Heat pump - The Sustainability Management Wiki

Authors: Shervin Bikdeli, Navid Ajam
Edited by: Radid Pejaranonda, Yun Chunlei
Last updated: May 18, 2026

Executive summary

Heat pumps are energy-efficient technologies that transfer heat from low-temperature sources such as air, water, or ground to provide heating and cooling. They play a key role in reducing energy consumption and greenhouse gas emissions, especially when combined with renewable electricity.

Technologically, heat pumps rely on a vapor-compression cycle and can achieve high efficiency, often delivering three to four units of heat for each unit of electricity consumed. Their performance depends on system design, climate conditions, and proper installation and operation. Common types include air-source, ground-source, water-source, absorption, hybrid, and ductless systems.

From an economic perspective, heat pumps often require higher upfront investment than conventional heating systems, but they can deliver lower lifecycle costs under favorable conditions. Key influencing factors include electricity prices, seasonal performance, climate, and policy incentives.

Ecologically, heat pumps contribute to decarbonization by improving energy efficiency and enabling the use of renewable energy. Their environmental performance depends on refrigerant choice, system maintenance, and end-of-life management.

Socially, heat pumps can enhance indoor comfort, reduce air pollution, and create jobs, but challenges remain regarding affordability, equitable access, and public acceptance. Noise and workforce shortages are additional concerns.

Policy frameworks strongly influence deployment. Regulations, subsidies, and climate targets in regions such as the EU, US, and China support adoption, but barriers such as high upfront costs, limited workforce capacity, and grid integration challenges must be addressed to scale up implementation.

1 Description and history

Water naturally flows from higher places to lower places, and heat is transferred from hotter objects to colder ones—this is a law of nature. However, in real life, to meet needs such as agricultural irrigation and domestic water supply, people use pumps to move water from lower places to higher ones. Similarly, in today’s world of increasing energy scarcity, heat pumps have become a widely recognized new energy technology for recovering heat from low-temperature exhaust air normally released into the atmosphere and low-temperature wastewater discharged into rivers. A heat pump is a device that transfers thermal energy from a low-temperature heat source to a high-temperature heat source, and it has become a new energy technology attracting worldwide attention. It differs from the mechanical device people are familiar with—the “pump,” which raises potential energy. A heat pump usually extracts low-grade heat energy from natural sources such as air, water, or soil, then uses electrical work to upgrade it and provide people with high-grade heat energy that can be utilized.¹

In the early nineteenth century, the French scientist Sadi Carnot first introduced the theory of the “Carnot cycle” in an 1824 paper, which became the origin of heat pump technology. In 1852, the British scientist Lord Kelvin proposed that refrigeration devices could also be used for heating, putting forward the concept of a heat pump based on the reverse Carnot cycle. During the 1950s, heat pumps and reversible air-conditioning systems began to be applied in Japan and the United States because of seasonal demand for air conditioning and space heating.

Heat pumps have been widely studied in the literature across residential, geothermal, solar-assisted, and industrial applications. Research has focused on system design, refrigerants, seasonal performance, and integration with renewable energy systems. For example, Omer² and Florides and Kalogirou³ review the many configurations of geothermal heat pump systems. Chua⁴ focus on recent component-level improvements and novel system designs, and Neksa⁵ reviews CO₂ as a promising new refrigerant. Ozgener and Hepbasli⁶ and Hepbasli⁷ review the applications of solar-assisted and gas engine heat pumps, as well as heat pump water heaters.⁸

The operating principle of a heat pump is essentially the reverse of a heat engine. While a traditional heat engine converts thermal energy into mechanical work, a heat pump uses mechanical work to move heat from a colder location to a warmer one, transferring energy from the outdoors into a building during the winter, for instance. In this cycle, a refrigerant fluid, such as CO₂ (among other possible substances), absorbs heat during its evaporation phase and then releases that heat when it condenses. The process is driven by the compressor, which increases the pressure of the refrigerant and, consequently, its temperature. This cycle is repeated continuously, allowing the system to maintain comfortable indoor conditions regardless of the external climate.

