this $ 100 billion industry is ‘particularly ripe’ for disruption


Richard Branson. Image: Getty

As Australia’s southeast coast braces for a heat wave, millions of Australians will depend on a working air conditioner.

But despite the widespread use of technology, the $ 100 billion market has not changed its technology in any major way since its invention. In fact, its energy efficiency is currently only 14%.

This represents a major disruption opportunity, according to billionaire entrepreneur Richard Branson.

Global warming

As Branson explained, global warming is an indisputable truth. And as the planet warms, our reliance on air conditioning to stay cool will also increase.

“Globally, by 2030, extreme heat could lead to a loss of $ 2 trillion in labor productivity. The Indian economy alone is at risk of losing $ 450 billion (not to mention the 200 million Indians exposed to dangerous heat conditions each year), ”he explained on his blog.

In a November 2018 report, the Rocky Mountain Institute warned that sustainability is a global concern.

Regarding, he also found that comfort cooling is one of the most significant risks to our climate, with residential cooling expected to represent an increase of more than 0.5 ° C in global temperatures by 2100.

“The world needs a radical change in comfort cooling technology, which can effectively and reliably compensate for the exponential increase in the demand for cooling energy and put us on the path to cooling with less heating. “, said the institute.

Branson said the good news is that air conditioning has a lot of room for technological improvement.

“Despite a 100-year track record, the most advanced products have only achieved 14% of their maximum theoretical effectiveness.”

With the market set to quadruple by 2050, Branson said technological change could be the biggest technological step towards tackling climate change.

Why haven’t we done it yet?

Most air conditioning companies focus more on branding and marketing than research and development, Branson said.

And when they think of efficiency, that’s just a legacy of regulators.

Then there is the fact that the market is largely controlled by a small number of players. This, coupled with the high cost of research and development, means that it is difficult for new players to enter the market.

Alright, so how do we do it?

Convince the government.

State authorities must “aggressively raise energy efficiency standards” and phase out low-efficiency refrigerants.

As Branson noted, regulators in South Korea and Japan have been successful in forcing air conditioner manufacturers to double their efficiency in recent years, and manufacturers have developed a cheaper product nonetheless.

“We also need to raise the technological ceiling,” he continued.

“Commercial LED lighting has reached almost 70% of its theoretical maximum efficiency. Solar panels have reached 40 percent. I’m no air conditioning expert, but 14% seem pathetic to me. “

Branson recently launched the Global Cooling Prize, a $ 3 million awards program designed to encourage innovation in the industry. The Rocky Mountain Institute is a major partner of the award.

Recipients must have developed residential cooling innovations that use four to five times less energy for no more than twice the base unit cost.

As Branson admitted, nothing is insurmountable – Virgin Atlantic is proof of that.

“If we can disrupt the airline industry, where a single Boeing 737 can cost over $ 70 million, then I’m pretty sure we can do it with air conditioning.

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