Catalyst with Shayle Kann - Unlocking hyper-efficient cooling

Episode Date: March 3, 2022

It may not get the same attention as higher-profile sectors, but cooling accounts for 4% of global greenhouse gasses emissions. That's more than even aviation or shipping. Demand for cooling is expected to triple by 2050. In places where global warming is triggering intense heat waves, cooling has become a matter of life and death.  And yet, cleaner, more-efficient air conditioning technology exists. Why aren’t we using it? And how do we make it affordable and widely available? In this episode, guest host Lara Pierpoint talks with Jessy Rivest, vice president and general manager of the Cleantech program at Xerox PARC, where she develops and commercializes new cooling technologies. Lara and Jessy examine the two key technologies inside an air conditioner. The first is the cooling itself, a sophisticated process involving refrigerants. The second is humidity control, an energy-intensive process that Jessy thinks is ripe for an upgrade. Jessy also talks about the challenges of higher upfront costs associated with more efficient cooling options, and how incentives like the Global Cooling Prize are addressing them. She points out market opportunities like cooling-as-a-service and rebates from utilities to help avoid grid blackouts. And they dig into refrigerants, new types of dessicants, heat pumps and even ice.  Lara and Jessy also discuss ventilation and air quality technologies that intersect with health, a key consideration during the pandemic and wildfire season. And Lara talks about turtles and sartorial approaches to manage that enduring office debate: How cold should it be in the building? Catalyst is supported by Antenna Group. For 25 years, Antenna has partnered with leading clean-economy innovators to build their brands and accelerate business growth. If you’re a startup, investor, enterprise or innovation ecosystem that’s creating positive change, Antenna is ready to power your impact. Visit anten​na​group​.com to learn more. Catalyst is supported by Nextracker. Nextracker’s technology platform has delivered more than 50 gigawatts of zero-emission solar power plants across the globe. Nextracker is developing a data-driven framework to become the most sustainable solar tracker company in the world — with a focus on a truly transparent supply chain. Visit nex​track​er​.com/​s​u​s​t​a​i​n​a​b​ility to learn more.

from the studios of PostScript Media and Canary Media. I'm Laura Pierpoint, and this is Catalyst. We're around 4% of greenhouse gas emissions for air conditioners globally. It's close to twice as many emissions as come from the entire aviation industry. This is a really big chunk comprehended in a single device. And if that single device type, an air conditioner, can be made more efficient, that's a big deal. We have the technology to cool our buildings

a whole lot more efficiently than we do today. But what's a deal? Why aren't we cooling our buildings already with highly efficient AC? We're going to need more and more AC as the world gets hotter, so it's really important from a climate and greenhouse gas perspective

that we solve this problem. Today, I'm asking the question, what is it going to take to scale up efficient cooling tech? When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities,

coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility, built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale. Predictive, verifiable, and designed to perform when it counts.

Learn more at energyhub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy, and building the clean economy. Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. I'm Laura Pearpoint filling in for Shale Khan while he's on family leave.

Congrats to Shale. I'm the director of Climate at Actuate, which is a nonprofit focused on systems innovation to scale greenhouse gas emissions reductions. I mentioned previously that in grad school, we used to play McKinsey Curve Bingo every time someone came to talk. This meant that we would look out for the famous McKinsey Curve graph to appear on the screen. And this is where McKinsey had actually broken out the cost of different climate abatement technologies and how much of them we needed to get to our climate targets.

A huge portion of the abatement required on that McKinsey graph was slated to come from energy efficiency. And the best part about the energy efficiency buckets is they were not only free, they actually would save us money if we put them in place. We all thought efficiency was a low-hanging fruit destined to happen quickly. But here we are, almost two decades later. And where's all the energy efficiency? The uptake of efficiency remains far too low. In 2021, the International Energy Agency estimated that efficiency improved by about 1.9%.

That's less than half the rate that's required to meet global net zero targets by 2050. Furthermore, that rate actually represents some backsliding, because in 2011 to 2016, the rate was closer to 2.3%. So over that time period, we adopted LED light bulbs pretty quickly, and that's great. But we need to get a lot deeper and bigger with energy efficiency in order to get to the 4% annual rate of reductions we need. And we have to do this in a world that's getting warmer. That is where the demand for cooling is going to rise dramatically. As I sit here enjoying unseasonably warm 75-degree weather, it seems like a good time for a discussion with my friend and favorite cooling technology expert, Jesse Rivest. Jesse is the vice president and general manager of the clean tech business at Xerox Park, where her team is working to develop new technologies that reduce green technology.

greenhouse gas emissions in a number of different spaces, including HVAC. Her job, however, isn't just to do the inventing. It's to commercialize the fruits of that labor. So she has a lot to say about the current impact of air conditioning on greenhouse gas emissions and how we might be able to change that. So it's actually not a stretch to say that getting cooling right, which is to say getting it cheap, ubiquitous, and as light on the climate as possible is a matter of life and death.

