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01 / 05
The Global War on Air Conditioning

Blog Post | Energy Consumption

The Global War on Air Conditioning

Like much of the international climate agenda, restrictions on air conditioning risk more economic harm than environmental good.

Summary: Air conditioning is a life-saving and productivity-enhancing technology that has improved the lives of millions. However, it also faces criticism for its environmental impact. This article argues that the benefits of air conditioning far outweigh the costs, and we should not let efficiency standards prevent the technology from reaching those who need it most.


If air conditioning were a medical advance, its developers would have likely received Nobel Prizes for the many lives it has saved and improved. Although largely a first-world phenomenon, air conditioning is belatedly making inroads in less affluent societies. This includes the billions of people living in tropical regions who would benefit the most from air conditioning but where market penetration is less than 10 percent of households. Several studies project that the world could have billions more air conditioners in use by 2050. 

Despite the public health benefits of air conditioning, its expanded adoption is not universally accepted as good news. Critics focus primarily on the negative externalities of a more air-conditioned world, chiefly increases in electricity consumption and attendant greenhouse gas emissions. For this reason, the United Nations, World Bank, International Energy Agency, and many nongovernmental organizations (NGOs) are advocating an agenda that is, at best, ambivalent about the growth of air conditioning. 

The Benefits of Air Conditioning—the American Experience

The United States was the first nation to be heavily air-conditioned and thus provides the best evidence of its benefits. Before air conditioning, mortality rates in much of the U.S. would rise appreciably with the summer temperatures, but this trend has largely been eliminated by the 90 percent market penetration of air conditioning in American residences. In the most comprehensive study of air conditioning and public health to date, “Adapting to Climate Change: The Remarkable Decline in the U.S. Temperature-Mortality Relationship over the Twentieth Century,” Barreca et al. found substantial mortality benefits, especially among the elderly. Under one set of assumptions, the study found that widespread air conditioning has prevented 18,000 heat-related deaths annually in the United States.

Quality of life is also positively impacted by air conditioning. Learning improves substantially when classrooms are air-conditioned on hot days. Similarly, air-conditioning in the workplace enhances productivity.

Globally, the potential benefits could be an order of magnitude greater than those experienced in America, especially considering the nearly 10-fold larger populations living where summers are more intense than in most of the United States but where air-conditioned homes and buildings remain the exception. Lee Kuan Yew, widely considered to be the founder of modern Singapore—one of the relatively few fully tropical nations where air conditioning is common—cited air conditioning as the single largest contributor to its success relative to other countries that have to contend with comparably high temperatures and humidity.

It is worth clarifying that the growing demand for air conditioning is due overwhelmingly to normal summer temperatures experienced in tropical and semitropical regions where air conditioning has yet to take hold. It is not, as many commenters have suggested, demand caused by climate change-induced temperature increases.

The two main impediments to a more air-conditioned world—lack of access to electricity and unaffordability of an air conditioner—are finally receding. The world has at last reached the point of being nearly 90 percent electrified, and the slow march toward full electrification continues. At the same time, average household incomes in developing nations are rising to the point where rapidly growing numbers of people can afford their first air conditioner. 

Thus, the world is at the cusp of widespread availability of air conditioning for those who need it most. However, despite the potential benefits of this global transformation, achieving it is far from a priority with the international community. Climate change is, and in this context the growth of air conditioning is seen more as a problem than a solution.

The Perceived Risks of an Air-Conditioned World

Some of the most widely-cited projections come from “The Future of Cooling: Opportunities for Energy-Efficient Air Conditioning,” published by the International Energy Agency (IEA) in 2018. According to the IEA, “of the 2.8 billion people living in the hottest parts of the world, only 8% currently possess ACs.” The agency predicts this presently unmet need will result in an additional four billion air conditioners in use by 2050, with China and India accounting for nearly half that number. The global energy use from space cooling is expected to triple from 2,020 terawatt-hours in 2016 to 6,200 terawatt-hours in 2050 under IEA’s baseline assumptions. Further, since air conditioning use during the hottest times of summer days defines peak demand, IEA projects that the need for electricity generation capacity will increase 395 percent by 2050. Most worrisome to the IEA is its projected near-doubling of greenhouse gas emissions attributable to space cooling from 1,135 million tons in 2016 to 2,070 million tons in 2050.

The agency concludes by warning that “governments of countries with large or potentially large cooling demand need to take urgent action to rein in the growth in energy use for that purpose and limit the potentially large economic and environmental costs that would ensue.”

