Cooling a hotter world: El Niño meets strong growth in global electricity demand

Over the past five years, the world has experienced some of its hottest years on record, and meteorologists are warning that El Niño – a periodic warming of Pacific Ocean surface waters – could drive a new series of extreme weather events in 2026 and 2027. This comes as the adoption of air conditioning around the world has already been accelerating – the result of rising incomes in many economies with hot climates and record-breaking heatwaves in regions that previously had only limited cooling demand. As extreme heat events become more frequent and widespread, perceptions of cooling are shifting, driving more consumers to consider purchasing an air conditioner (AC). At the same time, falling unit prices and elevated inventories across the supply chain are lowering barriers to AC adoption, suggesting that the number of households purchasing their first AC unit will reach new highs in the years ahead.

Rising cooling demand this year is taking place in the context of a global energy crisis that disrupted around 20% of the world’s seaborne oil and gas trade and caused spikes in energy prices in many regions. Concerns about the availability of natural gas for peaks in electricity generation during heat waves, alongside affordability pressures, have prompted several governments – particularly in Asia – to introduce energy conservation measures. Eight countries have introduced measures related to cooling since March 2026. Bangladesh, Cambodia, Malaysia, the Philippines, Singapore and Sri Lanka have set minimum AC temperatures in offices, ranging from 24 °C to 26 °C. Jordan has restricted AC use in public offices, while the Seychelles government has asked public offices to switch off the AC once a week.

This speaks to the challenge that rising power demand for cooling poses for electricity systems around the world. Global electricity demand for space cooling1 has grown by 50% since 2015, rising to around 2 900 terawatt-hours – more than the total electricity demand of the entire European Union. Since 2015, cooling has accounted for 14% of global electricity demand growth while reaching as much as 25% in the Middle East and North Africa region. In 2025, it contributed 1 400 gigawatts of peak electricity demand across markets, equivalent to the total installed power generation capacity of the United States.

Electricity demand is also being driven higher by the expansion and electrification of industry, rising electric vehicle uptake, the rapid growth of data centres, and the electrification of other end-uses. Fuelled by growth across uses, electricity demand reached record-high levels in 2025 and increased at well over twice the rate of overall energy demand, putting additional pressure on power systems and strengthening the focus on electricity security for countries around the world.

This commentary builds on the IEA’s ongoing analysis of global air conditioning trends and their implications for power systems. It assesses what the current Northern Hemisphere summer and longer-term global trajectory could look like and outlines the policy tools available to governments to manage rising cooling demand while limiting the costs for energy systems and consumers.

Global markets for air conditioners have expanded rapidly in recent years. Annual AC unit shipments2 are now 25% higher than they were five years ago, fuelled by growth largely in emerging and developing economies. In 2024, amid exceptional heatwaves, global AC shipments reached 200 million units. That year, they grew by about 10% in India, the Middle East, the United States and Europe – and by 40% or more in Latin America and Africa. In 2025, demand softened in several markets as India experienced unseasonal rainfall, and as milder summer temperatures reduced cooling needs across parts of Southeast Asia and Latin America.

China remains the world’s largest AC manufacturing base and market, producing around 170 million units each year and exporting around 60 million units, with maximum manufacturing capacity of around 300 million units. This position reflects several factors, including extensive manufacturing capabilities and well-developed supply chains. Given China’s market position, a new provision for export AC efficiency has the potential to increase efficiency in countries with lower capacity for enforcing stringent standards.

Worldwide, around 40% of the population has access to air conditioning, while more than 80% experiences cooling needs during at least part of the year. Yet the share of households equipped with AC remains highly uneven across regions. Nearly 90% of households in Japan and the United States have an air conditioner, while ownership rates remain substantially lower in Southeast Asia and India despite high cooling needs. In China, access to cooling has expanded rapidly, with ownership rising by 50% over the past decade.

Across the world, the number of cooling degree days, a measure of cooling needs, is on the rise – and in many regions, the pace of growth has accelerated since the previous El Niño event in 2023-24. In China and Europe, cooling degree days were 25% higher in 2024 than in 2020. In Japan and Korea, they were almost 50% higher.

This year, El Niño is expected to return, with effects such as heat waves extending well into 2027. Heat waves affect cooling demand in two ways. First, they increase the utilisation of existing air conditioners. The more extreme the heat, the more consumers – even those who are price sensitive and use cooling sparingly – tend to switch on their ACs. Second, heat waves stimulate new equipment sales, increasing AC ownership and creating a structural effect that persists over time.