We think a lot about sea walls when we think about climate adaptation, but the truth is that heat waves are happening now. People are dying across the globe in extreme heat, and that's going to happen more and more frequently. The good news is that we have some options to really expand cooling and to do it really efficiently. Here's my conversation with Jesse about just that potential future. Hi, Jesse. Thanks for being here today. Hi, Laura. Good to see you. Yeah. All right. So let's talk about cooling. And I actually want to launch into this by talking about the adaptation piece of cooling.

One of the things that we've been talking about is how when you think about climate adaptation, a lot of times what happens is you picture or you see in the newspaper a sea wall. We're really trying to keep the seas back. And that's obviously an important piece of what's happening with climate change and something we need to think about from the adaptation perspective. But cooling is actually really a huge issue and it's going to get bigger. You know, already we've got heat waves that are getting worse across the globe and literally are killing people. So this is something that we need to take care of. We need to think about cooling technologies and deploying cooling as a way to manage the climate. So let's start there.

What are the climate, you know, what are planetary needs for cooling? How are those going to change as we go into the future here? Yeah, it's a great question. And McKinsey actually put out a report in 2020 on the impacts to human health of extreme heat and humidity and showed just how dangerous this is going to be. So the heat is an obvious one when we get too hot with humidity. when that's too high, we can't sweat and reject the heat. So this is definitely a huge problem, and there are a couple ways in which we need to work with it. One is ensuring that people can stay

cool enough, that people in these ultra-hot regions and ultra-humid regions have some form of relief for the many hours a day when it will be too hot. And the second is to try to disrupt this vicious cycle that we have because the reason that the globe is getting so hot is because of greenhouse gas emissions. And almost 4% of those greenhouse gas emissions are coming from air conditioning. So it's kind of a vicious cycle of the more air conditioning you use, the more greenhouse gases you emit, and the warmer the climate gets, so the more air conditioning you need to use. Can you give us a sense for how much that need for air conditioning is going to increase as we go into the future? Like, are we talking about 4% in perpetuity?

as general energy usage grows, or is that percentage going to get higher as the world gets hotter? It's a good question. It depends upon how other sectors grow, but we know that cooling will at least triple in energy consumption between now and 2050. So we're looking at a very serious increase,

absolute increase of emissions coming from cooling. That's pretty intense. So that is a pretty huge increase. It's something that we absolutely need to do because literally we need to, you know, keep people alive. So let's talk now about the greenhouse gas implications of that gigantic increase. So this, you know, like many other things within climate, you can break down the emissions factors in kind of two ways.

You can think about what are the emissions by kind of the components of the inputs for cooling. And then you can also think about like those cooling systems or doing a couple of different things so we can break down emissions that way. But let's start with the inputs. What are the different components of cooling? And to what degree does each of those components actually contribute greenhouse? gas emissions. Yep. There are three major components. One is having to do with the manufacturing and transport of those, sort of the embodied emissions. And that's about 5% of the emissions that we see

coming from air conditioners. There's another 35% that comes from refrigerant gases. So these refrigerant gases are really critical to how air conditioners today work. And they are also very potent greenhouse gases. There's a tiny bit of leakage over the lifetime of the device. there's another amount of leakage that happens at the end of the device, and in whole, that ends up being 35% of the emissions of the air conditioner coming from those refrigerant gases. And the balance, 60% is coming from electricity consumption and the CO2 emissions associated with that. Right. So really, those refrigerant gases, they're kind of a pernicious piece of this problem, right? Because we talk so much within climate tech about methane and CO2, but there really are these other greenhouse gases with huge,

global warming potential and even the small amount of leakage we're getting from these refrigerant gases is making a big difference. Is that right? Yep, that's absolutely right. And this is something that was attacked in the 90s for the Montreal protocol. And we saw great strides in this that actually might give some of us hope that global warming is something that can be approached in a similar way. Although we haven't seen it yet. Maybe it will come. But there started to be regulations that were tightening down what the allowable global warming potential was of refrigerant gases. And those continue to tighten over time. And it's country by country that are tightening those regulations. But as more countries tighten

them, companies have much less incentive to make very high global warming potential refrigerant gases. Right. That makes a lot of sense. Okay. Well, hopefully we can reproduce the Montreal Protocol in more ways than one. But leaving that topic for another time, let's talk for a second then about really sort of what happens within cooling and how each of the elements of what a cooling apparatus does also themselves kind of break down into greenhouse gas emissions. So here it's kind of like I think there may be some people, and I used to be one of these people who really imagined cooling systems as you create cool air and then you blow that cool air into a building. But you are one of the people who really taught me that actually humidity management is such a big deal when it comes to providing cooling. So let's talk about what these cooling systems actually do, what their purposes are and how that breaks down from a greenhouse gas emissions. perspective. Yeah, so maybe first we can start with why they need to use refrigerant gases in the

first place and how they're doing the heat pumping, which is pretty cool. A refrigerant gas is something that has a very low boiling point. It changes phase easily. And so you're condensing it and evaporating it back and forth. And that phase change allows you to pump a lot of heat from one side of it to the other. And so that can allow you to cool something, to pull heat away, or to pump heat. in and to heat it up. And so the way that an air conditioning system in a building works is that you're bringing in fresh ventilation air to keep the air fresh in the building, and then you're recirculating that air some number of times before it gets exhausted from the building. And what the heat pump is doing is cooling down that air to an acceptable temperature, but also wringing the humidity out of it.

And the colder it gets, we all know from winter time, it gets very, very dry. This is because the cooler the air gets, the less moisture it can hold. So what air conditioners do today in a nice commercial building in the U.S. is they cool air from 90 degrees down to 50 degrees Fahrenheit to get it really, really dry, and then they heat it back up to 70 degrees to make it a comfortable temperature. So the first step was wringing out the humidity, getting it down to 50 degrees, and the second step was making it actually a comfortable temperature for humans, which when you think about it as a very energy-intensive way of doing that,

and if you could separate out the two jobs that the air conditioner needs to do, humidity management and temperature management, you could use optimized systems for each of those. I mean, that's so fascinating to me, and I kind of feel like we have like a tale of two totally different technology spaces here, because refrigerant gases, while terrible for the climate, are actually really fascinating and really cool from a technology perspective. As you mentioned, the phase changes, like the fact that we have this as kind of a technology

to do cooling is really pretty great. But on the flip side, we're trying to manage humidity here, too. And I think that's a really good point that, like, that's something we have to do. But, you know, it's really interesting to me that we kind of have this really clugy way of doing it. It's not very technology savvy. You know, we're really just basically, like, cooling things down. We're overcooling it.

and then actually heating things back up. So is that right that we've kind of got this high-tech way of doing cooling and this very low-tech way of doing humidity management? You know, I think it would be fine if one of the jobs was much more important than the other. But it turns out that humidity is using, on average, a little bit more than half of the electricity of our air conditioner. So it matters. And these really ought to be optimized in separate ways.

But the air conditioner was invented more than a century ago and has been pretty nicely optimized. for changing the temperature and really poorly optimized for changing the humidity. Yeah, I mean, that's a really, really interesting point. So, okay, so let's dig into this a little bit. So we've basically talked about kind of how cooling technology works today. Hopefully, the good news that we're going to get into is that it does not have to be this way. So let's talk a little bit more about humidity management.

Are there other ways that we can do this that are a little bit more high-tech and ideally a little bit more efficient? There are different ways to manage humidity. And this is something that has been a pretty big focus. of the Department of Energy research funding. It's also a focus of the Global Cooling Prize, which is an international competition, really focused on reducing the energy consumption of air conditioners. And, you know, approaches range from better control systems to better materials that can absorb the humidity. So a very common and commercially available, not common, but commercially available solution today is a solid desiccant wheel. So it's like a giant ceramic wheel

that is absorbing moisture from the air as it goes through. But these are very difficult systems to engineer and to maintain. And so they're not widely adopted. They're adopted in pretty niche industrial or possibly on commercial rooftops. What makes them difficult to engineer? Is it something about kind of tuning the materials themselves or is it that they're hard to manage like in practice once they're installed in a building. It's more of a logistical issue of you've got this very large wheel, now you have a geometrical constraint, you have heat transfer. If you have a wheel on one side you're trying to cool and on the other side you're trying to desorb the water, boil it off. And so the inherent challenge with humidity management is that you're going to

condense out moisture into something and to get rid of it, to drive off that moisture so that you're sorbent can absorb more, you're going to have to heat it up, and that can be energy intensive. It's still a better idea than cooling all the way to 50 degrees Fahrenheit and then warming it back up in the heat of the summer to 70 degrees. So it does still save energy, but if you can go beyond that phase change, you could save a lot of energy, not boil off the water. Okay. So I mean, are you bullish about these kinds of technologies? Is this the wave of the future for humidity management or is there some other horsey mite back here? No, I think the desiccant space is interesting. Solid desiccans have their challenges. There are also liquid desiccants, which is just a very salty

solution of water. Those also have a lot of promise, a different set of logistical constraints when designing a system, but a lot more tunability and flexibility in the design. So I am bullish on desiccants in general and liquid desiccans in particular. Okay, awesome. Put Jesse down as bullish on desiccants. I love that. Great. So let's talk a bit about the cooling side of the equation. So, you know, we mentioned high tech and really cool that phase changes occur in these special kinds of refrigerant gases to help us stay cool. But, I mean, do we have other options here? Because these are not really great materials, right? These are, ideally we would stop relying on these kinds of very high global warming potential greenhouse gases here. What other options do we have to provide cooling? Yeah. So a heat pump is a general way of changing the temperature. And so one type of heat pump is the vapor compression system that uses refrigerant gases and condenses them and evaporates them to pump heat across. But there are other kinds too. There are solid state heat pumps as well. And you can also use water, evaporating water, to have zero greenhouse gases. And that's another approach that people use. So because, between new types of heat pumps, solid state heat pumps, low global warming potential refrigerants, and water evaporative cooling.

