Cold chains and the demographic dividend

"Globally, civilisation has reached a tipping point where our capacity to feed our growing numbers is of serious and increasing concern. Science has enabled us to increase food production, but much of what we produce perishes before it can reach the people we need to feed. It has therefore become imperative that mankind fully grasps and controls clean cold energy, so that our species can continue to thrive and prosper."

Pawanexh Kohli,

Chief Advisor & CEO,

National Centre for Cold-chain Development, India

  • The cold chain industry faces a period of unprecedented demand growth due to rapid demographic change in emerging markets.
  • The Asian middle class is forecast to expand six-fold to more than 3 billion people by 2030, two thirds of the world total; the global urban population will grow to 6 billion by 2050.
  • Cold chains in emerging markets are rudimentary or non-existent: China has half the refrigerated vehicles of France.
  • Cold chain investment is starting to boom in emerging markets, but relies on highly polluting diesel-powered transport refrigeration units.
  • Air pollution causes around 600,000 premature deaths in India each year and 1.2 million in China.

Cold chains in the developing world today are rudimentary to non-existent – but perhaps not for much longer. In India, for example, just 4% of fresh produce travels to market through a system of refrigerated warehouses and trucks, compared to more than 90% in the UK, causing high levels of food wastage. In China, meanwhile, there are thought to be some 66,000 refrigerated vehicles serving a population of 1.3 billion, whereas France has 140,000 for a population of just 66 million.

Cold chains are vital not only for food but also medicine: it's estimated that more than 2 million people die each year from lack of vaccines due to inadequate refrigerated distribution. In India, for example, the world's third largest pharmaceutical producer, where output almost tripled to $32 billion in the seven years to 2014, almost 20% of temperature sensitive healthcare products and 25% of vaccines arrive damaged or degraded because of a broken cold chain.

But these disparities seem unlikely to persist in the face of the tectonic demographic change that is already under way: rising incomes, urbanisation and population growth. Developing countries now face a choice: whether to build their vital new cold chains using conventional, highly polluting technologies or the clean cold technologies of the future.

The West is used to viewing Asia as the workshop of the world, but rising incomes mean the region could soon have twice the consumer spending power of Europe and North America combined. Forecasts from the OECD suggest the Asian middle class will multiply six-fold by 2030 to more than 3 billion people, two thirds of the global total. As incomes rise, people tend to eat more meat, dairy, fruit and vegetables, and to eat in restaurants more often, all of which requires cold chains.

At the same time, the global population is forecast to grow to 9 - 10 billion people by mid-century, putting ever greater pressure on the food supply. Rapid urbanisation means the numbers living in cities will rise by two thirds to more than 6 billion, making it ever more important to reduce food losses along lengthening supply chains. Around one third of all calories produced worldwide for human consumption are lost between farm and fork, but the picture in developing countries is far worse. The estimated annual cost of food wastage in India is $13 billion and China $20 billion. If developing countries had the same level of refrigerated transport and warehousing as found in the developed world, 200 million tonnes of perishable food would be saved each year – increasing the food supply by 14%.

Investment in cold chains is now beginning to boom in China and India, but based on diesel-powered technologies that produce grossly disproportionate emissions of NOx and PM. If this continues, it can only worsen the extreme levels of toxic air pollution that cause around 1.8 million premature deaths each year in those two countries alone.

Cooling is a vital foundation of modern economies, but its environmental impact is becoming punitive. The industry has made some incremental improvements in efficiency, but these are likely to be overwhelmed by demand growth in the developing world. To make cold sustainable requires a radically new approach.

Luckily there is a portfolio of new British technologies moving into demonstration and early deployment, supported by academic and industrial research and development. With the right support these technologies could coalesce into a major industry that simultaneously reduces greenhouse gas emissions, improves air quality, replaces environmentally destructive refrigerants with benign alternatives, and creates thousands of new manufacturing jobs.

This report explores the demographic drivers of cold chain demand in developing countries, and shows how growth over the next twenty years could be far stronger than anyone imagines. If these new cold chains are built using conventional technologies the pollution and health impacts will be severe. This threat is not yet widely appreciated and warrants further investigation and debate.

At the same time, "clean cold" is potentially a huge opportunity for Britain, where technology development and thinking around cold energy systems are making great strides – which are so far unmatched elsewhere. With the right support, this work could soon form the basis of a truly global market.

Toby Peters

Senior Group Managing Director, Dearman

Visiting Professor in Power and Cold Economy, Birmingham Energy Institute, University of Birmingham