For a split-type heat pump air conditioner, during summer cooling operation, the outdoor unit acts as the condenser and the indoor unit acts as the evaporator, so the system transfers heat from indoors to outdoors. In winter, the roles are reversed: the indoor unit acts as the condenser and the outdoor unit acts as the evaporator, so heat is transferred from outdoors to indoors. This switching is usually achieved by means of a four-way reversing valve. Inside a heat pump air conditioner, there is a four-way reversing valve. Under cooling conditions, the indoor heat exchanger serves as the evaporator, while the outdoor heat exchanger serves as the condenser. During winter heating operation, the four-way valve switches and changes the direction of refrigerant flow. At this point, the indoor heat exchanger becomes the condenser, and the outdoor heat exchanger becomes the evaporator. Because the outdoor heat exchanger operates at a low temperature in winter, frost tends to form on it as it blows out cold air. When the frost reaches a certain level, the four-way reversing valve switches again, and the air conditioner temporarily enters the summer cooling mode. In this state, the outdoor heat exchanger receives heat, allowing the frost to melt. Once defrosting is complete, the four-way valve switches back to the heating mode. During defrosting, to prevent cold air from being blown into the room, the indoor fan is stopped. Of course, this reverse-cycle defrosting has some negative effect on comfort, so other methods have been developed, such as hot-gas bypass defrosting and thermal-storage defrosting, which do not require switching the operating mode.¹

The performance of a heat pump is generally evaluated by its coefficient of performance (COP). The COP is defined as the ratio of the heat transferred from a low-temperature source to a high-temperature sink to the input power required. Typically, the COP of a heat pump is around 3 to 4, which means that a heat pump can deliver 3 to 4 times as much heat energy as the energy it consumes. However, heat pump performance should be assessed using both instantaneous and seasonal indicators. The coefficient of performance (COP) describes the ratio of heat output to electrical input under specific operating conditions, while the seasonal coefficient of performance (SCOP) provides a more realistic measure of heating efficiency over an entire heating season. In North American practice, HSPF2 is commonly used to evaluate seasonal heating performance, while SEER2 reflects seasonal cooling efficiency. These performance indicators are strongly influenced by system design and operating temperatures. In general, lower emitter flow temperatures improve efficiency because the compressor needs to overcome a smaller temperature lift. For this reason, heat pumps tend to perform best in low-temperature heating systems, such as underfloor heating or oversized radiators. Proper system sizing is also essential: an undersized system may require frequent auxiliary heating, while an oversized system may suffer from reduced efficiency due to frequent cycling on and off. Therefore, heat-loss calculations should be carried out before installation so that the heat pump capacity can be matched to the building’s demand. Commissioning and control settings are equally important for actual efficiency, because even if the equipment itself has high performance, poor control adjustment, unsuitable setpoints, or incorrect refrigerant charging can all reduce overall system performance.⁹

Recent advancements in technology have greatly improved the performance and flexibility of heat pump systems. For example, today’s compressors utilize variable-speed technology, which allows the system to adjust its output according to real-time heating or cooling needs. This not only enhances energy efficiency by minimizing the number of on-off cycles but also increases occupant comfort by creating a more consistent indoor climate. Sophisticated control systems, often linked with smart home technologies, facilitate remote monitoring and precise adjustments of operational parameters, ensuring the heat pump runs at optimal efficiency in varying environmental conditions.

In addition to individual systems, there is an increasing trend toward employing heat pumps in district heating networks. These large-scale setups capture waste heat from industrial processes, data centers, or sewage systems, showcasing the ability of heat pump technology to scale and serve entire communities effectively. Such networks improve energy efficiency on a municipal level while contributing to broader initiatives aimed at decarbonizing urban spaces.

There are some the most important types of heat pumps with their characteristic features as shown in table 1.

• Air-source heat pumps (ASHP)¹⁰

They are the most common systems to extract heat from outside air. They work well in moderate climates and are used very much in heating as well as cooling houses.

• Ground-source (geothermal) heat pumps¹¹

They are also called geothermal heat pumps. They use the relatively constant temperature of the earth as a source of heat during the winter (as a sink of heat during the summer). They are highly efficient with low operating costs, particularly in areas with varying temperatures.

• Water-source heat pumps¹²

They take in the heat from an external body of water—a lake, river, or well—and perform most efficiently when there is a constant water supply.

• Absorption heat pumps¹³

In contrast to the use of electricity to power a compressor, the absorption systems use heat (obtained from natural gas, solar energy, or waste heat) to transfer the refrigerant. They are most typically used in industrial processes and can be paired with renewable sources of heat.