There are other options up and coming, but certainly not on the market or about to be on the market. Sure. Okay, well, I want to come back to the wild world of heat pumps in a minute. But first, one other question. What about ice? Because we hear a little bit about, you know, these kind of ice-based demand flexibility services,

you know, essentially ice as battery, right? that you freeze a whole bunch of water when electricity prices are low and you don't need air conditioning, and then you can blow air across the ice and start melting it to cool a building down at a different time of day. Are you feeling bullish about those technologies? Do you see those as being in a separate category? Or what do you think about ice as a cooling system? I don't know if ice solves the electricity consumption and CO2 emissions part of the problem, but it certainly solves a really important problem about air conditioning, which is that air conditioners are the number one cause of blackouts on the electrical grid.

So if you want grid stability, and especially in a world with increasing needs for added grid stability with more renewables online, you really want to avoid having that peak, peak electricity demand that is the reason during blackouts that electrical grids go down. So there's a lot of value in that for the ice formation. But I guess we haven't seen these businesses. We have seen these businesses pop up and we haven't seen them take off. And that may well be a matter of incentives, whether regulatory or economic. Right. No, I think that makes a lot of sense.

So basically what you're saying is that this isn't necessarily an efficiency play to use ice. You're still going to have to use a lot of electricity to make that ice. But you can't at least shift it, which given the right incentives, might actually be an interesting thing to do. Yep. Okay. Awesome. Okay. So let's talk a bit about heat pumps.

So there may be other listeners who, like me, are asked by their friends all the time, I need to replace my natural gas, you know, boiler or whatever it is, should I get a heat pump? And they look at me because they think I know things about energy. And the truth is that I know next to nothing about heat pumps and how they work. So let's dig in a little bit. You've already mentioned a couple things about this. But what are we talking about when we say heat pumps? It sounds like this is basically the technology that already underpins cooling.

But there's some interesting and different ways we can use it, some potential improvements to the technology for cooling of the future. Is that the right way to think about it? Yes, it is. So those refrigerant gases that are changing phase are bringing energy from one side of the device to the other as they condense and evaporate. And that can enable you to pump heat into a system or pump heat out of a system. And so these are devices that have been used for heating and are used today in heating. But it's much cheaper today in most parts of the U.S. to use natural gas or fuel oil. to create the heat that you need if what you're looking for is heating.

On the other hand, with cooling, we don't have many options other than perhaps the ice solution that you mentioned. And so we do need heat pumps for air conditioners. So today, pretty much any air conditioner you can get on the market is a heat pump and it is a vapor compression heat pump. What's happening in the legislative world is that there are starting to be some requirements around what natural gas burning products get sold. So for example, in California in 2035, you will not be able to buy a natural gas fired furnace. And this means that people will need to be switching to an electric heat pump. So now you're using the electricity to pump that heat.

And it's different from resistive heating, which is just you run that electricity through a wire that heats up and that gives off heat. A heat pump can be much more efficient than resistive heating because it's kind of. kind of opening a valve to allow whatever heat you can scabbage from the outdoors, even on a gold day, and bring it into the building. And what I think is really interesting about all these heat pumps coming online for heating purposes to replace natural gas is that this disrupts the sales cycle of air conditioners as well, as a side benefit. So now you have air conditioners, which would last for 10, 15 years.

And maybe someone has a very inefficient. air conditioner that was purchased during a time of low regulation, and they're not going to replace it for 15 years. But because they have to replace their furnace anyway, they can buy a two-way heat pump, which enables you to pump heat in both directions. It can be your cooler and your heater. And now they replaced an air conditioner that was very intensive greenhouse gas emitter with something that's much more efficient out of cycle. Very cool. This is one of those rare cases in climate tech where you might actually get a virtuous a cycle where our efforts to basically wean ourselves off of natural gas could really just increase

the timeline for actually improving the efficiency of our cooling technologies. Exactly. Two birds, one stone. So here's the next question, is that when we think about, you know, what it means to adopt a more efficient technology and particularly a more efficient cooling technology, one of the things that we hope to see is that it's actually going to be cheaper to adopt it, that theoretically, because this is now a more efficient cooling system that we're using, you know, we don't have to pays much for electricity, and therefore, in an ideal world, this system will pay for itself. Is that essentially what's happening here? Let's talk about the really efficient technologies that are on the market.

Will they pay for themselves given enough time or not necessarily? And then similarly, for some of the more advanced things coming down the pipeline, what are your hopes for when or if they're ever going to get to that point that basically it pays to buy the more efficient technology? Yeah. Well, the answer to that is similar for all energy efficiency, which is that, yes, it pays itself back. It's a great investment. On the other hand, the people that are making those purchase decisions aren't thinking of this as an investment. They're thinking, I need an air conditioner and I have a budget.

And so because we're used to looking at most, if not all, of these energy efficiency technologies as capital expenditure rather than total cost of ownership, it becomes difficult to incentivize people, even though the economics say, yes, of course you should do that. It'll pay itself back in two years or five years. If the lifetime of the device is 10 years or 15 years, that's plenty good payback, but it's just not how people are thinking about this. So what ends up happening is that while there's a range of air conditioning efficiency available on the market, by and large, people buy the very cheapest thing they can buy. In rich countries, in poor countries, they're buying the cheapest thing they can buy. Right. Well, and it's not even necessarily they, right?

