Driven by factors such as climate change, urbanization, and the growing affordability of cooling technologies, space cooling (SC) demand is rapidly increasing. This study examines how the implementation of appropriate policy measures and technological advancements can effectively manage this rising demand while ensuring sustainability. Using a bottom-up modeling approach with the Invert/EE-Lab model, we projected SC demands across the EU-27. Our focus was on integrating various efficiency levels of passive measures—such as shading, enhanced ventilation, and building design improvements—with technological advancements in cooling systems. The analysis shows that combined strategies could reduce SC demand by up to 55% by 2030 and nearly 80% by 2050, compared to a baseline scenario without these passive measures. Significant energy savings are particularly notable in the non-residential sector, which has a higher baseline energy consumption. Furthermore, the aggressive adoption of energy-efficient cooling solutions is projected to substantially reduce CO2 and NOX emissions, contributing to the EU’s climate mitigation goals. Economic analysis indicates that the levelized cost of cooling could range from 55 to 92 EUR/MWh under various efficiency scenarios. These findings underscore the critical role of policy interventions, including incentives for passive cooling measures and support for the development and diffusion of advanced cooling technologies, alongside the creation of adaptive regulatory frameworks. Implementing these strategies is crucial for aligning the increasing SC demand with broader energy efficiency objectives and ensuring sustainable development amid rising global temperatures.