Both the United Nations and the World Bank largely concur with the IEA’s projections. They also agree on the primary policy prescription—mandatory energy efficiency improvements for air conditioners. Indeed, a sizeable international bureaucracy has sprung up around this issue, involving these organizations as well as national governments, NGOs, and private benefactors. According to the IEA, stringent efficiency standards for air conditioners, coupled with aggressive decarbonization of electricity generation, could not only avoid the projected increase in greenhouse gas emissions from cooling but reduce it below baseline levels to a mere 150 million tons in 2050. The EIA attributes half the emissions declines to more-efficient air conditioners.

The Tradeoffs with Air Conditioner Efficiency Mandates 

The American experience is again illustrative. For decades, the U.S. Department of Energy (DOE) has set and periodically tightened the energy efficiency standards for all types of air conditioners, from window units to central systems. These efficiency standards increase the purchase price of the equipment but save money with use. The DOE has been criticized for setting excessively stringent regulations, and indeed the agency itself concedes that some standards have increased the first cost so much that users may never earn it back in the form of lower electricity costs over the life of the system. Others have also asserted that the DOE understates the extent of efficiency improvements that would occur in the absence of regulations and thus overstates the marginal benefits of arbitrary standards.

In any event, whether or not the added cost of a high-efficiency air conditioner is recouped with use is of no consequence to those priced out of buying the system in the first place. Billions of people in developing countries are finally approaching the point where they can afford their first air conditioner—but just barely. Any nontrivial increase in the purchase price could put air conditioners out of reach for hundreds of millions of households.

For this reason, an affordable but less efficient air conditioner may be better than its costlier but more-efficient counterpart. So long as people can acquire the air conditioner, they can always be judicious about its use—running it only at the very hottest times and not always on the highest setting, etc. But those who can’t afford one in the first place are completely deprived of its benefits. Keeping first costs low should be paramount.

Unfortunately, proponents of arbitrary efficiency mandates have demonstrated a cavalier attitude about affordability. For example, the Rocky Mountain Institute and others sponsored a contest, called the Global Cooling Prize, that rewarded the designers of new ultra-efficient systems that would “counter the climate threat from room air conditioners.” The winning designs were estimated to have a purchase price two to three times higher than a conventional air conditioner. Even assuming these costs would come down over time, they highlight the very real risk of doing more harm than good by depriving many people of air conditioning for the sake of greenhouse gas emission reductions. In addition, the technological complexity needed to increase efficiency—especially if taken to an extreme—can have an adverse impact on reliability and thus add to maintenance costs. 

It is plausible to speculate that the true goal of aggressive efficiency mandates is to limit the spread of air conditioning in developing nations, not unlike measures imposed by the international community restricting the use of other technologies such as pesticides and bio-engineered crops. Whether deliberate or not, air conditioner efficiency requirements will undoubtedly raise first costs and impede market penetration. 

The Kigali Amendment May Add Further Costs

Climate change activists are not only focused on the electricity use from air conditioners but are also concerned about the refrigerants they use. Specifically, hydrofluorocarbons (HFCs) emerged as the class of refrigerants that were used in most systems after the 1987 Montreal Protocol on Substances That Deplete the Ozone Layer placed restrictions on earlier refrigerants targeted for depleting the earth’s ozone layer. Hydrofluorocarbons, though initially hailed as ozone-friendly alternatives, later came under attack as greenhouse gases. Thus, any such refrigerants leaking out of equipment and into the air would contribute to climate change.

While it is true that HFCs, on a per molecule basis, are hundreds, and in some cases, thousands of times more potent greenhouse gases than carbon dioxide, they are on the order of a million times less common in the atmosphere. Overall, the U.S. National Oceanic and Atmospheric Administration puts their current contribution to anthropogenic warming at 1.37 percent.

Nonetheless, in 2016 in Kigali, Rwanda, the Montreal Protocol was amended to place restrictions on HFCs. While it is still too early to tell what the Kigali Amendment’s impact on air conditioning is, it is very likely that the forced switch to less-ideal refrigerants will raise costs. Ironically, the Kigali Amendment may also have an adverse impact on efficiency, as HFCs will be replaced by refrigerants that may prove less efficient in practice.

Conclusion

Much of the international climate agenda risks more economic harm than environmental good, especially for developing nations. In most cases, the tradeoff involves significant energy cost increases from restricting fossil fuels in exchange for speculative and possibly inconsequential future temperature reductions. Here, the tradeoff involves potentially prohibitive cost increases on air conditioning via energy efficiency standards, imposed just as billions more people are on the verge of affording their first air conditioner. It is a deal that should be rejected.

The Human Progress Podcast | Ep. 49

Jay Richards: Human Work in the Age of Artificial Intelligence

Jay Richards, a senior research fellow and center director at The Heritage foundation, joins Chelsea Follett to discuss why robots and artificial intelligence won't lead to widespread unemployment.

