With scorching heat waves moving across the planet, air conditioners have never been in more demand. However, the technology itself is a climate-impacting dilemma.
How does the air conditioner work? The general principle of all current AC units is following
- it sucks the air in the room and exposes it to chemicals known as refrigerants
- refrigerants have a low boiling point which is why it evaporates when it gets exposed to hot air from the room
- the evaporated refrigerant cools the air and the cold air gets blown back into the room
- the hot air gets thrown out and the compressor turns the evaporated refrigerant back into a liquid state and it repeats the process
From the steps mentioned above there are three primary items that impact the climate.
Refrigerants are a type of greenhouse gas that is a thousand times more potent than carbon dioxide. These refrigerants tend to leak during their lifetime and when the AC unit gets discarded.
The hot air that is being dumped from AC is marginal per unit, but millions of units working multiple hours during the day will have a measurable impact on climate. In 2007, Okayama University of Scientists in Japan found that ACs can raise temperatures in downtown Tokyo by as much as 2°F.
Just like any household machine, AC requires electricity to operate. This accounts for approximately 6-10% of electricity consumption worldwide and demand is higher when people get home after work and turn on their units in the afternoon. This is the most fixable of the three issues given there are renewable energy sources.
Potential solutions are being researched and worked out by scientists and manufacturers. Though ESG and impact investors may not come up with solutions to the mechanics of it, they can certainly demand companies to focus on these issues. This is the potential that ESG and impact investing introduced to the modern financial market. Investors have demanded efficiency and profitability from companies, but now investors need to demand more than just monetary returns, our planet needs it.
