Is cooling the future of heating?

The buildings sector, which includes residential, public and commercial properties, accounts directly and indirectly for 30% of the final energy consumed around the world, or around 3 100 Mtoe, including almost 55% of global electricity consumption. Building operations account for around 28% of global CO₂ emissions, making their decarbonisation a key priority to reach climate neutrality goals.

Heating and cooling systems, the two main end-uses in building operations, are particularly critical areas to address to curb buildings emissions. Heating is currently responsible for around 45% of building emissions, and still relying on fossil fuels for supplying more than 55% of its final energy consumption. Building floor area is expected to double by 2070 – the equivalent of adding the built surface of Paris to the buildings stock every week. At the same time, space cooling will expand more rapidly than any other building end-use, with access provided to an additional 5 billion people by 2070

Exploiting synergies across heating and cooling systems in the building sector can provide a framework for reaching decarbonisation objectives, with high-efficiency heat pumps a significant source of change. In the 2020 edition of Energy Technology Perspectives, the Sustainable Development Scenario, which provides a pathway for broad implementation of clean energy technology and increased innovation on a trajectory that is compatible with the Paris Agreement, projects building sector emissions to decline sharply by 2070.

Three-quarters of emissions reductions required in the buildings sector under the Sustainable Development Scenario can be achieved through widespread implementation of technologies that are today mature and at early stage of adoption. Further innovation that enables integration across diverse climates and building types will provide additional gains for heating and cooling in buildings operations.

Space heating and sanitary hot water production account for the lion’s share of the buildings sector carbon footprint. Around 4.3 Gt of CO₂ were released to the atmosphere in 2019 for heating in buildings when accounting for emissions from direct fossil fuel combustion as well as from upstream electricity and heat generation. This represents nearly 12% of global energy and process-related CO₂ emissions.

Major technology advances and policy initiatives have generally helped to stabilise global heating-related emissions over the past decade, despite a 20% growth in heated floor area. More stringent building energy codes have reduced thermal energy demand per square meter for new buildings by 30% in Europe, 35% in Japan and 20% in the United States, relative to 2000. In parallel to progress on average building envelope performance, efficient heating technologies are on the rise, with air-to-air heat pumps sales growing nearly 10% a year globally since 2010, while heat pump water heater sales more than doubled, and solar thermal water heater sales increased nearly 1.5-fold.

However, the challenge of decarbonising heat remains enormous. Heating technologies that directly use fossil fuels account for more than half of global sales and the need for new low-carbon products to meet a variety of building environments hinders their rapid deployment. In the IEA’s Stated Policies Scenario, which reflects the impact of existing and stated policy plans, CO₂ emissions related to buildings heat provision only decrease by just over 20% by 2050 and around 40% by 2070, relative to today. By contrast, they fall by more than 95% in the Sustainable Development Scenario by 2070.

Meeting buildings sector space cooling needs only required 15% of the energy used for heating in 2019 and generated about 1 GtCO₂ from the use of electricity. Yet, space cooling is the fastest-growing building end-use and is expected to remain so over the coming decades. On the basis of stated policy intentions, cooling demand is growing at more than 3% a year for the next three decades, 8-times faster than demand for heating in the last 30 years.

There are multiple drivers for space cooling demand growth. First, there are stark differences in air-conditioner ownership today across household income ranges. For example, ownership levels in high-income urban households in India range from 75%-85%, compared to the 5% or lower for low-income rural households. Air-conditioner ownership exceeds 90% in the United States and Australia, while it remains under 10% in India, Indonesia and close to 20% Brazil, despite the number of cooling-degree-days - a metric used to assess needs for cooling services – being about twice as high in those countries. Of the 35% of the global population that live in areas where it is hot every single day, only around 15% own an air conditioner. As a result of improving living standards, climate change and policies to broaden access to essential energy services, this share is projected to jump to 60% by 2050 and 70% by 2070.

Another major factor in cooling demand growth is a significant expansion in buildings floor area, which is expected to double by 2070. More than 70% of that growth will occur in places with high space cooling demand, driven by a growing population in developing regions (see indicator “Population needing cooling” in the map below). Overall, the global stock of air conditioners could increase to 7 billion units by 2070, the equivalent of selling almost 10 air conditioners every second from now to 2070.

Average temperature rise also contribute to increasing cooling service demand. The average global temperature on land and ocean surfaces has risen every decade by 0.15°C on average since 1980. 2016 and 2019 are the two warmest years on record and September 2020 has been the hottest in a 141-year dataset (National Centers for Environmental Information, 2020). Cooling degree days (which are closely correlated with cooling service demand per square meter) are expected to grow  up to 50% by 2050 up to 70% by 2070, depending on the region and climate change impact on temperature rise (see indicator “cooling degree-days”). In addition, the frequency, severity and duration of extreme weather events are on the rise. Heat waves are also becoming more humid, increasing the need for air conditioning. Cooling consumption during heat waves can account for up to 70% of peak electricity demand in areas where 70% of households or more have access to cooling.