Blog Post | Science & Technology

Human Work in the Age of Artificial Intelligence | Podcast Highlights

Chelsea Follett interviews Jay Richards about why robots and artificial intelligence won't lead to widespread unemployment.

Listen to the podcast or read the full transcript here.

Your book, The Human Advantage, is a couple of years old now, but it feels more relevant than ever with ChatGPT, DALL-E 2, and all of these new technologies. People are more afraid than ever of the threat of technological unemployment.

There’s something that economists call the lump of labor fallacy. It’s this idea that there’s a fixed amount of work that needs to be done, and if some new technology makes a third of the population’s work obsolete, then those people won’t have anything to do. Of course, if that were a good argument, it would have been a good argument at the time of the American founding, when almost everyone was living and working on farms. You move forward to, say, 1900, and maybe half the population was still on farms. Well, here we are in 2022, and less than 2 percent of us work on farms. If the lump of labor fallacy were true, we’d almost all be unemployed.

In reality, there’s no fixed amount of work to be done. There are people providing goods and services. More efficient work makes stuff less expensive, giving people more income to spend on more things, creating more work. But a lot of smart people think that advancements in high technology, especially in robotics and artificial intelligence, make our present situation different.

Is this time different?

I don’t think so.

Ultimately, the claim that machines will replace us relies on the assumption that machines and humans are relevantly alike. I do not buy that premise. These machines replace ways in which we do things, but there is no reason to think that they’re literally going to replace us.

A lot of us hear the term artificial intelligence and imagine what we’ve seen in science fiction. But that term is almost all marketing hype. These are sorting algorithms that run statistics. They aren’t intelligent in the sense that we are not dealing with agents with wills or self-consciousness or first-person perspective or anything like that. And there’s no reason beyond a metaphysical temptation to think that these are going to be agents. If I make a good enough tractor, it won’t become an ox. And just because I developed a computer that can run statistical algorithms well doesn’t mean it will wake up and be my girlfriend.

The economy is about buying and selling real goods and services, but it’s also about creating value. Valuable information is not just meaningless bits, it has to be meaningful. Where does meaningful information come from? Well, it comes from agents. It comes from people acting with a purpose, trying to meet their needs and the needs of others. In that way, the information economy, rather than alienating us and replacing us, is actually the economy that is most suited to our properties as human beings.

You’ve said that the real challenge of the information economy is not that workers will be replaced but that the pace of change and disruption could speed up. Could you elaborate on that? 

This is a manifestation of the so-called Moore’s Law. Moore’s Law is based on the observation that engineers could roughly double the number of transistors they put on an integrated circuit every two years. Thanks to this rapid suffusion of computational power, the economy is changing much faster than in earlier periods.

Take the transition from the agrarian to the industrial economy. In 1750, or around the time of the American founding, 90 percent of the population lived and worked on farms. In 1900, it was about half that. By 1950, it halved again. Today, it’s a very small percentage of the population. That’s amazingly fast in the whole sweep of history, but it took a few hundred years, a few generations.

Well, in my lifetime alone, I listened to vinyl records, 8-track tapes, cassette tapes, CDs, and then MP3 files that you had to download. Nobody even does that today. We stream them. We moved from the world of molecules to the world of bits, from matter to information.

There were whole industries built around the 8-track tape industry, making the tapes, making the machines, and repairing them. That has completely disappeared. We don’t sit around saying, “Too bad we didn’t have a government subsidy for those 8-track tape factories,” but this is an illustration of how quickly things can change.

That’s where we need to focus our attention. There can be massive disruptions that happen quickly, where you have whole industries that employ hundreds of thousands of people disappear. You can say, “I know you just lost your job and don’t know how to pay your mortgage, but two years from now, there will be more jobs.” That could be true. It still doesn’t solve the problem. If we’re panicking about Skynet and the robots waking up, we’re not focusing on the right thing, and we’re likely to implement policies that will make things worse rather than better.

Could you talk a bit about the idea of a government provided universal basic income and how that relates to this vision of mass unemployment? 

I have a whole chunk of a chapter at the end of the book critiquing this idea of universal basic income. The argument is that if technology is going to replace what everyone is doing, one, they’re not going to have a source of income, and that’s a problem. People, in general, need to work in the sense that we need to be doing something useful to be happy.

I think there are two problems with that argument. One is that it’s based on this false assumption of permanent technological unemployment that is not new. In the book, I quote a letter from a group of scientists writing to the president of the United States warning about what they call a “cybernetic revolution” and saying that these machines are going to take all the jobs and we need a massive government program to pay for it. The letter is from the 1960s, and the recipient was Lyndon Baines Johnson. This is one of the justifications for his great society programs. Well, that was a long time ago. It’s exactly the same argument. It wasn’t true then. I don’t think it’s true now.

