Abstract Temperatures in cities are amplified through the urban heat island effect by anthropogenic heat emissions into microclimates. The trapping of solar energy in urban canyons plays the most significant role. Our analysis, however, considers how urban air conditioning systems influence their local microclimate. Using models and simple observations we demonstrate how the heat rejected from these machines creates a direct feedback on the machine performance. Thermodynamically, the temperature of the environment directly controls the efficiency of the common refrigeration cycle found in air conditioning systems via the second law. A city, with its complex topography of urban canyons and skyscrapers, produces small microclimates with varying temperatures. This project investigates three urban settings that create microclimates that are detrimental for the efficiency of cooling in New York. First, the overall urban heat island effect, second the effect of roof temperature on rooftop package air conditioning units, and third the impact of local heat emission from agglomerations of window air conditioners. The efficiency loss is investigated by considering the range of temperature changes that can be observed in the surrounding environment of air conditioning systems, and determining the subsequent impact on the Coefficient of Performance (COP). Our COP analyses indicate a range of potential energy increases of around 7%–47% due to increases in environmental temperature around air conditioners. An analysis of the building stock of New York City showed that the annual electrical energy demand is potentially increased by these effects by nearly 10 PJ (3000 GWh) combined, which is more than 10% of the total cooling demand for the city.