Photo shows three heat pumps on a blue background

What are heat pumps?

A heat pump uses technology similar to that found in a refrigerator or an air conditioner, but in reverse, extracting heat from a source, then amplifying and transferring the heat to where it is needed. Current models are 3‐5 times more energy efficient than gas boilers, and global heat pumps sales have been growing at double-digits the past few years.

What is the role of heat pumps in clean energy transitions?

Heat pumps are increasingly recognised as a critical technology for the decarbonisation of heat, receiving increasing policy support in several countries over the last years. The IEA estimates heat pumps globally have the potential to reduce global carbon dioxide (CO2) emissions by at least 500 million tonnes in 2030 – equal to the annual CO2 emissions of all cars in Europe today.

Where do we need to go?

Heat pumps still meet only around 10% of the global heating need in buildings, below the deployment level required to get on track with the Net Zero Emissions by 2050 Scenario. Further policy support and technical innovation are needed, in particular to reduce upfront purchase and installation costs, remove market barriers to complex renovations, improve energy performance and durability, and exploit the potential of heat pumps as an enabler of power system integration and flexibility.

A heat pump uses technology similar to that found in a refrigerator or an air conditioner, but in reverse, extracting heat from a source, then amplifying and transferring the heat to where it is needed. Current models are 3‐5 times more energy efficient than gas boilers, and global heat pumps sales have been growing at double-digits the past few years.

Heat pumps are increasingly recognised as a critical technology for the decarbonisation of heat, receiving increasing policy support in several countries over the last years. The IEA estimates heat pumps globally have the potential to reduce global carbon dioxide (CO2) emissions by at least 500 million tonnes in 2030 – equal to the annual CO2 emissions of all cars in Europe today.

Heat pumps still meet only around 10% of the global heating need in buildings, below the deployment level required to get on track with the Net Zero Emissions by 2050 Scenario. Further policy support and technical innovation are needed, in particular to reduce upfront purchase and installation costs, remove market barriers to complex renovations, improve energy performance and durability, and exploit the potential of heat pumps as an enabler of power system integration and flexibility.

Latest findings

Annual growth in sales of heat pumps in buildings worldwide and in selected markets, 2021 and 2022

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Global heat pump sales continue double-digit growth

Global sales of heat pumps grew by 11% in 2022, according to the latest IEA analysis, marking a second year of double-digit growth for the central technology in the world’s transition to secure and sustainable heating. Increased policy support and incentives for heat pumps in light of high natural gas prices and efforts to reduce greenhouse gas emissions were key drivers behind the strong uptake.

In Europe, heat pumps enjoyed a record year, with sales growing by nearly 40%. In particular, sales of air-to-water models, which are compatible with typical radiators and underfloor heating systems, jumped by almost 50% in Europe. In the United States, heat pump purchases exceeded those of gas furnaces, while in China, the world’s largest heat pump market, sales remained stable.

Heat pump capacity in buildings by country and region in the Announced Pledges Scenario, 2021-2030

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Heat pumps are a proven way to provide secure and sustainable heating

Heat pumps, powered by low-emissions electricity, are the central technology in the global transition to secure and sustainable heating. The Future of Heat Pumps, a special report in the IEA’s World Energy Outlook series, provides an outlook for heat pumps, identifying key opportunities to accelerate their deployment. It also highlights the major barriers and policy solutions, and explores the implications of an accelerated uptake of heat pumps for energy security, consumers’ energy bills, employment and efforts to tackle climate change.

Around 10% of space heating needs globally were met by heat pumps in 2021, but the pace of installation is growing rapidly with sales at record levels. Government policy support is needed, though, to help consumers overcome heat pumps’ higher upfront costs relative to alternatives. Financial incentives for heat pumps are already available in over 30 countries, which together cover more than 70% of heating demand today. The IEA estimates heat pumps globally have the potential to reduce global carbon dioxide (CO2) emissions by at least 500 million tonnes in 2030 – equal to the annual CO2 emissions of all cars in Europe today.

Heat pump manufacturing capacity by country or region according to announced projects and in the Net Zero Scenario

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Global manufacturing will need to quadruple by 2030 to reach Net Zero targets

Greater deployment of heat pumps in the years ahead will require a scale-up of manufacturing capacity and has implications for the entire heat pump supply chain and electricity infrastructure. In 2022, some of the major manufacturers, notably in Europe, announced expansion plans that – if realised in full – would increase global manufacturing capacity by around one third. This would still leave a gap to meet the sales required in the Net Zero by 2050 Scenario. Global manufacturing capacity would need to almost quadruple by 2030 in order to bridge that gap.

However, manufacturing facilities can be deployed relatively quickly (one to three years) and few expansion projects are ever widely announced. Heat pumps share components with other industries and appliances, and their demand for critical materials – with its associated supply vulnerabilities - is lower than that of other clean energy technologies such as electrolysers, solar PV and wind. 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.