Because in a lot of cases, you know, you're saying, oh, gosh, I need a new air conditioner. In many cases, it may be on an emergency basis. And then you're hiring a contractor or someone to install it for you. And they're really kind of making the choice because you're picking, you know, based on wanting low cost and they're the ones who are ultimately selecting the technology. Is that right? That's right. They just install whatever they have at the moment, especially in a commercial office building when suddenly the air conditioner goes out, you don't want to wait three weeks for something to get in stock. You want your people in the office being productive. So they do get replaced on an emergency basis. It's a good point.

Right. Well, and goodness forbid, you have to send all your workers to work at home instead of in the office because we know that that's not possible. It wouldn't work at all. Wouldn't work at all. Okay. But I want to go back to actually something that you said, because you said basically that the lifetime for these technologies is around 10 years and that the payback is like two to five years. Is that really true for the most efficient technologies out there on the market right now, that it's that short a payback period, just two to five years? Or are some of the things actually a little bit longer that are the ultra-efficient options? There are certainly options for much, much more efficient systems that would never pay themselves back.

There's the full range. But despite the fact that there's the full range of get the very most efficient thing money can buy and it never pays itself back, but you feel good about yourself, all the way to it's a tiny bit more efficient and it pays itself back within the first year. Still, the way consumers are purchasing air conditioners is very rarely from the standpoint of total cost of ownership and almost always from the standpoint of what is the upfront capital. Virtual power plants are becoming a reliable way for utilities to manage capacity, but enrolling devices is just the start. What really matters is confidence, knowing those resources, will perform when dispatched and being able to prove it from the control room to the living room. Energy Hub's platform handles the full picture, from near real-time forecasting,

locational dispatch, and the kind of rigorous verification that holds up when regulators, grid operators, or leadership ask, did it deliver? Easy enrollment creates momentum, proven performance builds trust. That's why more than 170 utilities rely on Energy Hub to manage over 2.5 million devices delivering 3.4 gigawatts of flexible capacity. See what that looks like at energy hub.com. We're living through a profound economic shift, and energy sits at the center of all of it.

Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers, but the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital.

As I talk with people deploying capital, shaping policy and building projects. Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Well, so how do we fix this?

What are the options here? I mean, I know one of the things we've talked about is that regulations and really setting the floor for efficiency is one super efficient, if I may use the expression, way to do this and to actually force people's hand with respect to purchase decisions. Is that really the answer that we just have to say the minimum efficiency of products on the market is X, or do we have other options? Well, there's kind of a disorganized slew of options here. There's definitely not a silver bullet, but there are national standards, so the minimum efficiency requirement, or MER's, is

legislation that was talked about in the 70s and implemented in the 90s for air conditioners specifically. And in air conditioners, it's the SEER rating, S-E-E-R. And this shows how efficient the device is and there are minimum efficiency requirements where in the U.S. you cannot sell an air conditioner that has too low of a SEER rating. Unfortunately, those are for very commoditized, copy-paced air conditioners that are typically for residential consumers. And once you get into a more complex system, like a commercial or industrial system,

it's a lot harder to regulate. So those are the national standards. But then there are... Why is it so much harder to do regulation in the commercial industrial sector? They end up being more bespoke systems. They have slightly different jobs to do. Also, the seer rating does not comprehend

the humidity management. So whether you're managing humidity very efficiently or not efficiently at all doesn't impact the seer rating. So they're imperfect metrics and they don't apply to complicated systems very well. It's similar to the cafe standards where it's not perfect. Different drivers will get a different mileage, different routes, will get a very different fuel economy.

But those automotive cafe standards were really helpful in giving us something to track and starting to optimize. And the SEAR ratings are their analog in the air conditioning world. You can go beyond Sierra. You can start to look at ashtray standards, which determine how much fresh air you need to bring into a building. In Europe, it's the C-I-B-S-E standards that are kind of the ash-ray equivalent. And then there are lead building certifications. There are Energy Star certifications. So it's kind of a mish-mash nationally and regionally of how you manage these regulations. Right. So it sounds like the sort of most effective baseline is like, you know, set some sort of, you know, efficiency standard and mandate that all products at least meet that minimum standard. And then from there, we've got some other options. So, you know, lead systems and energy SAR systems that are intended to inform the customer and in the case of lead also give them some kind of loose incentives to buy more efficient things. So that in combination, effective but not perfect, is that a fair way to describe it? Yes. Yes, and effective internationally, because once companies start making it for one country in a much more efficient standard, the costs get driven down in that, and it's easier for them to distribute globally. Yeah, I mean, that's a really great point that local action makes a big

difference here. I mean, is California enough? If California gets really excited and goes super energy efficient, do you think that the rest of the world follows suit, or is that too much to hope for? It certainly reduces the friction. In the case of the Seer ratings, I don't think that's going to do it. There is discussion of humidity-specific standards. They've been put in place. So the H.R.I. 920 standard. And that helps to measure also the humidity management efficiency, which is a big step forward. There are no values or targets assigned to that right now, but they have defined how you calculate those numbers. So this is all helpful, but it's probably not sufficient to really start to crank down the emissions.

