Sustainable Cooling Is the Next Climate Finance Test: UNDP’s $20 Million Fund Puts It in Motion

UNDP has received approval for a US$20 million Energy Efficiency Revolving Fund to support the shift to energy-efficient, low-global warming potential cooling technologies in Colombia, Ghana and Jordan. The initiative targets tourism and commercial sectors where refrigeration and air-conditioning systems can carry high climate and energy costs. Its wider significance lies in testing whether revolving finance can help businesses overcome upfront cost barriers while supporting Kigali Amendment commitments and long-term emissions reductions.

Cooling is one of the climate economy's least visible pressure points. Every hotel kitchen, supermarket chiller, food distribution centre and cold storage facility depends on refrigeration, but many commercial systems still carry a double cost: high-emission refrigerants and heavy electricity use.

To address this challenge, UNDP has received approval for a US$20 million Energy Efficiency Revolving Fund (EERF). Targeting Colombia, Ghana and Jordan, the fund is designed to help businesses in tourism and commercial sectors replace inefficient cooling equipment with energy-efficient, low-global warming potential alternatives. The bigger test is whether affordable finance can turn cleaner cooling from a climate ambition into a routine business investment.

The fund is designed to support countries in meeting commitments under the Kigali Amendment to the Montreal Protocol, which aims to phase down HFCs while improving energy efficiency. Replacing harmful refrigerants can reduce direct emissions, while more efficient equipment can cut electricity use and lower indirect emissions from power consumption.

Finance, not technology, may be the real barrier

Capitalized with US$20 million from the Multilateral Fund for the Implementation of the Montreal Protocol, EERF will establish financing mechanisms such as concessional loans and other financial instruments. These are intended to help businesses overcome technical and financial barriers to adopting climate-friendly cooling solutions.

Sustainable cooling upgrades can require high upfront investment, especially for small and medium-sized enterprises. The fund addresses this by providing concessional financing through national financial institutions. As repayments come back, they can be reinvested into new projects, allowing the original capital to be used repeatedly.

Climate-friendly technology may exist, but market transformation depends on finance, skills, trust and local delivery channels. By working through local financial institutions and mobilising private-sector investment, the fund seeks to turn sustainable cooling from a donor-backed intervention into a bankable business decision. That is the larger test.

Three countries, three cooling markets

Colombia, Ghana and Jordan have different market conditions, but all face rising or significant demand for commercial cooling. The fund will test whether one financing model can be adapted across different economies and business sectors.

In Colombia, US$8 million will be implemented through Bancóldex, the country's business development bank. The programme will support commercial cooling upgrades in hotels, supermarkets and food distribution centres. A key focus will be replacing HFC-intensive refrigeration systems, including equipment using refrigerants such as R-507A and R-410A, with efficient, low-GWP alternatives. The project is expected to deliver approximately 734,000 tonnes of CO₂-equivalent emissions reductions over the equipment's lifetime.

In Ghana, the fund will be capitalized with US$4 million and delivered through participating commercial banks, including Fidelity Bank Ghana and First National Bank Ghana. The programme targets growing tourism and commercial sectors, where cooling demand is increasing rapidly. It will help businesses replace ageing equipment that relies on high-GWP refrigerants such as R-134a and R-404A, with expected lifetime reductions of more than 110,000 tonnes of CO₂-equivalent.

Jordan's US$8 million fund will be managed by the Central Bank of Jordan and delivered through participating commercial banks. It will focus on hotels, restaurants, supermarkets and cold storage facilities, all important to Jordan's tourism-driven economy. By financing the replacement of approximately 45 MW of cooling capacity with energy-efficient systems using low-GWP refrigerants, the initiative is expected to deliver more than 250,000 tonnes of CO₂-equivalent emissions reductions over the equipment's lifetime.

The real prize is a model that can scale

Across the three pilot countries, the EERF is projected to deliver more than 1 million tonnes of CO₂-equivalent emissions reductions over the lifetime of the supported equipment. The expected impact combines direct reductions from replacing high-GWP refrigerants with indirect reductions from energy efficiency improvements of at least 25 percent over baseline equipment. The initiative is also expected to strengthen energy security by reducing electricity consumption from cooling systems.

The programme is expected to generate lessons from three different markets, creating a foundation for scaling similar cooling finance models elsewhere. Revolving funds depend on strong project selection, borrower demand, repayment discipline, technical standards and bank capacity. Businesses must be convinced that cleaner cooling is financially viable, not only environmentally desirable. Financial institutions must be able to assess technology risks and structure loans that work for end-users. Governments and implementing partners must ensure that climate gains are properly measured and that financing reaches the sectors most in need of upgrades.

The EERF also sits within a broader UNDP-supported package approved at the 98th Meeting of the Executive Committee, where 39 projects across 31 countries were approved, representing US$56 million in grant financing and US$82 million approved in principle. UNDP has mobilized more than US$1 billion in grant financing through its Multilateral Fund portfolio to support ozone protection, climate action and sustainable cooling transitions.

Cooling may not always dominate climate headlines, but as demand grows, the question is becoming harder to ignore: who will pay to make it cleaner, and can the transition happen fast enough to matter?