As the southeast coast of Australia braces itself for a heatwave, millions of Aussies will rely on a functioning air conditioner.
But despite the technology’s widespread use, the $US100 billion market hasn’t evolved its technology in a major way since its invention. In fact, it’s currently only at 14 per cent energy efficiency.
This represents a major disruption opportunity, according to billionaire entrepreneur Richard Branson.
As Branson explained, global warming is an incontrovertible truth. And as the planet warms, our reliance on air conditioning to stay cool will also increase.
“Worldwide, by 2030, extreme heat could lead to a $2 trillion loss in labor productivity. India’s economy alone stands to lose $450 billion (not to mention the 200 million Indians exposed to dangerous heat conditions each year),” he explained in his blog.
In a November 2018 report, the Rocky Mountain Institute warned sustainability is a global concern.
Concerningly, it also found that comfort cooling is one the largest risks to our climate with residential cooling set to account for an increase of more than 0.5ºC to global temperatures by 2100.
“The world needs a radical change in comfort cooling technology, one that can effectively and assuredly offset the exponential increase in cooling energy demand and put us on a path to cooling with less warming,” the institute said.
Branson said that the good news is that air conditioning have a lot of room for technological improvement.
“Despite a 100-year runway, the most advanced products have only achieved 14 percent of their maximum theoretical efficiency.”
With the market set to quadruple by 2050, Branson said a technology shift could be the single biggest technology step towards addressing climate change.
Why haven’t we done it yet?
Most air conditioner companies are focused more on brand and marketing than research and development, Branson said.
And when they do think about efficiency, it’s only at the bequest of regulators.
Then there’s the fact that the market is largely controlled by a small number of players. That coupled with the high cost of research and development means its difficult for new players to enter the market.
Okay, so how do we do it then?
Convince the government.
State authorities need to “aggressively raise energy efficiency standards” and cut poor-efficiency refrigerants out.
As Branson noted, regulators in both South Korea and Japan managed to force air conditioner companies to double their efficiency in the last several years, and the manufacturers still developed a cheaper product.
“We also need to raise the technology ceiling,” he continued.
“Commercial LED lighting has achieved nearly 70 percent of maximum theoretical efficiency. Solar panels have reached 40 per cent. I’m no AC expert, but 14 per cent seems pathetic.”
Branson recently launched The Global Cooling Prize, a $US3 million awards program designed to encourage innovation in the sector. The Rocky Mountain Institute is a major partner in the prize.
The recipients need to have developed residential cooling innovations which use four to five times less energy at no more than twice the baseline unit cost.
As Branson acknowledged, nothing is insurmountable – Virgin Atlantic is proof of that.
“If we can disrupt the airline industry, where a single Boeing 737 can cost north of 70 million dollars, then I’m pretty sure we can do it with air conditioning.”
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.