Sales of Air Conditioners (ACs) in Indonesia are forecasted to increase by 7.5% each year, which suggests that the peak demand could increase by over 20 GW by 2035 (McNeil et al., 2019). Large-scale deployment of highly efficient and increasingly affordable inverter-driven (variable-speed) ACs could reduce Indonesia’s AC electricity use by 30%–50%. However, adoption of inverter-driven ACs has lagged in Indonesia: the technology constitutes only 8% of the Indonesian AC market, compared with 40% in Southeast Asia and 65% in China. In this context, LBNL designed a technical analysis to support policy action to transform the market towards more efficient ACs (including with low- global warming potential (GWP) refrigerants) in the longer term. Setting longer-term targets in consultation with the AC industry is an approach that has been used very successfully in the context of refrigerant changes under the Montreal Protocol, under the treaty’s well-known “start-and-strengthen” approach. Such an approach, particularly when pegged to policies aimed at mitigating costs of superefficient technology, serves as a positive investment signal to manufacturers, further reducing compliance costs for manufacturers and ultimately reducing the costs to consumers.