Despite the growing momentum to raise efficiencies of air conditioners, stated policies will not be able to curb electricity use for cooling, which is set to grow threefold by 2070 relative to 2019, or more than twice the level reached in the Sustainable Development Scenario. 

Decarbonising the buildings sector will benefit from prioritizing solutions focused on heating, cooling or both heating and cooling (see indicator “Heating and cooling needs”). Heat pumping technologies are an important technology solution as they can be deployed in a broad range of climates, and tailored to provide both heating and cooling, cooling only or heating only. In fact, a third of the global population requires heat pumps for both heating and cooling. In year-round hot and humid climates, advanced cooling technologies are needed to meet the challenge of rapid growth in air-conditioning demand. In both cases, accelerating deployment of high-efficiency products and continued innovation will be essential to meet decarbonisation goals.

Within the heating market, already today, heat pumps are effective for decarbonisation and could provide more than 90% of heating needs globally, emitting less CO₂ than the most efficient fossil-fuel alternative (see indicator “CO₂ savings from heat pumps”). In major heating markets such as the European Union, the United States, Canada, Russia or China, the high seasonal performance factor1 of heat pumps (ranging from 300% to 400% or more depending on the region) is enough to halve CO₂ emissions related to the electricity consumed under what gas combustion in an efficient condensing boiler would emit. They already make up for more than 40% of heating equipment sales in the United States for the new builds market. 

Despite their growing penetration within the heating market, the overwhelming majority of heat pumps sold today are used for space cooling. Total cooling equipment capacity is 17 times the one for heating. While the most efficient heat pumps used for space cooling (e.g. air conditioners) could reach an energy performance rating of up to 12, the average energy efficiency rating of the products available on the market is close to 4. To be aligned with the objectives of the Sustainable Development Scenario, the average performance of air conditioners needs to increase by more than 50% by 2030 and almost double by 2070. Without such efficiency improvements, under stated policies, electricity demand for cooling could nearly triple by 2070.

Exploiting synergies across heating and cooling strategies can accelerate the deployment of more efficient reversible heat pumps, help to phase out fossil fuel equipment and therefore support buildings sector decarbonisation objectives. In particular, heat pump sales for heating need to triple by 2030 and become the leading technology in the long-term. They reach more than 50% of heating equipment stock by 2050 for both residential and commercial applications in the Sustainable Development Scenario.

An estimated 33% of households worldwide have both space heating and cooling needs, although the share can be as high as 78% in Europe, 56% in North America and nearly 80% in China (see indicator “Share of population needing both heating and cooling”). In these regions, it is particularly important that technology progress in reversible heat pump units is steered towards simultaneously achieving decarbonisation objectives associated with both heating and cooling provision for buildings. Standalone applications (e.g. in single-family buildings), centralised systems (e.g. for offices, commercial buildings, some multi-family buildings) as well as district energy systems can take advantage of such synergies as vapour-compression serves as a common technology principle for all heat pump operation modes. To exploit this opportunity, governments and industries could focus on:

• Stimulating market uptake with the provision of new services (e.g. cooling) in favour of heat pumps for new builds and renovations. For example, in the United States, it contributed to increasing the share of heat pump sales for newly constructed buildings, where it exceeds 40% for single-family dwellings and nearly 50% for new multi-family buildings. The renovation market, however, is lagging behind globally. It needs to be stimulated with incentives and market instruments to encourage in-kind replacement of coal, oil and gas boilers with air-to-water heat pumps when space and piping networks allow.
• Exploiting simultaneous heating and cooling generation in vapour compression cycles. District energy networks may be connected to areas where heating needs are dominant (e.g. residential buildings) and others with larger cooling needs (e.g. offices). Making use of both the heating and cooling provided by vapour compression cycles in integrated energy networks can raise the efficiency of heat pumps by 30-50%, while allowing integration of waste heat and renewable energy sources. Additional opportunities include the recovery of waste heat from compressors of air conditioners that can benefit sanitary hot water production in residential applications and boost heat pump efficiency by up to 60%, depending on water heating needs.
• Reaping technology spillovers. Technology learning could be transferred across various types of heat pumps and air conditioners because they share multiple components and thermodynamic principles. Synergetic technology areas include the use of next-generation components such as electrochemical compressors or more compact heat exchangers. In parallel to technology progress, the accelerated uptake of reversible units, combined with the rise of vapour-compression-based cooling-only units in regions with no or little heating needs, will generate economies of scale, which could spill over into heating applications. Thermal output capacity of vapour compression cycles could expand more than fivefold, 85% of which is driven by cooling needs. It results in an additional capital and installation costs reduction of around 15% by 2050 in the Sustainable Development Scenario, which facilitates the deployment of this technology for heating applications

A number of heat pump technology designs are ready for deployment. However, the diversity of building types, end-use service demand patterns and climate conditions require further enhancement for them to adapt to a variety of working environments. The Energy Technology Perspectives 2020 special report on Clean Energy Innovation and accompanying Clean Technology Guide show that innovation2 has a strong role to play to broaden their applicability to specific markets and ensure they are scalable.

