Global market for environmentally friendly refrigerants is expected to grow 5.9% annually

The global market for environmentally friendly refrigerants is projected to expand from USD 1.5 billion in 2025 to USD 2.3 billion by 2032, growing at a compound annual growth rate (CAGR) of 5.9%, according to a recent report by Meticulous Research. This growth is primarily being driven by regulatory actions to phase out hydrofluorocarbons (HFCs) and rising demand for sustainable refrigeration solutions.

Key Drivers of Growth

Mr. Udafsabr, Research Director at Meticulous Research, explained:

“Driven by global HFC phase-out regulations and rising environmental awareness, the refrigerant market is making an important shift towards sustainable solutions. Ammonia-based refrigerants, with zero ozone depletion potential, will achieve high growth. The Asia-Pacific region, supported by strong government initiatives, is leading the global wave with growth exceeding 7% CAGR.”

• Hydrocarbons currently make up over 37% of the market, recognized for their low environmental footprint.

• Ammonia refrigerants are expected to see rapid adoption due to their zero ozone-depletion potential (ODP) and low global warming potential (GWP).

• Carbon dioxide refrigerants are also gaining popularity as natural alternatives to synthetic gases.

• Propane (R290) and other hydrocarbons are increasingly used in residential and commercial air-conditioning systems, thanks to their efficiency and eco-friendly profile.

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Market by Applications

• Refrigeration: With more than 52% market share, refrigeration remains the largest segment, driven by food preservation, pharmaceuticals, and cold chain warehousing.

• Air Conditioning: Expected to post strong growth as energy-efficient and climate-friendly systems gain traction.

• Industrial Refrigeration: Expanding use of ammonia and CO₂ refrigerants, particularly in supermarkets, food processing, and cold storage facilities.

Market by End-User

• Industrial sector: Currently holds over 45% of market share.

• Commercial sector: Expected to grow fastest, supported by demand in retail chains, supermarkets, and commercial real estate projects.

• Residential sector: Growing steadily as consumers adopt eco-friendly and energy-efficient home cooling solutions, supported by government policies on energy efficiency.

Regional Insights

• Asia-Pacific: Holds over 44% of the global market and is projected to grow at more than 7% CAGR. Regional leadership is driven by government environmental initiatives, rising industrial demand, and large-scale cold chain development.

• Europe: Continues to maintain momentum with strict regulations on synthetic refrigerants and rapid adoption of green technologies.

• North America: Shows strong potential, led by California’s move towards ultra-low GWP refrigerants by 2035 and federal incentives for sustainable cooling.

Relevance for India

As one of the fastest-growing refrigeration and air-conditioning markets in the world, India stands to benefit from this global shift. The country’s expanding cold chain for agriculture and pharmaceuticals, along with rising residential air conditioning demand, makes it a key future market for environmentally friendly refrigerants.

Government initiatives such as the India Cooling Action Plan (ICAP), coupled with growing consumer awareness about sustainability, will accelerate adoption of natural and low-GWP refrigerants in the coming years.

Conclusion

The global push towards eco-friendly refrigerants is reshaping the cooling industry. With Asia-Pacific — including India — leading the transition, the market is expected to see sustained growth over the next decade. The shift away from HFCs to natural alternatives like ammonia, CO₂, and hydrocarbons marks a critical step toward sustainable, climate-friendly refrigeration and air-conditioning systems worldwide.

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