For taking it a step further, we need to have more customer awareness paired with business models that incentivize the adoption of energy-efficient air conditioners. If the way in which people purchase cooling is wrapped into how much energy they use, that's huge. And that's actually something that's kind of

of cool we're seeing in electric vehicles because now that upfront purchase price takes into account how big the battery is, which takes into account how efficient that car is. So now that upfront cost is wrapping that in. And if we can find either a direct analog to that in air conditioners, which is unlikely, or a business model that can snap consumers into thinking that way, maybe they're buying cooling as a service rather than making an upfront capital expense, that could really change the game. Yeah, let's talk a bit about cooling as a service, because I think, as we know, here in Silicon Valley, everything as a service is just all the rage right now. So is that the answer here?

What does it mean, first of all, to provide cooling as a service versus kind of the standard way that we purchase air conditioners? Yeah. The best way to think about it, and there are lots of ways to think about it, the way I think about it is a company like Sunrun really changed the game in rooftop photovoltaics by saying, you know what? not everybody can afford to purchase outright a solar system for their roof. It's very expensive. And so what we could do instead is to install it for them. And we own, we Sun Run, own this rooftop PV system and we sell the customer the electricity that they're getting from the PV system that we own. Cooling is a little bit trickier. People are used to paying for electricity. People are not used to

paying for cooling per degree of cooling used in the same way they're used to paying for electricity per kilowatt hour of electricity used. And so cooling as a service needs to bring in the utility bill and you see the reduction in the utility bill, the energy savings, along with the capital expense of the air conditioner, which is depreciated over some number of years. And so it's more parties that you might need to bring into understanding what the net value is. Maybe one party sees a lot of upside and the other party actually sees downside because they're not used to paying a monthly fee. Right. So, yeah, I mean, that is definitely tricky, I think, for some businesses to go from, you know, imagining a capital expense to turning it into something that's kind of an ongoing cost like

this. And as you say, it's a little bit more complicated because it's not, like, cooling is not a commodity that people are used to buying. But, but, I mean, ultimately, do you think this really solves the problem and that this is an important and necessary way to get the kind of deployment of efficient technologies that we need, or is it a sort of maybe helpful thing? What's your, honest take on weather cooling as a service is the silver bullet here? Yeah, I wouldn't call it a silver bullet. I would call it a serious opportunity that's very complex and difficult to make work that's worth looking into. And that, along with customer awareness, along with inevitably increasing electricity prices, along with increasing value in having a smaller peak load,

a smaller load on your electrical grid. I think all these things together, along with regulation, will move the needle. And whether cooling as a service happens or not, I don't know, it's hard. I'm thinking, by the way, of like a really hilarious issue that this is going to create, which is if you think about cooling as a service and suddenly, you know, folks are having conversations about the number of cooling degree hours that you use. How is that going to affect the workplace dynamic between people who like to be warm and people who seem to wear really heavy jackets and sweaters and or like to work that sort of thing? It's really, you know, I'm

thinking back to the time that I was at the Department of Energy. Anyone who spent time working in that forestall building has literally dealt with frozen fingers as you're typing on your keyboard during the middle of the workday. And I remember there was an article about turtles is what they call them. And turtles are people who basically leave their place of work and go sun themselves somewhere in order to warm up and go back into their building. And then on the flip side, you've got a lot of people. And generally, in DOE, what we noticed, it was mostly men wearing big heavy suits who wanted the cooling cranked up really high. And we'd even joke about, you know, basically having sartorial changes as one way to help, like, save the planet through, you know,

reducing greenhouse gas emissions by reducing the need for cooling and buildings. So I don't know if this is something that you've thought about, but I'm just curious about, like, I mean, there are some interesting workplace dynamics, basically, that might arise in the context of this cooling as a service model. Yeah, it's absolutely true. So an interesting thing going back to my favorite topic of humidity management is that the more humid it is, the more fussy everybody is about what temperature it is. And so you know that because on a muggy day, you're miserable. And on kind of a clammy day, you're also really uncomfortable, right? but as the air gets drier, you get much more comfortable with broader range of temperature.

Think of going to Arizona. It's hot, but it's dry. It's fine. Your body's own system of evaporative cooling can manage your temperature very well. And so if you can manage the humidity in a building really effectively, you can have people of all attire being quite comfortable. I love that. I love solutions that actually just completely like cut an argument entirely by making it irrelevant. So humidity management it is.

This is really great. Okay. So what else do we need then in order to get where we need to go? So let's talk about like net zero commitments. How important are those to getting to really efficient, you know, really high quality cooling? Yes. So I mentioned at the beginning that we're around 4% of greenhouse gas emissions for air conditioners globally. And that's a big number.

