive energy losses globally, solutions already exist to enable market transformation—particularly through advanced Heating, Ventilation, and Air Conditioning (HVAC) systems, smart building automation, thermal energy storage, and low Global Warming Potential (GWP) refrigerants. “The good news is that we have the technology to make this transformation possible,” he said, pointing to examples from Singapore and New York that integrated artificial intelligence and retrofit strategies to drastically cut emissions and operational costs. He also highlighted the role of magnetic bearing chillers, hybrid passive-active designs, and smart controls in achieving up to 65% energy savings. Monroy closed with a call to action: assess current building performance, leverage financial incentives, and adopt future-ready cooling technologies to ensure long-term sustainability.

The Q&A session was moderated by Rusmir Musić, Global Cooling Lead at IFC, who also showcased IFC EDGE tool’s capacity for measuring both capital expenses and operational cost savings—ultimately strengthening the business case for green buildings. “Implementing efficiency at the design stage is cheaper than retrofitting later,” he noted, “especially in rapidly urbanizing regions like Africa and Asia.” In response to concerns around cost recovery, Musić pointed to faster sales and greater access to green finance as compelling incentives. He also underscored the importance of early collaboration between architects and engineers and encouraged governments to adopt non-fiscal policy measures like expedited permitting to accelerate sustainable cooling adoption.

Rounding up discussions, Gennai Kamata delivered the closing remarks by inviting participants to join the Cool Coalition Passive Cooling Working Group, which he co-chairs. The group convenes like-minded countries and organizations to support policymakers and stakeholders in the building sector through the development of policy toolkits, advocacy, matchmaking, technical guidance, awareness-raising, and capacity-building efforts to accelerate passive cooling adoption. Kamata highlighted ongoing discussions within the group on evaporative cooling and nature-based solutions, emphasizing their applicability in both dry and humid climates. Finally, Kamata announced plans to develop Passive Cooling Guidelines in the lead-up to COP30, which will offer detailed policy recommendations and technical pathways for scaling passive strategies.