2021 has thrust climate change and the need for sustainable solutions to the forefront of global conversations.
Transition to a low-carbon resilient future was the key agenda at many global events and conferences, such as COP-26, that called for landmark commitments from participating nations. Asian countries, including Singapore and India, translated their net-zero commitments to actions in their recently announced annual budgets.
Singapore announced progressive increases in carbon tax rates by 2030 to push businesses and individuals to internalise the costs of carbon and take action to moderate their emissions. India made budget allocations to reduce its carbon intensity and increase reliance on renewable energy and energy storage technologies. This underscores the important role of businesses in fulfilling national net-zero agendas.
At the business level, corporates and industries face challenges in identifying opportunities to decarbonise successfully. The right solution may vary across different functions and sectors. But one sector which needs to put this transition at the core of its operations is the buildings sector, which is responsible for high energy-related carbon dioxide (CO2) emissions – nearly 40% globally and nearly 25% in ASEAN in 2019.
Evaluating energy needs of existing infrastructure
The buildings sector is the third-largest global greenhouse gas (GHG) emitter, trailing only the industrial energy and agriculture and land sectors. Space cooling (air conditioning) is a significant contributor, consuming about 40-50% of a building’s energy.
See also: Conducting secure data movements in the cloud symphony
With rapidly growing urban populations and hot, humid climate conditions, this region’s cooling demand could rise to as much as 30% of the peak electricity demand by 2040. Existing buildings that house traditional air conditioning systems have especially high energy consumption and carbon emissions. Doubling air conditioning efficiency could save the world as much as US$2.9 trillion in investment, fuel and operating costs by 2050.
ASEAN is staring at a needed investment of US$2 trillion over the coming decade to build sustainable infrastructure and to decarbonise existing infrastructure. This could be achieved through transitioning to new technologies, retrofitting existing assets and moving away from fossil-fuel-powered assets nearing the end of their economic lives.
However, for businesses to confidently adopt new solutions, this massive investment needs to be evaluated and justified in several ways:
See also: 80% of AI projects are projected to fail. Here's how it doesn't have to be this way
- Regulatory mandates
To drive businesses to take action, governments across the world are firming their carbon policies. Singapore’s carbon tax rates apply to all spaces producing 25,000 tonnes or more of GHG emissions annually. In the 2022 budget, the government announced progressive increases in the carbon tax – expected to reach $50 to $80 per tonne by 2030 - Operational implications
Cooling is a non-core yet mission-critical activity. Traditionally, building owners purchase, install and run air conditioning systems, but do not necessarily know how to do it most efficiently. For example, a shopping mall can of course run air-conditioning, but may lack the expertise to do so efficiently, notably with outdated equipment. - Financial benefits
The existing model of space cooling incurs high upfront costs, along with ongoing maintenance and operational costs, while negatively impacting asset performance, yield and valuation in the long run.
Using the ‘as a service’ model for cooling
Emerging as a sustainable and cost-effective solution to industrial and commercial cooling is Cooling as a Service (CaaS). ‘As a service’ is well known to consumers – think Netflix or Spotify – you consume the movie or music, but never own it.
CaaS is a lesser-known concept with big advantages for built environments in urban settings. Under this model, the cooling service provider assumes all capital investments and operational responsibilities, while building owners buy the air at a fixed $/RTH (Refrigerant Ton Hour) rate on a pay-as-you-use basis.
As with music, buildings consume cooling but never own the equipment. With the CaaS model, building owners simply dictate the conditions they want to achieve in their space – say 23 degrees – and pay only for the cooling they use.
When investing in any green infrastructure or decarbonization technology, business and building owners have multiple concerns, including the direct cost benefits, broader socio-economic impact, and utility-scale implications of these investments. Addressing these considerations is important for the successful adoption of the CaaS model.
However, the immediate challenge faced by the model is lack of awareness, which hinders business owners from confidently transitioning to CaaS, leaving behind their inefficient and carbon-heavy cooling systems.
To stay ahead of the latest tech trends, click here for DigitalEdge Section
On a micro level, CaaS helps businesses become less carbon reliant while reducing capital investment, outsourcing non-core activity, and lowering operational and maintenance costs.
The role of CaaS in Asia
The rising demand for cooling is particularly concerning for the Asia Pacific region, which produced 16.75 billion metric tons of carbon dioxide emissions in 2020. This was more than the combined total emissions of all other regions that year.
Singapore is heating faster than the rest of the world owing to its extreme heat conditions and high humidity. This underscores the need for sustainable cooling solutions to support its soaring demand due to extreme and dynamic weather conditions.
The region, fortunately, has access to renewable energy sources, particularly solar. With CaaS, buildings can achieve cooling powered by 100% renewable energy. For instance, in Singapore, INSEAD Business School and in India One Elpro Park, a mixed-use development in Pune, run completely on solar energy and an AI-driven CaaS model, significantly reducing energy consumption.
CaaS is the way forward
The world requires and deserves more cooling. Not only to deal with soaring global temperatures, but also to provide a better quality of life.
With traditional air conditioning, our infrastructure will continue to rely on inefficient cooling, incur high costs and damage the environment. Adoption of CaaS is a critical movement to improve overall efficiency of our future-ready and carbon-neutral infrastructures, also helping businesses to reduce costs and provide better customer experiences.
Justin Taylor is the CEO of Kaer
