This paper presents a cost-effective enhancement of a trans-critical carbon dioxide (CO2) cycle in air-conditioning mode by utilizing a thermoelectric sub-cooler. It is well-documented that the cooling COP of the transcritical CO2 cycle decreases as the ambient air temperature significantly increases above the critical temperature of the refrigerant.Γ A high gas cooler outlet temperature limits the enthalpy of evaporation so that the air-conditioning cooling performance is reduced. Sub-cooling is known as a mitigation method to this problem.Γ However, adding a small-scale heat pump to a residential or light commercial air conditioner can be quite costly. Therefore, a thermoelectric solid-state sub-cooler is proposed. The thermoelectric cooling (TEC) devices utilized in small temperature differences ranging from 5 to 15 oC can be quite efficient since the intrinsic heat loss of the TEC by heat conduction in reverse direction of pumping heat is minimal. Based on the prior work, the optimum design for cost-per-performance shows that the cost for sub-cooling is dominated by the heat exchangers and it is not by the thermoelectric material itself. The TECs are compact and have a low thickness, which is in the range of a few mm. Hence the TEC modules can be integrated into the form factor of a plate heat exchanger. In this study, the cooling COP of the CO2 air conditioner is enhanced by approximately 12% using an optimally designed thermoelectric sub-cooler at an ambient temperature of 35 oC. This potential improvement is based on a figure-of-merit (ZT) of currently available thermoelectric materials (ZT~1). The seasonal primary energy efficiency and the cost performance of the optimized TE sub-cooled CO2 heat pump system will be presented in comparison to other compact sub-cooling technologies