Heat Pumps

Countries and regions making notable progress to advance heat pumps include: 

• In the European Union, heat pumps sales fell by 5%, after a decade of steady growth. Though sales continued to grow in a range of countries, this was not sufficient to balance out a major downturn in Italy, and significant declines in Poland and Finland.
• In the United States, air-to-air heat pump sales decreased by 15% in 2023. However, sales of fossil fuel heating systems plummeted even further, by a record 20%.
• Air-to-water units declined by 10% in Japan in 2023 amid low consumer spending, mainly driven by a drop in sales of heat pumps water heaters, which had been increasing year on year since 2014.
• In the United States, nine states accounting for nearly a quarter of residential energy use have recently pledged to aim for heat pumps to account for around two-thirds of residential-scale space heating, water heating and cooling equipment sales by 2030, and 90% by 2040.    
  

In 2023, heat pumps could meet more than 60% of global space and water heating demand with lower CO₂ emissions than if condensing gas boilers are used. Rapid reductions in emissions from electricity supply and increased technology efficiency in the NZE Scenario mean that in all regions, heat pumps would record lower CO₂ emissions than natural gas-fired condensing boilers before 2025.

Associated with heat pumps deployment, there is a risk of accidental emissions of refrigerants, for example during manufacturing, product usage or decommissioning. Currently, most heat pumps employ a hydrofluorocarbon (HFC) as refrigerant. HFCs have a short atmospheric lifetime, but high global warming potential (GWP). HFC made up about 2.5% of 2019 global GHG emissions. 

If no changes were made in refrigerant usage, the global heat pump stock in 2030 in the NZE Scenario would contain nearly 740 Mt of CO₂ equivalent from HFCs. This is more than current direct emissions in all Chinese buildings; but, due to short atmospheric lifetime has an even higher short-term climate impact.  

Good practice in maintenance and recycling applied worldwide could prevent the emission of about one-third of these HFCs but the estimate varies widely by geographical region and heat pump model. New generation HFC refrigerants feature a lower GWP than conventional HFCs, but are still significantly more potent GHGs than hydrocarbons or HFOs, which are considered possible alternatives to HFCs. However, hydrocarbons require additional safety precautions for flammability and HFOs require further research in the field of toxicity and atmospheric decomposition. 

In 2023 heat pumps met more than 10% of the global heating need in buildings – about half of what is needed in the NZE by 2030.  

In some markets such as Japan and the European Union, and to some extent Korea, heat supplied from heat pumps is credited as renewable, making them eligible for support under certain renewable energy policy schemes. In 2022 China also recognised water and ground source heat pumps as a renewable energy technology at the national level, while in some provinces also air course units are included in the Green design standard of civil buildings. 

In Europe, in which the largest markets are France, Germany and Italy, sales declined by around 5% year-on-year, dropping to nearly 3 million units.

In the United States, sales of air-to-air units declined by 15% compared to the year before.

More heat pump units were sold in China in 2023 than in any other country, and China was the only major market where sales grew, at a robust 12%, as consumer activity recovered after Covid-19 restrictions were lifted. This growth was primarily driven by air-source heat pumps used for space heating, which experienced growth of over 15% year-on-year. In contrast, domestic hot water heat pumps remained at the same level as 2022. Around 35% of all heat pumps are manufactured in China, making the country the largest producer and exporter of this technology, with most of its exports going to Europe.

In Japan, heat pump water heaters sales were 10% down by end-2023, after having experienced 7 consecutive years of positive market growth (8% year-on-year on average), which neared 20% in 2022. Sales of air-to-air heat pumps saw as slight decline in 2023 as most units sold were to replace existing installations, which are typically one third less efficient than new models.

These negative market dynamics should be reverted to meet climate goals by 2050, as global sales need to expand by nearly 20% per year during this decade to align with the NZE Scenario.

In 2022 and 2023, some of the major manufacturers, prevalently in Europe, announced expansion plans that – if realised in full – would increase global manufacturing capacity by more than one third.  Announcements have slowed down in quantity and size over 2023, following the decrease of sales driven by policy uncertainties.

To get on track with deployment required in the NZE Scenario, existing global manufacturing capacity will need to almost quadruple by 2030. 

However, manufacturing facilities can be deployed relatively quickly (one to three years); expansion projects are not widely announced, and therefore are not the only indicator on future expansion plans. Expansion to 2030 is therefore likely to be much greater than has currently been announced. Other barriers, such as shortages of installers, appear to be more pressing priorities for boosting heat pump deployment. 

Heat pump performance has improved significantly over the last decades thanks to global R&D efforts and continued RD&D of heat pump technologies remains key to accelerating their deployment. Central ongoing innovation areas are: 

• Enhanced heat pump systems for use in very cold climates, multi-family homes, large non-domestic buildings, high to very high heating temperature systems and existing buildings in general, as well as more compact solutions (see Climate and Comfort Box). 
• Systems-oriented solutions such as algorithm design to optimise whole-building/district energy use, integrated active controls, integration with energy storage and thermal grids, on-site integration with solar PV and solar thermal, and control design. 
• Climate-friendly refrigerants with very low or zero global warming potential . 
• Improved acoustics and aesthetics to increase the acceptability and expand the installation potential. 
• Innovative heat source techniques to reduce the surface footprint and cost of geothermal solutions such as deviated wells or to use heat from lakes, rivers and sewer systems.  
• Heat pump solutions which recover waste heat from building ventilation or waste water. 