The second point is that just giving people cash payments misses the point entirely. First, it pays people to not work. Disruption is a social problem, but the last thing you want to do is to discourage people from finding new, innovative things to do.

Entrepreneurs find new things to do, new types of work. They put their wealth at risk, and they need people that are willing to work for them. And so you want to create the conditions where they can do that. You don’t want to incentivize people not to do that.

Let’s talk a bit about digitalization. How did rival and non-rival goods relate to this idea of digitalization? 

So, a banana is a rival good. If I eat a banana, you can’t have it. In fact, I can’t have it anymore. I’ve eaten it, and now it’s gone. Lots of digital goods aren’t like this at all. Think of that mp3 file. If I download a song for $1.29 on iTunes, I haven’t depleted the stock by one. The song is simply copied onto my computer. That’s how information, in general, is. If I teach you a skill, I haven’t lost the skill; it was non-rival. More and more of our economy is dealing in these non-rival spaces. It’s exciting because rather than dealing in a world of scarcity, we’re dealing in a world of abundance.

It also means that the person who gets their first can get fabulously wealthy because of network effects. For instance, it’s really hard to replicate Facebook because once you get a few billion people on a network, the fact that billions of people are on that network becomes the most relevant fact about it. There’s a winner-take-all element to it. But, in a sense, that’s fine. Facebook is not like the robber baron who takes all the shoreline property, leaving none for anyone else. It’s not like that in the digital world. There are always going to be opportunities for other people to produce new things that were not there before.

And then there’s hyper-connectivity. You’ve said that this is something you don’t think gets enough attention; for the first time, a growing share—soon all of humanity probably—will be connected at roughly the speed of light to the internet. Can you elaborate on that? 

Yeah, this is absolutely amazing.

Half of Adam Smith’s argument was about the division of labor and comparative advantage. When people specialize, the whole becomes greater than the sum of its parts. In the global market, we can produce everything from a pencil to an iPhone, even though no one person or even one hundred people in the network knows how. Together, following price signals, we can produce things that none of us could do on our own. Now, imagine that everyone is able to connect more or less in real time. There will be lots of cooperative things that we can do together, of course, that we could not do otherwise. 

A lot of people imagine that everybody’s going to have to be a computer engineer or a coder or something like that, but in a hyper-connected world, interpersonal skills are going to end up fetching a higher premium. In fact, I think some of the work that coders are doing is more likely to be replaced.

Do you worry about creative work, like writing, being taken over by AI? 

Algorithms can already produce, say, stock market news. But the reality is that stock market news is easily systematized and submitted to algorithms. That kind of low-level writing is going to be replaced just as certain kinds of low-level, repetitive labor were replaced. On the other hand, highly complex labor, such as artisanal craft work, is not only going to be hard to automate, but it’s also something we don’t necessarily want to automate. I might value having hand-made shoes, even if I could get cheaper machine-made shoes.

To sum up, how do you think people can best react to mass automation and advances in AI? 

I think the best way to adapt to this is to develop broad human skills, so a genuine liberal arts education is still a really good thing. Become literate, numerate, and logical, and then develop technical skills on the side, such as social media management or coding. The reality is that, unlike their parents and grandparents, who may have just done one or two jobs, young people today are likely to do five or six different things in their adult careers. They need to develop skills that allow them to adapt quickly. Sure, pick one or two specialized skills as a side gig, but don’t assume that that’s what you’re going to do forever. But if you know how to read, if you know how to write, if you are numerate and punctual, you’re still going to be really competitive in the 21st century economy.

Get Jay Richards’s book, The Human Advantage: The Future of American Work in an Age of Smart Machines, here.

BBC | Labor Productivity

How Robots Are Taking over Warehouse Work

“In its warehouses, Asda uses a system from Swiss automation firm Swisslog and Norway’s AutoStore. In the US, Walmart has been automating parts of its supply chain using robotics from an American company called Symbotic.

Back in Luton, Ocado has taken its automation process to a higher level.

The robots which zoom around the grid, now bring items to robotic arms, which reach out and grab what they need for the customer’s shop.

Bags of rice, boxes of tea, packets of crumpets are all grabbed by the arms using a suction cup on the end.”

From BBC.

Axios | Labor & Employment

Average Worker Now Logs off at 4 p.m. On Fridays

“Quitting time has been shifting earlier throughout the week, and it’s especially early on Friday, according to an analysis of sign-off times from some 75,000 workers at 816 companies by the workplace analytics firm ActivTrak.

Friday sign-off times have moved up from around 5 p.m. at the start of 2021 to around 4 p.m. now. Monday-Thursday sign-offs have also shifted earlier, to around 5 p.m. on average.”

From Axios.