The case for finance actions

The rapid growth in cooling demand combined with the long lifetime of the equipment give rise to important challenges that must be addressed through both short-term and long-term interventions. While it is important to develop innovative technology and new integrated-system solutions, there is an encouraging momentum to act now and start shifting the trend and avoid locking-in expensive, inefficient and polluting infrastructure.

Development Financial Institutions (DFIs) –international, multilateral, national and regional– recognize that scaling up transformational investments in cooling that meet the development goals of countries without worsening climate change requires a deeper and collective efforts from all stakeholders. DFIs have committed to help governments who put ambitious cooling strategies and actions in their revised Nationally Determined Contributions (NDCs).

DFIs, which represent some of the largest providers of public finance for sustainable development, have a long history of supporting developing countries in their efforts to translate the goals of the Paris Climate Agreement, the Kigali Amendment and the SDGs into meaningful country-level targets, policies, programs and finance the projects needed to achieve them. They provide policy advice on long-lasting economic pathways and can leverage multiple times their investment from private capital. For instance, Multilateral Development Banks (MDBs) committed over $43 billion to climate finance in 2018–up more than 22% from 2017.

DFIs will be crucial in accelerating and scaling up efforts to achieve sustainable cooling. Their work with governments and subnational authorities needs to quickly evolve to provide maximum support, mobilize private financing and impact on the transformation that is needed to achieve efficient, climate friendly cooling for all that are at risk of heat stress.

Framework for finance actions

This framework for financial action on sustainable cooling highlights how DFIs can act at the institutional level and at the country level, focusing on four main areas in various sectors relevant to cooling, e.g. transport, agriculture, health, education, energy and urban:

  • Advisory on policy, regulation and planning;
  • Financing solutions, business models and other enablers of investment transactions;
  • Technical assistance to the private and public sector;
  • Risk insurance and guarantees

The examples set out in the table below illustrate some of the generic actions that DFIs can take. Note that the listed actions will not be equally relevant for each DFI, since each DFI typically has its own focus and different client groups. The actions listed as ongoing have been pursued by at least one DFI.

Type of actionOngoing actionsAspirational actions
At the institutional level
Institutional leadership in sustainable coolingPromote and mainstream sustainable cooling in advisory and investment lending workMake sustainable cooling part of climate mitigation and adaptation action plans and plans to implement the SDGs.
Stimulate reductions of high GWP refrigerants within investments to maximize climate benefitsSystematically integrate sustainable cooling into activities that finance energy efficiency, transport mobility, climate smart agriculture, sustainable cities, and trade and competitiveness
Develop and/or support a global roadmap on sustainable cooling, including through DFI-specific action plans.Report on private and public investments, and moneys mobilized by MDBs, for sustainable cooling.
Participate in global initiatives on sustainable cooling, e.g. Cooling for All (by SEforAll), Climate and Clean Air Coalition (CCAC), UNE’s Cool Coalition, etc.Develop new lending and financing instruments for sustainable cooling -related investments and consumer purchase decisions. Provide training and mainstreaming instruments into business.
Raise awareness, promote behaviour change and disseminate knowledge/lessons learned on EE and clean cooling.Commit to minimum energy efficiency and/or GHG standards in project lending.
Promote the cross-sectoral approach given the wide needs and impacts of cooling.Set volume targets for sustainable cooling related lending and/or investments.
Educate and provide training to build local capacity throughout the life cycle and value chain of cooling-related infrastructure
At the country level
Advisory on policy, regulation and planningSupport client countries to create the right policy, regulatory, and contractual frameworks to create market demand for catalyzing investments in EE, such as MEPS, mandatory labeling schemes, compulsory energy audits; building codes;Support sustainable cooling -related planning and development processes, e.g. sustainable cooling -informed urban development
Support cities to develop urban heat mitigation strategies and build their resilience to extreme heat;Promote integrated infrastructure and system approaches to sustainable cooling in sectors relevant to cooling, e.g. district cooling with thermal storage (load shifting), use of waste heat and water for cooling, sustainable cold chain infrastructure, …
Support and facilitate private sector participation in cooling infrastructure and interventions
Strengthen public institutions that provide or oversee sustainable cooling -related services;
Support the development and implementation of national cooling action plans
Financing solutions and business modelsFinancing and delivery mechanisms that drive markets towards clean cooling, such as energy service agreements, pay-as-you-save programs, on-bill financing, bulk procurement.Expand traditional lending instruments and green bonds to scale up clean cooling and green buildings projects.
Mobilize commercial financing from local financial institutions (FI) to expand EE credit lines to include clean cooling solutions.Mobilize external resources from bilateral and multilateral donors including GEF and GCF.
Support implementation of national cooling plans through regional cooling efficiency financing programs.
Innovative approaches to finance measures building resilience to heat.
Innovation and technical assistanceSupport developers to design and certify sustainable cooling solutions in green buildings, e.g. through the IFC green building program.Provide technical assistance to commercial banks and ESCOs to scope their needs and advise on technically and financially feasible cooling solutions.
Work with manufacturers to improve the manufacturing and supply of efficient cooling equipment.
Support/Demonstrate the adoption of new innovative technology.
Risk insurance and guaranteesDevelop risk mitigation instruments (e.g., insurance and guarantee) to motivate private capital investment in clean cooling.