I think most of the people who are listening to this podcast will be well calibrated to that number, but it's close to twice as many emissions as come from the entire aviation industry. This is a really big chunk comprehended in a single device. And if that single device type, an air conditioner, can be made more efficient, that's a big deal. And so when these corporations that have made net zero commitments start to look to fulfill those commitments, their first line of defense may very well be offsets. Don't think about it, throw money at the problem. Offsets are very cheap right now. But when CO2 offsets become more expensive, which is probably fairly imminent given the number of very aggressive net zero commitments, then we're going to have

to start making decisions between what's more expensive to actually improve my energy efficiency, which, you know, pays for itself in principle, but in practice you need to figure out piece by piece how to put together those energy efficiency solutions. And so when offsets get expensive enough to motivate people to do that, to go into their energy efficiency, what they'll find is that a really large chunk of their emissions are coming from air conditioners. And maybe you will see out-of-cycle replacements of air conditioning units and other things. We saw out-of-cycle replacement of light bulbs pretty quickly.

So when you start to see people making those decisions, then we've reached a tipping point. Right. Well, and my hope for what it's worth is that we don't have to wait for offsets to get expensive to get there. I mean, it's really interesting to me that there are a lot of companies now that have not zero targets, which is fantastic. But what you're seeing over and over is particularly like some of the big tech companies that are some of the most aggressive ones on this. There's so little that are directly in scope that they actually can reduce. And efficiency is one of the things that they really can't affect. So my hope at least would be that they go out and do that first, you know, since this is really a way that they can directly do emissions reduction. But again, getting into some of the reasons that, like, that doesn't necessarily happen automatically.

What about some of the fact, you know, that building, you know, ownership and the tenure for building leases, you know, there's a big tenant agent problem here, right? And so we mentioned that, yeah, 10 years is kind of the lifetime for the device and potentially a shorter payback period. But if that payback period is longer than like a lease lifetime or, you know, whatever else is kind of inherent in sort of your financial strategy around your building usage, that's really going to create a problem for anyone, even the best meaning companies who are trying to go energy efficient. So is that a problem we need to solve? That's a problem we would love to solve. And we need more minds thinking about this because it is really tricky. We're not going to change the way buildings are owned and rented out. And so, you know, we can go back to cooling as a service as one potential way to do this. You know, you don't have to own your home to have sun run install solar panels. You don't have to own your home for the full length of time that those solar panels, you know, 20, 25 years, are going to last. You may very well change homeownership and just transfer that.

So cooling as a service could be one option. And again, regulatory is another option, making sure that people aren't using very high, global warming potential gases, refrigerant gases, and making sure they have efficient devices on hand. You know, we had one Jeff McColle on here as a podcast guest just two weeks ago talking about insurance. So this sounds like a really ripe opportunity for insurance carriers to kind of help with the deployment of some of these kinds of highly efficient tech. That would be great. I want to add in one more thing that we haven't talked about yet, which is about utilities and their view of air conditioners. So we talked a little bit about grid instability and the importance of air conditioners and causing blackouts.

Because of this, utilities would be delighted to give rebates to customers for buying a more efficient air conditioner. And that might end up being a really valuable tool to help people overcome that higher upfront cost of a more efficient device. And not only that, but if there's a way to get your air conditioner to use the electricity off-beak, provide the cooling when you need it, but then to somehow use the electricity another time, whether through a battery or a different type of air conditioning technology, that could be incredibly powerful. And that starts to enable more of a cooling as a service model because you're providing grid services in addition to electricity savings. Yeah, I think there's some really cool opportunities there. It's amazing, though, how fast everything gets integrated, right? Because we're sitting

and we're talking about scale, and it's kind of like, okay, all we need to do is fix how real estate is leased and financed and also how, you know, we're incentivizing grid flexibility and, like, you know, how some of these other business models actually work for providing cooling services. And once we get there, we could have this really great integrated system. There's a long to-do list. Yeah, it's a lot to fix. But I think it's a really good point that utilities absolutely have a dog in this fight, right? That they're, you know, as you say, grid stability is extraordinarily important. And they are really regulated based on their ability to keep the grid stable. So, you know, not only are there utilities out there that already have, you know, efficiency directives that they're

required to meet, but also this is actually an important way that they can help manage the grid. That's a great point. Let's talk for a second about ventilation. So this has come up, you know, in the context of the pandemic. I think, you know, a lot of folks have been thinking about ventilation, obviously more than they ever have. Certainly those of us with kids think about it in the context of schools and how important it is to get lots of changes of air going. So what do you, do you see this as kind of a potential challenge for getting more efficient HVAC in, or do you think that there's a way in which the desire for, you know, more advanced and faster and better ventilation might actually encourage us to get to more efficient HVAC products? Yeah, ventilation is a really

