Report: Climate Policy, Need for Cooling Push Refrigerants Market to Adopt Cleantech Solutions
Image: Erin McKenna, Unsplash
Air conditioning and refrigeration are a global necessity in our rapidly warming world. Paradoxically, cooling systems demand tremendous electricity and employ potent greenhouse gases that worsen global warming and damage Earth’s atmosphere. A new report from Boulder-based venture capital and research firm Saoradh Enterprise Partners (SEP) looks at the most investable cleantech solutions for this growing market.
Refrigerants are a type of industrial chemicals used for cooling and refrigeration. They are used industrially, commercially, in households, vehicles, and common appliances. Refrigerants are environmentally damaging – hydrofluorocarbons (HFCs), one of the most abundant refrigerants, are 1,000 to 9,000 times more damaging to the climate than CO2. Emissions of HFCs are growing by 10-15% each year, and they can last in the atmosphere for up to 29 years.
The environmental danger of refrigerants has precipitated some of the most groundbreaking, progressive, and widely-supported climate policies of the past 40 years. HFCs are a replacement for even more powerful ozone-degrading CFCs phased out under the 1987 international Montreal Protocol. Now countries have committed to cut HFCs by more than 80% by 2050 to avoid 0.5° C of warming. Even with these policies in place, however, the use of refrigerants is increasing.
Air conditioning is one of the largest and fastest-growing applications for refrigerants: the global stock of air conditioners in buildings will grow to 5.6 billion by 2050. That’s 10 ACs sold every second for the next 30 years. This is a double-pronged climate issue: in addition to increasing the use of HFCs, air conditioning demands a substantial amount of electricity. According to the International Energy Agency, air conditioning accounted for 10% of global energy consumption in 2018, and explosive growth could push that to 45% by 2050.
Cleantech Solutions
Regulatory pressure, increased demand, and rising emissions make refrigerants an urgent priority for innovation. Climate change non-profit Project Drawdown puts “Refrigerant Management” and “Alternative Refrigerants” near the top of its list of 100 solutions to reverse global warming. SEP analyzed three types of solutions:
Improved system efficiency: Efficiency can lower the colossal energy demand of cooling systems. The IEA study shows that efficient ACs could cut future energy demand in half. Efficiency improvements include decoupling AC and dehumidification, leak detection, and AI systems that reduce electricity use and refrigerant waste.
Alternative refrigerants: CO2, ammonia, water, and other substances like glycol can be used as refrigerants with zero GWP potential. Hydrofluoroolefins (HFOs), which are not damaging to the ozone, and HFO/HFC blends are promising transitional solutions.
End-of-life management: A significant amount of refrigerant leakage occurs during disposal. This can be addressed through recovery, reclamation, and recycling of refrigerants. Several companies are working on improved disposal methods.
“The refrigerants industry is under pressure to decarbonize, which makes it an interesting area for innovation. SEP’s report is a useful overview of the current refrigerants market and the steps the industry can take to lower environmental impacts.”
Market & Companies
The global refrigerants market is highly developed – it was valued at $20.6 billion in 2020 – but only a fraction of companies are working on cleantech, creating a significant opportunity for investment and innovation. SEP identified 131 notable cleantech companies. Of these, SEP found 25 to be most interesting to investors. The majority are producing end devices. Several are in manufacturing, strategic management, or end-of-life solutions. The complete database of companies is available upon purchase of the report.
PURCHASE THE REPORT
The Refrigerants report is 114 pages and includes:
A global database of notable companies (with a US focus).
A database of green refrigerant characteristics.
One hour of individualized support from the SEP team.
Find more details, including a full table of contents, and purchase the report on the SEP Marketplace.
ABOUT TOPIC REPORTS
Topic reports explore cleantech investment spaces with the aim to calibrate investors, uncover opportunities, and identify possible solutions to Solving Climate+ by 2050. SEP produces topic reports twice per quarter to gather data and insights important to evaluating key cleantech investment spaces as part of our Innovation Flow Reporting (IFR) service. Recent and upcoming reports include BattRe (lithium-ion battery recycling), Biochar, Bioplastics, Clean Food, Concrete and Cement, Desalination, and Refrigerants.
ABOUT INNOVATION FLOW REPORTING
SEP’s Innovation Flow Reporting (IFR) service is designed to illuminate innovation hubs and identify and capture the best cleantech commercialization opportunities for SEP and our corporate clients. More than just market research, Innovation Flow Reporting delivers actionable information. IFR uncovers new cleantech opportunities for corporate venture capital offices, innovation programs, product development teams, and R&D departments. We know it works because we use it to drive our investing.
ABOUT SAORADH ENTERPRISE PARTNERS
Saoradh Enterprise Partners (SEP) is a cleantech venture capital and research firm based in Boulder, Colorado. SEP partners with innovators, entrepreneurs, and corporations to find solutions at the magical intersection of science (what’s possible), finance (what’s bankable), industry (what’s needed), and planet (what matters). Learn more at www.saoradh.com.