Interview with Lucas Davis, Jeffrey A. Jacobs Distinguished Professor in Business and Technology, Haas School of Business, University of California, Berkeley, and Principal Investigator on the electricity and air conditioning in Sierra Leone project.

Your EEG-funded project is studying electricity and air conditioning, predominantly in Sierra Leone, but also in other countries in Sub-Saharan Africa and South Asia. You are focusing on the relationship between income, temperature and air conditioner adoption, as well as the impact of air conditioning on the environment – what inspired you to carry out this research?

Sales of residential air conditioners are booming worldwide, to almost 100 million units annually. That means every hour, 10,000 new residential air conditioners are sold somewhere on the planet. My co-authors and I are interested in the economic and environmental impacts of this growth. A typical room air conditioner uses 20 times more electricity than a ceiling fan, so air conditioning adoption threatens to dramatically increase electricity demand, particularly during peak periods when the grid is already stressed.

Can you tell us more about current air conditioner use in Sierra Leone, and how this might change in the future?

Less than 2% of households in Sierra Leone currently have air conditioning. Our model predicts only a modest increase over the next several years, with adoption highly concentrated among the highest-income households. Thus now is a particularly opportune time to review the country’s minimum energy efficiency standards, electricity rates, and other policies that impact adoption and usage of air conditioners and other energy-using durable goods.

Which other countries in Sub-Saharan Africa are you studying? Is the situation similar? What can you tell us about air conditioning use in South Asia?

In Sub-Saharan Africa, we are also studying Ghana, Nigeria, and South Africa.

Residential air conditioning is currently below 5% in all three countries, but our model predicts considerable growth over the next several years, particularly in Ghana, and again, with growth highly concentrated among high-income households. South Africa is a somewhat different case with higher-income levels and a considerably cooler climate.

The scope for increased demand for air conditioning in South Asia is staggering. Take India, for example. Compared to the United States, India has four times the population, but by some measures is also more than three times as hot on average. Thus, India’s total potential demand for cooling is 12+ times that of the United States. Air conditioning is still relatively uncommon in India and other South Asian countries, but this is poised to change dramatically as incomes continue to rise.

Is there evidence of air conditioning technology becoming cheaper and more likely to be adopted by lower-income households in the future?

Air conditioners are becoming cheaper, but our modelling suggests that income growth – not air conditioner prices – will be the primary driver of global air conditioner adoption. Worldwide there are hundreds of millions of households approaching income levels where we observe a rapid increase in air conditioning.

Increasing the use of air conditioning poses major environmental challenges – particularly in terms of carbon dioxide emissions and hydrofluorocarbons – can you tell us more about this, and how these challenges might be addressed? Are there many developments likely to make substantive impacts on improving the energy efficiency of air conditioners?

Most electricity worldwide continues to be generated using fossil fuels, so this growth in air conditioning means billions of tons of increased carbon dioxide emissions. In addition, the refrigerants used in air conditioning are themselves a potent greenhouse gas. The Kigali Agreement aims to significantly reduce the use of hydrofluorocarbons, but much work needs to be done.

With regard to energy efficiency, there have been dramatic improvements over the last several decades, but it isn’t clear that this rate of technological change can continue. Probably the more likely scenario for reducing carbon dioxide emissions is to transform the electricity sector itself. The cost of grid-scale solar and wind have fallen precipitously, creating an unprecedented opportunity for decarbonisation.

What has your research revealed so far/what findings can you share?

We published a paper in July 2021 called ‘Air Conditioning and Global Inequality’ that uses household-level microdata from Sierra Leone and 15 other countries to characterise the relationship between climate, income, and residential air conditioning. We show that both current and future air conditioner usage is concentrated among high-income households. Not only do richer countries have much more air conditioning than poorer countries, but within countries adoption is highly concentrated among high-income households. We argue in the paper that this pattern has profound consequences for health, productivity, and educational inequality. The paper is available here.

How has COVID-19 impacted your research? For example, you originally planned to conduct focus groups with households and to interview government and electricity utility officials – how was this affected by travel restrictions and social distancing rules, and how were the issues overcome?

Because of COVID-19 we made the decision not to conduct focus groups with households. However, we are continuing to interview government and electricity utility officials, as well as representatives from non-government organisations, regulators, and private energy companies. Fortunately, we were able to complete an initial round of interviews back in 2019 prior to the beginning of COVID-19, and we are hoping to complete additional interviews later this year using a combination of in-person and virtual.