Governments and industry have vital roles to enable heat pumps to play their full part in contributing to energy security, energy affordability and emissions reductions.

Heat pumps

More efforts needed

Heat pumps are increasingly recognised as a critical technology for heat decarbonisation, receiving focused policy support in several countries over the past years. In 2022 record growth in heat pump sales was registered in Europe and in the United States, and 2023 is also showing early signs of ongoing growth, with for example Germany and Sweden witnessing over 100% and 20% growth, respectively.

However, heat pumps still meet only around 10% of the global heating need in buildings. To get on track with the Net Zero Emissions by 2050 (NZE) Scenario, the global heat pump stock would need to almost triple by 2030, to cover at least 20% of global heating needs. Further policy support and technical innovation are also required, particularly to reduce upfront costs, and to remove market barriers to renovations, improve energy performance and durability, exploit the flexibility potential, and further develop products and systems for refrigerants with lower climate and environmental impact. 

Heat pumps see strong growth in many countries, especially in Europe

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

  • In Europe, heat pumps enjoyed a record year in 2022, with sales growing by nearly 40%. Sales of air-to-water units jumped by almost 50%. In some markets, such as Poland, sales grew over 100%, driven by ambitious policies and support schemes. In the EU, a heat pump action plan is also expected in late 2023. 
  • In the United States, air-to-air heat pump sales grew by around 11% in 2022, overtaking gas furnace sales after years of almost equal growth.  
  • Air-to-water units grew by 19% in Japan in 2022, mainly driven by heat pumps water heaters. 
  • In 2022, France increased subsidy levels, followed by the United States, Ireland and Austria in early 2023, laying the foundations for sustained heat pump deployment.    

The majority of current space and water heating demand could be met with lower CO2 emissions by using heat pumps instead of condensing gas boilers

Relative CO2 emissions from the operation of air-source heat pumps compared with the most efficient condensing gas boilers by region in the Net Zero Scenario, 2010-2030

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In 2022, heat pumps could meet about 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.

Specialised maintenance, recycling and the use of alternative refrigerants can substantially reduce emissions resulting from refrigerant leakage

 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. 

Under the NZE Scenario, heat outputs from heat pumps increase at least two-fold by 2030 

In 2022 heat pumps met around 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 heat pumps as a renewable energy technology at the national level.  

Contribution of renewable electricity to heat pumps consumption in buildings space heating in the Net Zero Scenario, 2010-2030 

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Heat pump sales increased by more than 11% globally in 2022

In Europe, in which the largest markets are France, Germany and Italy, sales grew by around 40% year-on-year, reaching almost 3 million units.  

In the United States, sales of air-to-air units grew by 11% compared to the year before.  

More heat pump units were sold in China in 2022 than in any other country, despite a slowdown in sales growth. Air-to-water heat pumps mainly used for space heating make up a small segment of the Chinese market, but they saw growth of more than 20% in 2022. Around 40% 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, sales of air-to-air heat pumps were largely stable in 2022 as most units sold were to replace existing installations, which are typically one third less efficient than new models, but air-to-water units, led by heat pump water heaters, grew by 19%. 

Despite promising market trends, global sales need to expand by over 15% per year during this decade to align with the NZE Scenario. 

Annual growth in sales of heat pumps in buildings worldwide and in selected markets, 2021-2022

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Manufacturing capacity will need to quadruple by 2030 to reach NZE Scenario targets

Heat pump manufacturing capacity by announced projects in the Net Zero Scenario, 2021-2030

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In 2022 and early 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.  

To get on track with deployment required in the NZE Scenario, existing global manufacturing capacity will need to almost quadruple by 20301

However, manufacturing facilities can be deployed relatively quickly (one to three years) and expansion projects are not widely announced. 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. 

1The manufacturing capacity needed to meet projected demand in the NZE Scenario (NZE demand) is estimated assuming a utilisation rate of 85%.

Innovation is key for heat pump deployment in more challenging market segments

 Continued RD&D of heat pump technologies remains key to accelerating their deployment. Central ongoing innovation areas are: 

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. 

Accelerated heat pump deployment requires upgrades of supporting infrastructure, while automatised control systems can turn heat pumps into a grid asset

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. 

Policy support for heat pumps is increasing rapidly to meet decarbonisation and energy security ambitions

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 cooperation is crucial to foster innovation and improve data on heat pumps

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. 

Manufacturers are investing billions of dollars in expanding heat pump production capacities

As of November 2022, 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. Further manufacturing announcements are expected, driven by new incentives for consumers and direct support for manufacturers in the United States and in the EU. A growing number of manufacturers are also offering installation training programmes to address the shortage of installers. 

We would like to thank the following external reviewers:

  • 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 

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