• Hybrid heat pumps¹⁴

They blend the characteristics of various types (say, air-source and gas-fired) to realize performance under a wide range of conditions. They can automatically change between modes to ensure maximum efficiency as well as comfort.

• Ductless mini-split heat pumps¹⁵

Ideal for homes with no ductwork, these systems offer zoning capability, with the option to heat or cool various rooms or zones separately.

Table 1: Main types of heat pumps and their characteristic features. Authors’ own compilation.

Types

Advantages

Disadvantages

Air-Source Heat Pumps

• Simple to install at relatively affordable costs

• Very accessible with many off-the-shelf products

• Suitable for moderate climates

• The efficiency reduces in very low temperatures

• Can produce outdoor noise

• The performance can be affected by adverse climatic conditions

Ground-Source (Geothermal) Heat Pumps

• Highly effective due to the perpetual ground temperature

• Long lifespan with silent operation

• Lower operating costs over time

• High initial installation cost (drilling, land requirements)

• Installation is invasion-based and locational

• Requires much land area or boreholes

Water-Source Heat Pumps

• High efficiency if a suitable water body is present

• Stable source temperature can produce consistent performance

• Requires a dependable supply of water (lake, river, or well)

• Can have regulatory and ecological issues

• Installation complexity may be higher in cities

Absorption Heat Pumps

• Can use waste heat or renewable thermal sources (like solar) instead of electricity

• Minimize power consumption while operating with other energy sources

• Lower coefficient of performance (COP) than vapor compression heat pumps in general

• More powerful and complex, perhaps limiting domestic application

• Often necessitate more infrastructure at the source of the heat (for instance, fuel or solar panels)

Hybrid Heat Pumps

• Combines the technology of heat pumps with traditional heating systems

• Offers flexibility to adjust efficiency in accordance with external conditions

• Interchangeable energy sources in order to maximize performance

• More complex control and design systems

• Generally higher installation and maintenance costs

• Requires careful integration to achieve expected benefits

Ductless Mini-Split Heat Pumps

• No Ductwork Required

• Energy Efficiency

• Zoned Comfort

• Higher Starting Price

• Maintenance Required Regularly

• Complexity for Bigger Homes

2 Economic performance

• Payback period

The payback period depends on many factors, for example upfront cost, operating cost savings, local climate, building insulation quality, policies of each country or region,¹⁶ and electricity-to-gas price ratio is the most important one. Regarding the aspects of comparing the payback period of renewable energy combined with heat pumps, taking solar heat pumps as an example, it depends on solar Irradiance and ambient temperature. Payback takes more than 30 years for northern climates, but it is shorter than 21 years in southern climates. The reason is that the northern climates have less irradiation and more days with the need of heating compared to southern climates.¹⁷

• Investment cost

There are different factors that can affect the investment cost. Some of them are the capacity of heat pumps, the market we purchase, type of heat pump and technology, extra equipment added or not. the upfront costs of a heat pump typically include: the main unit/equipment, installation labor, electrical upgrades, distribution/emitter upgrades, and control systems. Cost differences between different systems can be significant. For air source heat pumps (ASHP), the upfront investment is usually lower, while for ground source heat pumps (GSHP), the upfront investment is higher, but the seasonal performance is usually more stable.⁹ The cost of heat pumps varies significantly across different countries and markets, influenced by labor costs, supply chains, regulations, and building-specific retrofit requirements. For example, in Sweden for different technologies of heat pumps, the price increased from 2010 to 2023 and there is a significant jump from 2022 to 2023. This consistent price increase is mostly because of the effect of inflation on the economy.¹⁸

• Operating cost

The operating cost of a heat pump is affected by factors such as SCOP, heating temperature, climate, and building envelope, but the main influencing factor remains electricity. First, it is obvious that heat pumps with different technologies consume different amounts of electricity, and higher consumption means higher operational costs. Second, different climate regions need different heat supply from heat pumps. Third is the feed-in tariff for electricity. With higher tariffs, we should pay more for operational costs. As an example, the electricity price in Germany has changed over recent years, and it affects the heat pump’s operational costs. These prices can play a role in societies’ selecting between gas boilers and heat pumps.¹⁸

• Lifecycle cost comparison

Lifecycle cost comparison provides a more meaningful economic assessment of heat pumps than investment cost alone. Although heat pumps often involve higher upfront expenditures than conventional gas or oil boilers, their total cost over the system’s lifetime may be lower under favorable conditions. A robust comparison should therefore include equipment and installation costs, possible electrical or emitter upgrades, annual maintenance, and long-term energy consumption. In addition, economic results are highly sensitive to assumptions such as local climate, building insulation level, seasonal performance, electricity and gas tariffs, policy incentives, and system lifetime. For this reason, simple payback periods should be interpreted with caution, while net present value (NPV) offers a more comprehensive evaluation of long-term economic viability. In particular, the electricity-to-gas price ratio is a decisive factor: where electricity prices are high relative to gas, the financial attractiveness of heat pumps may decline, whereas lower relative electricity prices, higher seasonal efficiencies, and supportive subsidies can significantly improve lifecycle economics.⁹

• The production cost

The production cost of a heat pump mainly depends on its major components, especially the compressor, heat exchanger, control system, and power electronics. Material prices also play an important role, particularly for copper, steel, and aluminum. For the raw material costs, based on IEA estimation the majors are copper by 50 percent, steel by 20 percent, aluminum by 15 percent and nickel 10 percent. In addition, production costs are affected by manufacturing scale, labor costs, supply chains, and regional market conditions.

Figure 1: Production cost breakdown. Authors’ own illustration based on¹⁹

3 Ecological performance

Heat pumps provide remarkable ecological benefits against climate change by reducing greenhouse gas emissions and enhancing overall energy efficiency. Comprehensive life cycle assessments (LCA) show that these advanced systems can drastically lower carbon footprints when compared to traditional fossil fuel heating methods.¹⁹

In the past, the working refrigerant used in heat pumps was generally Freon. However, because Freon damages the Earth’s atmospheric ozone layer, scientists around the world have been committed not only to improving the coefficient of performance of heat pumps and making more effective use of energy, but also to developing new refrigerants in order to protect the global environment. As a result, some substitutes for Freon have already been put into use. Today, most manufacturers in China still use R22 as the refrigerant, while the widespread adoption of more environmentally friendly refrigerants such as R417A and R134a has not yet fully arrived. In contrast, countries such as Japan have taken the lead in using CO₂ as a refrigerant, thereby avoiding damage to the ozone layer. In addition, refrigerant management is particularly important, because leakage not only reduces system performance but may also increase direct greenhouse gas emissions. This also applies to low-GWP refrigerants such as R-454B: although they can reduce direct climate impact compared with older refrigerants, their environmental benefits still depend on sound system design, leak prevention, and correct charging. At the end of a system’s service life, proper recovery, reuse, and disposal of refrigerants and components are necessary in order to reduce waste and avoid unnecessary emissions.¹

Routine maintenance is important for preserving both the efficiency and environmental performance of heat pumps. Regular service typically includes cleaning or replacing filters, inspecting coils, checking airflow, and verifying refrigerant charge and possible leaks. Poor maintenance can reduce heat transfer efficiency, increase electricity consumption, and shorten equipment lifetime.²⁰

Beyond their energy-saving potential and lower carbon emissions, heat pumps can also improve resource efficiency by recovering waste heat from a variety of sources, including industrial processes, sewage systems, and urban environments. By converting otherwise unused thermal energy into useful heat, these systems can reduce the overall demand for additional fuel. When combined with complementary technologies such as solar thermal collectors, the overall efficiency of the system can be further improved and may cover a significant share of heating demand, particularly in densely populated urban areas. Consequently, modern heat pump technology stands out not only for its ability to mitigate emissions but also for its role in promoting a sustainable and resource-efficient approach to energy utilization throughout its operational lifespan.²¹ Figure 2 summarizes the main differences between heat pumps and conventional heating systems.

Figure 2: Comparison of heat pumps and conventional heating systems. Authors’ own illustration based on²²

4 Social impact

Heat pumps are widely discussed as a low-carbon heating technology, but they also have social impacts. At the household level, they affect energy costs, indoor comfort, and health. At the community level, they influence public acceptance and people’s views on whether the costs and benefits are shared fairly.²³^,²⁴ However, these benefits are not distributed equally. In some cases, heat pumps can reduce fuel poverty and improve indoor conditions. In other cases, high initial costs, unequal access to financial support, and differences in local energy prices can limit these benefits.²³^,²⁵ Social acceptance also depends on more than technical performance. It is shaped by behavioral factors, trust in installers, and concerns such as outdoor noise from air-source heat pumps.²⁶^,²⁷ This section discusses four main dimensions of social impact: adoption barriers and affordability, health and comfort, neighborhood acceptance, and employment and skills transition. Table 2 summarizes the four dimensions discussed in this section and shows that the social benefits of heat pumps depend strongly on affordability, installation quality, public acceptance, and workforce readiness.

Table 2: Summary of the main social impacts of heat pumps. Authors’ own compilation.

Dimensions

Potential benefits

Main limits

Key references

Adoption barriers, affordability, and equity

Can reduce fuel poverty and improve household energy security

High initial costs, unequal access to subsidies, differences in local energy prices

²³^,²⁴^,²⁶

Health, comfort, and environmental co-benefits

Better indoor comfort, healthier indoor conditions, less local air pollution

Benefits depend on building condition, installation quality, and operation

²⁸^,²⁹^,³⁰

Noise and neighborhood acceptance

Can support low-carbon heating in residential areas

Noise may cause annoyance and disturb sleep or concentration if poorly installed

²⁷^,³¹

Jobs, skills, and social transition

Creates jobs in manufacturing, installation, and maintenance

Shortage of qualified installers and need for training/reskilling

³²^,³³^,³⁴

• Adoption barriers, affordability, and equity

The adoption of heat pumps not only depends on technical performance, but also on economic and social conditions. In many cases, heat pumps can reduce fuel poverty and improve household energy security, especially when they replace expensive off-gas heating systems.²³ However, not all households benefit equally. High initial costs, differences in local electricity and gas prices, and unequal access to financial support can make heat pumps less attractive or less affordable for low-income households.²³^,²⁴ Renters and low-income households may face even greater barriers because they often have less control over building upgrades and less access to upfront capital for new heating systems.²⁴^,²⁶ Adoption also depends on behavioral and social factors, such as knowledge of the technology, trust in installers, and the ability of households to adapt to a different heating system.²⁶ For this reason, affordable systems, fair access to subsidies, and reliable information are important for more socially inclusive heat pump deployment.²⁴^,²⁶

• Health, comfort, and environmental co-benefits

Heat pumps can provide social benefits beyond energy savings. They can improve indoor comfort and support healthier living conditions. When they are combined with suitable building improvements, efficient heating systems can help maintain healthier indoor temperatures and better air quality. This is especially important for households experiencing fuel poverty.²⁸^,²⁹ Heat pumps also produce no local combustion emissions during operation. As a result, they can reduce indoor and nearby air pollution compared with fossil-fuel heating systems.³⁰ In practice, these benefits can be maximized when heat pumps are installed in buildings with suitable thermal performance and are operated correctly by households.²⁸^,²⁹ However, these outcomes still depend on proper installation, building condition, and effective system operation.²⁸^,²⁹

• Noise and neighborhood acceptance

Air-source heat pumps can create social concerns at neighborhood level, especially in dense residential areas where outdoor units are installed close to neighboring homes. Their noise can affect public acceptance because it may cause, for instance, annoyance, sleep, concentration, and mood disturbance.²⁷ These effects do not depend only on the technology. They also depend on installation location, surrounding building surfaces, and operating conditions.²⁷^,³¹ Simple mitigation measures, such as careful siting, adequate distance from windows, and acoustic shielding, can help reduce annoyance and improve local acceptance.²⁷^,³¹ Good planning, careful placement of outdoor units, and better noise assessment methods are therefore important for reducing local disturbance and improving neighborhood acceptance.²⁷^,³¹

• Jobs, skills, and social transition

The expansion of heat pumps can create wider social benefits through employment and skills development. Growth in the heat pump sector increases demand for workers in manufacturing, installation, maintenance, planning, and system design.³²^,³³ However, these benefits depend on the availability of skilled workers. Current evidence shows that shortages of qualified installers are already a major barrier in many markets. Wider deployment will therefore require large-scale training and reskilling of technicians, plumbers, and electricians.³³^,³⁴ As a result, heat pump adoption is not only a question of technology and policy, but also of workforce preparation and a fair social transition.³²^,³³ As shown in Figure 3, the workforce needed in the European heat pump sector by 2030 is expected to be much higher than current direct employment. This highlights the scale of the training challenge.