important topic in air conditioning. Before the pandemic, we saw an increased interest in ventilation for a few reasons. People were looking at how CO2 levels were impacting the cognitive function of building occupants and seeing that strategic decision-making and deep thinking were really impeded by higher levels of CO2. And by higher, I mean like 700 or 800 ppm, not really that high from the baseline of 400 ppm. And so they're looking at CO2 levels. They're looking at volatile organic compounds or VOCs, odors, and trying to understand how that impacts building occupant productivity happiness and health. And there were a lot of seminal papers out of Harvard talking about this

and making the argument that the more productive you can make your space, it totally pays for itself if you could somehow measure that productivity. It's much more impactful on the cost per square foot of your building to make your employees productive than it is to save a little bit of electricity or save on rent. And so there was already this trend toward looking at indoor air quality. when the pandemic hit, we did not know what to be afraid of, but we knew for sure that this airborne virus was a problem and we wanted to flush it out of systems as much as possible. So there were all kinds of recommendations to increase your ventilation rate.

People had windows open. People had their ventilation units, their rooftop fresh air ventilation units running as high as they could. And what this does, as you can imagine on a summer day, is dramatically increase the load, the electrical load on your air conditioner, you're spending more electricity on air conditioning in order to have fresh air because you're bringing in two times or five times as much hot, humid, outdoor air and conditioning it to room temperature. So this set us up for this tradeoff between healthy air and energy efficiency, which is a really ugly tradeoff to be facing. You want to choose both,

not one. And so there are a couple ways to deal with this. One is to simulate fresh. air and have a really good scrubbing system in the building, something that removes all those volatile organic compounds, something that is adding in oxygen as needed, and something that's selectively removing CO2. Those aren't easy things to do, but people are working on this. Another option is to make your air conditioner a heck of a lot more efficient so that you can bring in fresh ventilation air. There's another option, which is make your architecture more sensible for having good air mixing and not getting too hot in the first place. Ooh, that sounds like an interesting one.

Well, okay, so it sounds like the second one, though, may not be an option in places like, say, the West where you've got a lot of wildfire smoke and there are going to be times in the year, unfortunately, potentially many times of the year now where you're not going to want to bring in tons of outdoor air all the time. Is that right? In those cases, you're looking at some of the other options. Yeah, and in all practicality, you probably want some of both. Mm-hmm.

Okay. That makes a lot of sense. Great. Okay, well, so let's talk for just a second about Xerox Park and your role in this system. I think some people might be a little bit surprised to find out that the company that we associate with our printers is out ahead on figuring out what to do about super efficient cooling technologies and how to commercialize them. Can you say a bit about just what Park has going on with respect to cooling technology development and then specifically how you're planning to get some of these out into the world? Yeah, sure. Should I start with an overview of what park is? Sure. Okay. Park stands for Palo Alto Research Center, and it's a wholly owned subsidiary of Xerox, which was started as a research and development branch in 1970, where at one point Xerox wanted to be the office of the future company. And so they tasked Xerox Park with inventing that office of the future. And they had hardware scientists and computer scientists, as well as ethnographers, sitting together in a room, trying to imagine what that office of the future ought to look like. They invented all kinds of things that are fundamental to personal computing, the modern-day computer mouse, the whizzy wig, what you see is what you get graphical user interface,

the T-CICP Ethernet Protocol, the list goes on. There are also a lot of inventions that were quite relevant to Xerox's business, such as the laser printer, which have paid for this facility many times over. But this is really an industrial research facility that does as many big ideas as possible and works with all kinds of partners, not just Xerox, to get those inventions into the world. So we've been working on clean tech for a little over a decade, and we've built up a pretty cool portfolio of various technologies that are really aimed at the mitigation of greenhouse gases. And so that's how we got into air conditioning, along with lots of other things.

And what we're looking for is ways to bring this out into the world, whether spinning out companies that Xerox can hold an equity stake in or forming joint ventures, whereas Xerox can partner with another company to take a product to market. That's awesome. Well, I will hold my disappointment that in developing the Office of the Future, Xerox Park has not yet invented like little UFO-type saucers that will glide me around, like, you know, without having to walk around the whole office space, especially given that you guys are now working on climate technologies.

I think that's pretty great that this is something that you're in. to do and to get out there beyond just the stage of technology invention. And the indoor climate is a very important climate for the office of the future. Agreed. Makes a lot of sense. Cool. Well, thank you so much, Jesse. This has been a really great conversation. Really interesting to learn all of these facets of cooling. Hopefully, there are folks out there who can join in the fight to really make sure that we can get highly efficient cooling at scale because it sounds like we're really going to need it going forward. Thanks, Laura. It's always great to talk to you.

Jesse Revest is the president and general manager of the clean tech business at Xerox Park. Catalyst is normally hosted by Shale Khan. He'll be back after he returns from family leave. The show is a co-production of PostScript Media and Canary Media. Find Canary and PostScript on Twitter, and you can find me on LinkedIn. Tag us if you want to provide feedback on this episode or want to suggest future topics. You can find links for this episode's topic and guest in the show notes, or go to canarymedia.com. Our producers are Daniel Waldorf and Stephen Lacey.

Theme song and mixing by Sean Marquand. I'm Laura Pierpoint, and this is Catalyst.