In particular, additional innovation in vapour-compression equipment to penetrate the heating market are needed to:

• Tailor heat pump designs to specific market segments or operating conditions. While sharing the same thermodynamic cycles, heat pump types, designs, components, and operational needs vary for different climatic zones and distribution systems. Priorities include: 1) Developing compact and silent innovative system designs that are compatible with existing buildings and can be plugged into current buildings distribution systems. Such compact (and high temperature) solutions to substitute fossil-fuel boilers are still at early stages of adoption (TRL 7-9); 2) Developing products dedicated to multi-family building applications able to adapt to a variety of heat and hot water demand patterns, building size and layout (TRL 7-9), and 3) Pushing innovation for cold-climate heat pumps. Their seasonal energy performance can be 40% higher than conventional products when operating in very cold climates, while ensuring continued heat supply at outdoor temperatures of -25°C (TRL 5-7).
• Enhance heat pump integration to other parts of the energy system, such as electricity grids, renewable assets (off-site or on site such as solar PV), storage, micro-grids, etc. Integrated compact storage systems and demand-side response functionalities are critical to reduce their contribution to the peak load and associated needs for power generation and transmission upgrades. The prototype Climate and Comfort Box integrates components close to technology maturity (TRL 4-6) that propose a scalable and flexible product in a projected net-zero emissions environment, with limited on-demand fossil fuel power plants and a high share of variable renewables.
• Improve heat pumping technology designs and control systems to adapt to end-user demand patterns. For instance, technology designs that are able to work efficiently at partial loads would address the efficiency losses of low-capacity operations. For multi-split systems, enhanced controls could prove useful to adapt to varying cooling loads across multiple rooms (for multi-split systems for instance).
• A five-year delay in the demonstration of innovative designs associated with a lower uptake of heat pumps that are already commercial would results 60% lower installed output thermal capacity of innovative heat pumps by 2030, compared to the Sustainable Development Scenario.
  

In addition to innovations in vapour compression technologies, there is a significant market opportunity to develop affordable alternative or hybrid cooling solutions, especially for hot climate developing countries with no need for heating. More than 60% of the global population are projected to live in regions with such climate conditions in 2070.

• Hybrid membrane-based solutions (TRL 3-5) would open up the possibility of controlling both humidity and temperature by decoupling latent (vaporisation) and sensible (temperature variations without phase change) heat loads. This principally includes membrane-desiccants integrated evaporative cooling technologies. The same components can be operated with vapour compression cycles as well.  Most recent tests are promising, with coefficient of performance ranging from 5 up to 15.
• In addition, solid-state cooling technologies exploiting caloric effects of specific materials are today a prototype of what could be a new approach to refrigeration. At present, barocaloric materials, generating heat from pressure variations, and electrocaloric materials, generating heat from electric fields, seem to be the most promising for space cooling and refrigeration application (TRL 3-5). Research in test conditions shows that barocaloric refrigeration, in particular, could perform better than vapour compression coolers in domestic applications, with improvements ranging from 5% to 150% depending on ambient conditions and cooling demand patterns.

The benefits of non-vapour-compression cooling technologies also include the accelerated phase out of high-global warming potential refrigerants such as hydro-chlorofluorocarbons (HCFCs). To date, more than 195 countries have committed to reducing their use by 80% by 2050 as part of the Kigali amendment to the Montreal Protocol. Concrete action towards achieving this goal include the Kigali Cooling Efficiency Programme and the IEA Annex 54 of the Heat Pumping Technology Collaboration Programme.

Government stimulus packages represent an opportunity to increase the adoption of more efficient equipment. The European Commission introduced “Next Generation EU”, a recovery instrument supporting the EU strategy for the Clean Energy Transition. In particular, the package will support energy efficiency, the use of local resources and direct electrification, which is expected to lead to increased adoption of heat pumps and other renewable heating solutions for new builds and renovations.

The IEA’s Tracking Clean Energy Progress provides a series of recommendations on incentives, price signals (e.g. narrowing the gap between natural gas and electricity prices) as well as standards (e.g. minimum performance requirements, building codes) and infrastructure (e.g. district energy systems) required to boost improved building design and the use of efficient products. A policy path to achieve the heating and cooling decarbonisation objectives through heat pumps needs to target greater deployment, integration to the energy system and technology enhancement.

The rapid advancement and innovation in heat pumping technologies holds the promise of providing cost-effective, energy-efficient heating and cooling services to meet the challenges of decarbonisation in the building sector. However, key measures for implementation may only prove successful if a wide array of countries and stakeholders act together, and collaboratively, on the aforementioned critical research areas. The Technology Collaboration Programmes by the IEA are a good example of how a group of countries successfully unite their efforts to advance research topics and share best practices for innovative project implementation.