Improving efficiency for air conditioners

This policy brief by the Climate Policy Initiative analyzes the air conditioning (AC) sector in Brazil, specifically the impact of the Manaus Free Trade Zone (ZFM) industrial policy. It finds that despite significant tax incentives, the sector has experienced declines in productive and energy efficiency between 2003 and 2015, lagging behind international peers and the broader Brazilian manufacturing industry. The authors argue that the Basic Production Process (PPB) requirements create distortions and hinder the adoption of efficient technologies, such as inverter compressors, and recommend aligning industrial policy with energy efficiency standards.

• Air conditioners produced in Brazil exhibit lower energy efficiency and slower improvement rates compared to international standards. Between 2010 and 2018, average efficiency in Brazil grew by 10.2%, whereas India saw a 29% improvement (2011-2017) and Vietnam saw a 30.8% improvement (2013-2018).
• Increasing the efficiency of air conditioners in Brazil could lead to significant environmental and economic gains by 2035, including a reduction of 6.3 metric tons of CO2 greenhouse gas emissions and energy savings of 14.5 TWh, valued at R$ 8 billion reals.
• The industrial policy of the Manaus Free Trade Zone (ZFM), which provides tax relief to firms in the Manaus Industrial Park (PIM), has not improved energy or productive efficiency in the AC sector. Between 2003 and 2015, energy efficiency and productive efficiency in the AC sector declined by 2% and 5% respectively for both Brazil and the ZFM, contrasting with the stable indicators of the general Brazilian manufacturing industry.
• The Basic Production Process (PPB) requirements hinder efficiency by mandating that most manufacturing occur in the ZFM and requiring a minimum percentage of domestic compressors (30% for split units and 50% for window units). Because the only non-industrial compressor manufacturer in Brazil (located in São Carlos, São Paulo) uses outdated technology and does not produce inverter compressors, the policy limits the adoption of energy-saving variable speed technology.
• The AC sector in the ZFM is characterized by large-scale operations with high concentrations of production and employment but low wages. In 2015, the state of Amazonas held 58% of the sector's gross value of industrial production and employed 48% of the sector's workers, despite having only 17% of the local units.
• Tax expenditures for the industrial ZFM were estimated at R$ 4.3 billion reals in 2015, with the air conditioning sector receiving 7% of this amount, totaling R$ 285 million reals.
• Rapid growth in AC sales in Brazil has led to a surge in electricity demand. Between 2005 and 2017, sales more than tripled, and residential AC electricity consumption increased by 237% because efficiency gains were insufficient to offset the increase in units.

APA

Schutze, A., Holz, R., & Assunção, J. (2020). Improving efficiency for air conditioners. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/06/Policy-Brief-Improving-efficiency-for-air-conditioners.pdf

Chicago

Schutze, Amanda, Rhayana Holz, and Juliano Assunção. Improving efficiency for air conditioners. Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/06/Policy-Brief-Improving-efficiency-for-air-conditioners.pdf.

Wikipedia

{{cite report |last1=Schutze |first1=Amanda |last2=Holz |first2=Rhayana |last3=Assunção |first3=Juliano |title=Improving efficiency for air conditioners |publisher=Climate Policy Initiative |date=August 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/06/Policy-Brief-Improving-efficiency-for-air-conditioners.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{schutze2020improving, author = {Schutze, Amanda and Holz, Rhayana and Assunção, Juliano}, title = {{Improving efficiency for air conditioners}}, institution = {Climate Policy Initiative}, year = {2020}, month = aug, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/06/Policy-Brief-Improving-efficiency-for-air-conditioners.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }