Mobilising Finance for HFC Phase-Down and Sustainable Cooling

On the first day of the 48th Meeting of the Open-ended Working Group of the Parties to the Montreal Protocol (OEWG48), the UNEP Cool Coalition, Cool Up, GIZ Proklima, and the World Bank convened a technical session on financing sustainable cooling. The discussion focused on the point at which National Cooling Action Plans (NCAPs) and Kigali Implementation Plans need to become costed projects, investment pipelines and functioning markets. 

The scale of the opportunity is already substantial. The Cooler Finance report, produced by the World Bank Group and UNEP, valued the active cooling market in developing economies at USD 272 billion in 2023 and projected that it could reach around USD 600 billion annually by 2050. Yet, cooling remains difficult for financial institutions to identify, isolate within wider infrastructure investments, track and finance. It is frequently embedded in buildings, cold chains, industrial systems and transport, rather than presented as a distinct investment category. 

Opening the session, Amr Seleem, Country Engagement and Climate Policy Lead at the UNEP Cool Coalition, linked this finance gap to the implementation challenge facing the Global Cooling Pledge, the world’s first collective commitment to reduce cooling-related emissions by at least 68 per cent by 2050. Currently, only 25 of its 75 national signatories have published an NCAP, while limited financial resources remain the most frequently cited barrier to implementation. “The financing gap is not only about capital. Countries need the data, institutions, standards and project preparation required to turn cooling commitments into transactions,” noted Seleem. 

In his keynote presentation, Thanavat Junchaya, Senior Environmental Engineer at the World Bank Group, argued that financing structures must be designed around the borrower and the market, instead of being imposed through a standard product. “We have looked at things like revolving fund mechanisms as one way to make this more tailored.” Depending on the technology and customer, viable models may include vendor finance, on-bill finance, Cooling-as-a-Service, revolving funds, guarantees, blended finance, or conventional lending. Junchaya’s presentation also set out the need to move systematically from national baselines and sector priorities to costing, risk allocation and financing pathways. India's NCAP, which frames a USD 1.6 trillion investment opportunity to 2040, stood as his example of a plan constructed to attract capital.

Thanavat Junchaya moved to moderating the panel discussion where Professor Hu Jianxin of Peking University presented the 2019 Green and High-Efficiency Cooling Action Plan advanced on four fronts: strengthening energy-efficiency standards, now 16 mandatory national standards, improving the supply of efficient products, stimulating green consumption, and financing energy-saving renovation. His central caution to an audience of policymakers was against uniform prescriptions. China applies different Minimum Energy Performance Standards (MEPS) across its five climate zones, and the environmental case must be assessed scientifically before it will persuade a finance ministry: “It is an indispensable process to scientifically and technically assess the environmental and economic benefits of these actions.” Questioned by Daikin on whether China would extend its MEPS to cover refrigerant global warming potential, and on retrofit at the scale of India's 65 million replaceable units, Dr Hu confirmed that refrigerant limits are under active consideration, while noting that large-scale retrofit remains constrained by the verification systems still to be built.

From the donor vantage, Morgan Simpson, Policy Advisor, UK Department for Environment, Food and Rural Affairs, focused on the quality of project preparation. “The proposals that stand out are the ones that demonstrate a genuine understanding of the market alongside a clear implementation plan. It is really an assessment of the enabling environment, not just the technology itself,” she noted. Finance-ready proposals, therefore, require robust data, clear institutional ownership, trained technicians, monitoring systems, and a credible pathway to sustained market transformation. Simpson also positioned the Multilateral Fund under the Montreal Protocol as a catalyst rather than a sole source, able to assemble a project's elements and build the foundation that draws in wider investment, provided a country can evidence skilled technicians, monitoring systems and a route to market transformation rather than one-off procurement.

Beneath these specifics lies a problem of category, as Nils Hansen, Team Lead for Africa at GIZ Proklima explained: “Cooling is not seen as a sector in its own right, it is treated as cross-cutting, which means the effort and time actually needed to finance it properly is often underestimated.” Working across more than 15 African markets, and exclusively with natural refrigerants, such as R290 in split units, Hansen made the case for demonstration projects as the practical route to de-risking: pilots that prove real payback periods allow financial institutions to assess risk in the concrete rather than the abstract, which matters most to the small and medium enterprises rarely fluent in finance. He pointed to a pilot under Article 6 of the Paris Agreement as a live instance of public support and stronger policy, pulling private capital in behind demonstrated feasibility.

Experience from the Middle East, North Africa and Türkiye showed how transaction costs can be reduced on the lender side. Eslam Mahdy, Programme Manager at Cool Up, described a three-year process of helping banks move from general interest in green finance to dedicated cooling products. Cool Up supported financial institutions in Egypt, Jordan, Lebanon and Türkiye through market assessments, feasibility studies, staff training and country-specific technology catalogues. Jordan also became the first country in the region to publish a sustainable cooling taxonomy, providing financial institutions with a clearer basis for classifying eligible investments. “Banks are willing to deploy green finance. Their constraint is not appetite but capacity. They cannot assess every cooling project from scratch, which is why pre-qualified technology catalogues and standardised bankability tools matter.”

The discussion returned repeatedly to the need to treat cooling as infrastructure rather than as an appliance purchase. Whether the instrument was the World Bank Group's proposed revolving fund for sea-water district cooling in Grenada, a credit-based appliance replacement scheme in Thailand, or the United for Efficiency green loans linked to salary and electricity consumption in Senegal and Rwanda, it was agreed that smaller transactions need to be standardised or aggregated before most financial institutions will treat them as a scalable portfolio. 

Closing the session, Niroopa Kowlesser, Cooling Policy Specialist at the UNEP Cool Coalition, linked the findings to the Enabling Pledge Implementation for Cooling (EPIC) Facility, the Cool Coalition’s early-stage technical assistance mechanism for converting national cooling priorities into structured, investment-ready proposals. The Facility has already received more than 50 requests for support from Global Cooling Pledge countries. “Cooling is infrastructure, just like water and energy. It must be planned, financed and delivered with the same seriousness,” said Kowlesser. That requires an integrated investment approach combining passive cooling, efficient equipment, refrigerant transition, policy reform and institutional capacity. Concessional finance should be directed towards affordability constraints, project preparation and market failures, while commercial capital should scale technologies and business models with a demonstrated investment case. 

The next phase will focus on converting country requests into structured pipelines and connecting them with financing channels. These include the Multilateral Fund, the ninth replenishment cycle of the Global Environment Facility, which finances environmental projects in developing countries, and cooperative approaches under Article 6 of the Paris Agreement. The discussion will continue at the Global Cooling Pledge Assembly in Singapore, where governments, financial institutions and delivery partners will examine how national investment roadmaps and EPIC-supported pipelines can move into funded implementation.

More information on the Financing Sustainable Cooling: From National Plans to Investment Pipelines side event is available here.