Phase Change Emulsion (PCME) is a multifunctional fluid consisting of a Phase Change Material (PCM) and a carrier fluid. PCMEs have the potential of reducing energy consumption in air conditioning systems due to their higher latent heat capacities than water, which enable the same amount of cooling energy to be achieved at reduced flow rates. However optimum design of an integrated system requires a good understanding of flow behaviour and heat transfer characteristics of PCME in heat exchangers which cannot currently be readily deduced from manufacturer's data or published data. In this paper, the flow behaviour and heat transfer characteristics of a phase change emulsion (PCME) in coiled tubes have been investigated to establish its true potential as a heat transfer fluid in air conditioning systems. The result showed higher Nusselt number and heat transfer coefficient as well as reduction in flow rate by 20-40%. However, the pressure drop was found to be much higher than water due to its relatively higher viscosity which could affect the overall energy reduction capability of the PCME. Further enhancements are therefore recommended.