The Birth of the Cold Economy

06/30/2015 02:23 pm ET | Updated Jun 27, 2016

Cold underpins our modern lifestyles, and as demographics shift, the demand for cold is booming worldwide. This represents a huge, untapped opportunity for renewables.

America has the largest and most scrutinised economy on Earth, so you may be surprised to hear that much of its prosperity is underpinned by the need for 'cold'.

But if you consider what it takes to transport food and life-saving medicines to the other side of the country, or keep the people of Texas or Arizona cool, it all begins to add up.

Speaking at New York's REFF-Wall Street in June, my mission was to highlight the potential for cold technologies to become the next major growth market within the renewables sector.

As a crucible of American innovation, this event gathers senior representatives from the renewables, cleantech and finance industries worldwide to discuss solutions to some of the world's most serious challenges.

The US has a major, established demand for cooling. To illustrate the importance it plays in energy systems, 48 per cent of domestic energy consumption in the US is used to supply either heating or cooling.

To break it down further, the US expends about 185 billion kilowatt hours of energy annually just to provide residential cooling. In California, more than 30 per cent of total peak power demand in the summer is used to power air conditioning.

However, it has also been predicted that within 50 years time, demand for cold will exceed that for heating.

In fact, eight countries have the potential to exceed the United States' yardstick of high air conditioning usage, because of their warm climates and significant populations; India by 14 times if they adopt American standards of cooling.

Based on various projections, in India the electricity demand from air conditioning is projected to increase to 239 terawatt hours per year by 2030.

Given that cold is already central to so many of our modern conveniences, and future demand is so strong, you would expect to find a thriving 'cold economy' offering clean alternatives to fossil-fuel-based cooling systems.

But in spite of booming demand, cooling sadly remains the Cinderella of the renewable energy market, with investment lagging well behind electricity generation.

To take the United Kingdom market as an example, between 2010 and 2013 an estimated £27.7 billion was invested in renewable electricity generation, compared with £1.7 billion in thermal technologies; heat and cooling.

This relative underinvestment is reflected worldwide.

This gap represents an enormous opportunity to establish new high-growth markets for clean cold technology worth billions of dollars and capable of supporting thousands of jobs worldwide.

The cold chains that large logistics firms use to move goods around the country are a case in point.

There are thought to be more than 400,000 refrigerated vehicles on the road in the US today, which ranks it as the world's largest market for transport refrigeration units.

These units are powered by fossil fuels, and normally feature auxiliary engines that are far more polluting than the engines that drive the vehicles themselves - up to 29 times the particulate matter. And yet little data is collected to examine how these auxiliary engines contribute to poor air quality.

This is an obvious application where the introduction of clean cold infrastructure and technologies would create substantial and immediate benefit.

Globally we need to reduce the impact of our lifestyles on our natural capital and our environment. We also need to make our energy systems more economic and resource efficient.

Research conducted by Dearman has drawn attention to the booming demand for cold chains globally, powered by fast-growing economies such as China and India, where poor air quality is already considered a serious issue.

Globally, transport refrigeration is seeing double digit growth; more than 25 per cent in India and China. In fact global projections see the market more than tripling to 15 million inside ten years.

In India, outdoor pollution causes 600,000 premature deaths in a single year. This grim statistic demonstrates how essential it is that its global growth story be established on cost-effective, yet also clean technologies.

The solution will be smart and sustainable technologies built around the type of system-level thinking that helped to establish existing renewable energy networks.

It's vital that in addition to considering how we generate electricity, we also develop strategies for the storage and movement of energy, thermal not just electrons.

Infrastructure that can transport waste cold from one industrial process of liquefied natural gas (LNG) regasification for re-use elsewhere, could be just one example of the smarter systems level approach of the future.

As this cold economy evolves, it will need a joined-up approach to the development of 'clean cold' infrastructure. If governments, investors and technology companies pull together, we can realise a cleaner, more resource efficient world.