Peeled onions develop green shoots in cold storage due to exposure to light and moisture, which triggers the onion to sprout as it attempts to grow. The cold temperature slows down the process but doesn't stop it entirely.
Onions are bulbs, which are essentially underground storage organs containing a dormant plant. When an onion is peeled, it becomes more vulnerable to environmental factors like light and moisture. Even in cold storage, some light can penetrate, and moisture can condense on the surface of the onion. These conditions signal to the onion that it's time to grow. The onion uses the stored energy within the bulb to produce a green shoot, which is the beginning of a new onion plant. The cold temperature slows down the sprouting process compared to warmer temperatures, but it doesn't completely prevent it. The onion is essentially trying to reproduce, even in unfavorable conditions. The process is similar to how potatoes sprout eyes when stored for too long.
To prevent onions from sprouting, store them in a cool, dark, and dry place. Avoid storing them near potatoes, as potatoes release ethylene gas, which can encourage onions to sprout.