Energy-efficient air-conditioners, reflective paint, and early warning systems can protect people from extreme heat, but a critical financing gap is preventing their widespread adoption in vulnerable regions. According to the United Nations Environment Programme (UNEP), the scarcity of funding represents the biggest obstacle to rolling out proven cooling solutions as temperatures rise globally.

Why Are Efficient Cooling Technologies Not Being Deployed?

The problem is straightforward: inefficient, energy-guzzling air-conditioners are cheaper upfront than their efficient alternatives, making them the default choice for consumers and businesses in developing economies. In Southeast Asia, approximately 75 percent of air-conditioners currently in use are less efficient models. While the technology for better cooling solutions exists, scaling these innovations requires substantial financial investment that governments and private companies struggle to secure.

"The inefficient equipment, unfortunately, often is cheaper, and that is why the uptake from the market is higher. But we need to find a way to turn that around," said Martin Krause, climate change division director at the United Nations Environment Programme.

Martin Krause, Climate Change Division Director at UNEP

The market opportunity is enormous. According to a 2024 report by UNEP and the International Finance Corporation, the cooling solutions market in developing economies is expected to grow from approximately $300 billion annually to at least $600 billion per year by 2050. Yet without financing mechanisms in place, this growth remains theoretical rather than practical.

What Cooling Solutions Are Being Proposed?

Beyond energy-efficient air-conditioners, several complementary approaches are being explored to help populations cope with rising temperatures. These solutions address different aspects of heat resilience and can be deployed across urban and rural settings:

• Cool Paint and Materials: Heat-reflective paint and construction materials that reduce heat transfer into buildings, with Singapore planning to coat all housing estates with cool paint by 2030 that can reduce ambient temperatures by up to 2 degrees Celsius.
• Heatwave Warning Systems: Early warning infrastructure that alerts vulnerable populations to dangerous temperature events, allowing time for protective measures.
• Cooling Shelters: Dedicated spaces in advance for vulnerable populations in rural areas during extreme heat events.
• Workplace Protections: Mandatory shaded rest areas, acclimatization protocols, and breathable uniforms for outdoor workers, with ice packs and water sprays available during heat illness emergencies.

The urgency of deploying these solutions is intensifying. Rising temperatures driven by climate change are being worsened by the ongoing El Niño warming event, which is set to become one of the strongest on record. Malaysia's meteorological service warned in early September that the country could face extreme heat of up to 40 degrees Celsius between January and May of 2027, driven by this super El Niño event.

How Can Governments and Development Banks Unlock Financing for Heat Resilience?

Addressing the financing gap requires a multi-pronged approach involving both public and private sector participation. Development banks play a crucial role in reducing the financial barriers that prevent companies from investing in new, efficient cooling product lines:

• Development Bank Risk-Sharing: Institutions like the Asian Development Bank and the World Bank can absorb part of the risk associated with new product lines, lowering interest rates for companies borrowing to establish efficient cooling technologies.
• Carbon Credit Revenue Models: Replacing energy-intensive cooling with efficient alternatives generates carbon emission reductions that can be sold as carbon credits, creating a revenue stream to offset investment costs.
• International Climate Finance Partnerships: Bilateral agreements between developed and developing nations, such as the Switzerland-Ghana cooling initiative, where carbon savings from green refrigerant air-conditioners are sold to offset another country's emissions.

"There is always a risk with a new product line, and so companies might face higher interest if they borrow. But that is where development banks come in. They should take part of that risk on themselves to lower the interest rates for companies who want to borrow to establish a new product line with highly efficient technologies," explained Krause.

Martin Krause, Climate Change Division Director at UNEP

The Global Cooling Pledge Assembly, held in Singapore from September 15 to 18, brought together representatives from around 60 countries, including Cambodia, Bangladesh, and Japan, to develop strategies for cutting carbon emissions from air-conditioning while protecting populations from extreme heat. Financing cooling measures for vulnerable groups, particularly rural farmers and construction workers, emerged as a central concern throughout the assembly.

One innovative model being explored involves Ghana and Switzerland. Under this arrangement, Ghana is rolling out air-conditioners that use a green refrigerant with an ultra-low global warming potential. The carbon "savings" generated by this transition are then sold to Switzerland, helping the Alpine nation meet its climate goals while providing Ghana with revenue to support the transition.

The challenge ahead is substantial. As extreme heat becomes an increasingly serious threat to public health and economic productivity, the gap between available solutions and their deployment continues to widen. Without decisive action on financing mechanisms, vulnerable populations in developing regions will remain exposed to deadly heatwaves, even as the technology to protect them sits on the shelf.