Under today’s policy settings, cooling demand is set to grow by 1 600 terawatt-hours by 2035 – roughly equivalent to the total annual electricity demand of Japan and Korea combined. To assess the potential impact of more intense, frequent and longer heat waves, we also conducted a sensitivity analysis that assumes a strong El Niño event in 2026-27, with weather events of a similar magnitude every three years thereafter. While these assumptions are subject to considerable uncertainty, they provide an indication of the potential impact of more extreme heat conditions. In this sensitivity case, cooling demand accelerates further , adding around 700 terawatt-hours to electricity demand by 2035. More than 60% of this additional demand was driven by accelerated air conditioner adoption, while the remainder resulted from greater use of existing units.

This kind of scenario raises immediate challenges for electricity systems. In most regions, cooling demand is concentrated in a limited number of months each year, as well as during certain hours. This means that although cooling demand represents around 10% of annual electricity consumption, it accounts for 30% of peak electricity demand. This concentration of demand puts strains on power systems, particularly during heat waves, when cooling demand rises sharply and disruptions to electricity supply can happen. As a result, heat waves can reduce the reserve margins of power systems.

Air conditioners show large differences in performance across markets. The most efficient models available today can be up to four times as efficient as the least efficient models, and more than twice as efficient as the average unit sold. Despite these differences, average equipment efficiency globally has improved steadily, driven largely by the increasing cost-competitiveness of high-efficiency models and tighter regulations that are now in place in over 100 countries. The average AC unit sold globally in 2024 was around 20% more efficient than the average a decade before.

The stringency of efficiency regulations varies, with Japan and Singapore setting very ambitious standards, while others only require ACs to be one-quarter as efficient. In Japan, the longstanding Top Runner Programme remains world-leading, even though it has not been updated for over 15 years (new updates will enter into force in 2027). Meanwhile, many emerging and developing economies – such as Brazil, China, India, Indonesia and Saudi Arabia – have accelerated policy action quickly in recent years while starting from a lower efficiency baseline. India illustrates how regular policy tightening can rapidly transform market performance. It has updated AC efficiency requirements every two to four years since 2009, and the average efficiency of an AC sold in India today exceeds the highest efficiency standard from a decade ago by around 30%. However, despite this rapid progress, the minimum performance requirements of ACs sold in India are still only about half of those sold in Japan.

Thermal comfort and heat stress for people inside buildings – which drive the need for air conditioning – are determined by many factors. Better building and urban design can reduce the scale of the need and help countries manage growing energy demand for cooling.

At the building level, design and construction choices – such as shape, orientation, insulation or thermal mass – can significantly reduce heat gain and affect cooling needs for generations. Over 60 countries already include cooling-related provisions in their building energy codes. For example, Pakistan’s Energy Conservation Building Code sets mandatory insulation levels (U-values) for roofs, walls and glazing. Passive cooling techniques, such as shading and ventilation, further decrease indoor temperatures and can increasingly be digitally controlled based on outdoor conditions. In moderate climates, these measures, together with fans, can often replace air conditioning – and in hotter climates, these measures can reduce the cooling load required from AC systems. For example, an AC set at 26 °C combined with a fan can provide the same thermal comfort as an AC alone set at 24 °C, while reducing energy use by around 25%.

However, particular challenges can arise in cities, as the urban heat island effect intensifies heat stress, with concrete and asphalt storing and releasing heat and individual air conditioners expelling additional warmth into the outdoor environment. During heatwaves, temperatures in urban centres can be more than 10 °C higher than in rural areas.

Measures to mitigate the urban heat island effect include adding green spaces and bodies of water, street greening, and the unsealing of pavements; each measure alone could reduce the temperature by as much as 5 °C. Furthermore, district cooling can relocate exhaust heat to a centralised cooling plant outside densely populated areas. Such systems are both energy efficient and can act as thermal energy storage to help address peak loads. Cities such as Dubai and Singapore have implemented modern district cooling solutions at scale. Municipal heat action plans, especially in rapidly growing cities in emerging and developing economies, can help to reduce the urban heat island effect and increase heat resilience in the long term.

The combination of rising cooling demand, record AC sales and possible weather effects linked to El Niño – along with significant uncertainties over the energy supply outlook following shipping disruptions in the Strait of Hormuz – could create near-term challenges. But continuous efficiency improvements are helping to support electricity security and manage costs.

The situation underlines the importance of policy responses that help manage short-term demand and strengthen the efficiency of cooling systems over time. Reinforcing these measures, alongside forward-looking policies in building and urban design, can reduce heat stress, improve the resilience of energy systems to future shocks and expand access to essential cooling.