A billion new air conditioners will save lives but cook the planet

By Kai Schulz, Adrija Chatterjee, and Sheryl Tian Tong Lee

Summer in India has always been hot. Increasingly, it’s testing the limits of human survival. As temperatures have climbed across the world’s most populous nation in recent weeks, more than a dozen people died at an event in central India and thousands crowded hospitals with heatstroke symptoms. Hundreds of schools were closed and the mercury is still rising: Temperatures will hover around 45 degrees C across the northern plains this weekend.

The most immediate fix is mercifully affordable, at least in the short-term. Demand for air conditioners is surging in markets where both incomes and temperatures are rising, populous places like India, China, Indonesia and the Philippines.

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By one estimate, the world will add one billion ACs before the end of the decade. The market is projected to nearly double before 2040. That’s good for measures of public health and economic productivity; it’s bad for the climate, and a global agreement to phase out the most harmful coolants could keep the appliances out of reach of many of the people who need them most.

The logic behind the AC boom is simple. Economists note a spike in sales when annual household incomes near $10,000, a tipping point many of the world’s hottest places touched recently or will soon. The Philippines passed the $10,000 threshold roughly last year; Indonesia within the last decade. In India, where more than 80% of the population doesn’t yet have access to air conditioning, per capita gross domestic product — adjusted for purchasing power — will top $9,000 this year for the first time.

“We are operating in a limitless opportunity,” said Kanwaljeet Jawa, who heads the India wing of Daikin Industries, the world’s largest AC manufacturer. In recent years, he said, “our sales have grown more than 15 times.” This development has far-reaching consequences for public health, wellbeing and economic growth. Purchasing an AC is a pivot away from poverty for individuals and for their communities. People in hotter countries, which also tend to be poorer ones, suffer from worse sleep and impaired cognitive performance, both of which drag on productivity and output.

In a study looking at thousands of Indian factories with different cooling arrangements, researchers found that productivity fell by around 2% for every degree Celsius increase. This is a big deal for Prime Minister Narendra Modi’s push to boost sluggish export numbers, lure business from China and move up the global value chain: The declines due to heat over the past 30 years may equate to roughly 1% of India’s GDP, or about $32 billion, according to E Somanathan, author of the report and a professor of economics at ISI Delhi.

But expanding AC coverage too quickly also threatens to worsen the crisis it’s responding to. Most units use a refrigerant that’s far more damaging than carbon dioxide. The nations where demand is growing fastest remain deeply reliant on coal-fired power, and most people can only afford the cheapest, most energy-inefficient units.

If efficiency standards don’t improve, “then the planet will literally be cooked,” said Abhas Jha, a World Bank expert on climate change based in Singapore.

Wealthier, more temperate countries have tightened regulations on ACs, requiring better energy efficiency and less-toxic coolants. That adds to the cost of units, making those kinds of measures less palatable where affordability is paramount. International climate bodies are pressuring developing countries to lower their carbon footprint, but India and its peers point out that they still contribute far less to global emissions than places like the US, where nine out of ten people have access to AC.

“We’re facing a situation where extraordinarily harsh conditions are being imposed on growing economies,” said José Guillermo Cedeño Laurent, an assistant professor of public health at Rutgers University in New Jersey.

For may in Delhi’s working-class neighbourhoods, access to an AC is a matter of survival. Piyu Haldar, who works as a maid, said her shanty turns into a furnace in the summer. The tin roof gets hot enough to cook roti on it. Before sleeping, Haldar and her husband used to splash water on their bed to cool down the room. When her son was born in 2016, he suffered fevers from the heat. That was the breaking point. To afford an entry-level Voltas AC, Haldar stopped buying clothing, cut down on meals, took out a loan and doubled the number of houses she cleaned. Haldar avoids turning on the unit during the day. But as night falls, she flips on the switch and closes the door, keeping the mosquitoes out and preserving the cool air. In a windowless bedroom, her son, Yasir, pushed his face against the AC, delighting in the “cold chilled air!”

As more people like Haldar buy ACs, cooling companies are trying to improve energy efficiency without pricing out their biggest growth markets. Most G-20 nations, including India, use labelling systems to rate the efficiency of products, and stricter standards in the US and European Union have lowered energy use from appliances by 15% in recent years, according to BloombergNEF.

Haldar chose a three-star unit from Voltas, which cost about Rs 27,000, or roughly 15% less than comparable higher efficiency options. Three-star units comprise about 60% of total AC sales at Godrej Appliances, one of India’s largest retailers, said business head Kamal Nandi. One way to encourage consumers to buy more efficient models, the company says, would be to lower taxes on the units to 18%, down from the 28% luxury tariff that currently applies. “The AC has become a necessity,” Nandi said. “It is no longer a luxury item.”

For cooling companies, the growing demand for ACs could be quashed by regulation designed to slow climate change. Part of the problem will be solved if and when countries move toward cleaner sources of power. The other issue — the refrigerants that turn that electricity into cool air — is trickier.

One of the most common coolants, hydrofluorocarbons, can have 1,000 times the warming potency of carbon dioxide. Scientists estimate that failing to drastically lower dependence on HFCs could result in half a degree Celsius of warming by the end of the century, an enormous contribution to a rise that would trigger deadlier storms, droughts and, yes, more heatwaves.

For India, the challenge is to implement cleaner technology before millions of new consumers purchase the dirtier ACs, locking in their use for another decade.