A range of technology prizes help to recognise heat pump innovations and to scale up their deployment. Examples include the Peter Ritter von Rittinger International Heat Pump Award, the EHPA Heat Pump Award in Europe and the Residential Cold Climate Heat Pump Challenge in North America. 

When heat pumps are installed in existing buildings with hydronic heat distribution systems, radiators may in some cases need to be replaced in order to allow the units to operate at lower temperatures, thus benefitting from greater efficiency.² These upgrade costs can make up as much as a third of the total cost of installing a heat pump. Lower hydronic system temperatures can also be achieved by additional insulation of existing buildings and thus pave the way for higher heat pump efficiency. Financial incentives should therefore also address building and heat distribution system upgrades through holistically optimised renovation packages to enable heat pump deployment in existing buildings. 

Meeting the increase in electricity demand from the accelerated deployment of heat pumps also requires investment to upgrade customer connections, distribution grids, generating capacity and flexibility. Heat pumps, combined with energy storage and active control systems, can absorb fluctuations from the increasing share of variable renewable energy such as wind or solar PV in electricity grids. For now, harnessing flexibility from heat pumps responsive to external signals from the grid and/or price signals remains a niche solution, though a number of pilot projects have successfully demonstrated the potential to reduce peak demand and remunerate customers for their contribution to lowering load. 

² Fossil fuel boilers generally operate with output temperatures at 60‐80°C. While heat pumps can produce heat above 55°C and potentially up to 70°C, their performance declines as their output temperature increases. 

A range of policies have recently been introduced or strengthened to accelerate the deployment of heat pumps, in particular in Europe and North America in light of high natural gas prices as a result of Russia’s invasion of Ukraine, and efforts to reduce GHG emissions. Key policy instruments are: 

• Heat pump deployment targets to provide confidence for the industry: Some European Union member states, as well as the United Kingdom, have announced ambitious deployment targets up to 2030.  
• Financial incentives to reduce upfront costs: grants, income tax or VAT rebates and low-interest loans are currently available in over 30 countries around the world. Collectively, these countries make up more than 70% of global heating demand for buildings.  
• Rebalanced energy taxation and heat pump tariffs to motivate fuel switching and account for flexibility: Some utilities offer specially metered electricity or special rates for consumers with electric heating, such as in Germany, where special rates reduce operating costs by 20% on average. The Dutch government aims to increase taxation of natural gas by up to 43% by 2026, while lowering taxation on clean heating fuels. 
• Standards and labels for the deployment of efficient heat pumps: More than 45 countries have introduced mandatory labelling schemes and use mandatory standards to ensure minimum performance levels. In the United States, new heat pumps must meet more stringent efficiency requirements from 2023.  
• Bans on fossil fuel technology installation to encourage clean heating alternatives: have been implemented or announced in more than 20 countries at the national or subnational level. In 2023 new bans came into effect in Austria, Slovenia and Flanders. Around 90 local governments in the United States require new homes to be exclusively powered by electricity for space and water heating, and other end uses. 
  

International collaboration supports knowledge and data sharing and generation, as well as accelerating standard harmonisation across countries. 

The IEA Technology Collaboration Programme on Heat Pumping Technologies has been developing collaborative international research to innovate, demonstrate, collect and communicate advancements on heat pumping technologies since 1978. 

The Mission Innovation Community on Affordable Heating and Cooling of Buildings aims to facilitate new partnerships, private investment and research collaboration to accelerate innovation in the sectors. 

Stronger international collaboration on streamlining heat pump deployment data is also needed to inform policy decisions on accelerating the uptake of heat pumps. 

As of mid 2024, manufacturers had announced more than USD 4 billion in expanding production capacity for heat pumps, their components and related efforts, mostly concentrated in Europe. Expanding production capacity by 2030 to the level outlined for that year in the NZE Scenario would require additional investments of USD 15 billion globally.

A growing number of manufacturers are also offering installation training programmes to address the shortage of installers. 

In July 2023, Bosch announced the acquisition of Johnson Controls’ and Hitachi’s residential ventilation businesses for 8 USD billion, their largest-ever deal.

• Caroline Haglund Stignor, Monica Axell and Metkel Yebiyo - Heat Pump Centre 
• Maurizio Pieve, Delegate Italy, HPT TCP 
• Roger Hitchin, Alternate delegate UK, HPT TCP 
• Wim Boydens, Alternate delegate Belgium, HPT TCP 
• Francois Durier, Alternate delegate France, HPT TCP 
• Viktor Ölen, Alternate delegate Sweden, HPT TCP