Figure 3: Current employment and projected workforce needs in the heat pump sector. Authors’ own illustration based on³² and³⁴

5 Political and legal aspects

The development and widespread use of heat pumps also depend on political and legal frameworks. These frameworks shape building standards, renewable energy targets, sustainable finance, and consumer support schemes.³⁵^,³⁶ In the European Union, heat pumps are promoted through a combination of building regulations, renewable energy targets, sustainable finance rules, and broader initiatives linked to REPowerEU.³⁵^,³⁶ However, policy support alone does not guarantee rapid deployment. Implementation still relies on affordability, workforce capacity, and the ability of electricity systems to integrate growing electrified heating demand.³³ This section first examines the main EU policy framework for heat pumps, then reviews selected national and state-level policy examples, and finally discusses the main barriers to wider implementation.

• EU policy framework

The policy framework for heat pumps in the European Union is shaped by several complementary instruments rather than a single regulation. First, the EU Taxonomy provides a sustainable finance framework by classifying certain economic activities as environmentally sustainable. Within this framework, the installation and operation of electric heat pumps is listed as a specific activity. This means that heat pumps can be linked to green investment when the relevant technical screening criteria are met.³⁷^,³⁸ The Taxonomy does not directly provide financial support for heat pumps. Instead, it guides investment toward low-carbon technologies that support the EU’s climate objectives.³⁷

Second, heat pumps are supported through broader EU climate and energy legislation. The revised Energy Performance of Buildings Directive (EPBD) strengthens the legal framework for improving the energy performance of buildings and works together with other climate measures, including the revised Renewable Energy Directive and REPowerEU.³⁵ In parallel, the revised Renewable Energy Directive (RED III) sets an overall binding EU renewable energy target of at least 42.5% by 2030, with the aim of reaching 45%, and includes measures to accelerate renewables in sectors such as heating and cooling.³⁶^,³⁹

In addition, the wider EU policy context affects the future role of heat pumps through product-related regulation. REPowerEU highlighted the need to improve the energy performance of the EU building stock in order to reduce dependence on fossil fuel imports.³⁵ Heat pump deployment must also align with the revised F-gas Regulation (EU) 2024/573, which aims to avoid the use of planet-warming gases in products such as heat pumps and to encourage more climate-friendly alternatives.⁴⁰^,⁴¹ Overall, the EU framework combines finance, building policy, renewable energy targets, and refrigerant regulation to support both market growth and long-term decarbonization.³⁵^,³⁶^,³⁷^,⁴⁰

• National and state-level policy examples

At national and state level, heat pump deployment is supported through different combinations of grants, tax credits, rebates, and climate laws. Table 3 summarizes the main policy instruments discussed in this section before selected examples from the United Kingdom, the United States, and China are examined in more detail.

Table 3: Main policies supporting heat pump deployment

Area

Policy

Main function

Relevance to heat pumps

European Union

EU Taxonomy

Defines sustainable economic activities and guides green investment

Supports investment in electric heat pumps under sustainable finance criteria

European Union

EPBD

Improves building energy performance

Strengthens the policy context for replacing fossil-fuel heating systems

European Union

RED III

Expands renewable energy targets, including heating and cooling

Supports wider use of renewable-based heating technologies such as heat pumps

European Union

F-gas Regulation

Restricts high-GWP refrigerants

Encourages transition to more climate-friendly heat pump technologies

United Kingdom

Boiler Upgrade Scheme

Provides grants for low-carbon heating systems

Reduces upfront installation costs for households

United States

Energy Efficient Home Improvement Credit

Provides tax credits for qualified technologies

Supports household investment in heat pumps

United States

Home Energy Rebates

Provides rebates for eligible households

Improves affordability, especially for lower-income households

New York State

CLCPA and NYS Clean Heat

Combines legal targets with state support programmes

Links climate targets with practical incentives for heat pump adoption

China

National decarbonisation strategy

Supports carbon peaking and carbon neutrality goals

Promotes heat pumps in buildings, industry, and district heating

Source: Authors’ own compilation based on³⁵^,³⁶^,³⁷^,³⁸^,⁴⁰^,⁴²–.⁴³

In the United Kingdom, the Boiler Upgrade Scheme provides grants of £7,500 for air-source and ground-source heat pumps in England and Wales, while the Climate Change Committee (CCC) identifies a major increase in heat pump use as part of the UK’s long-term decarbonization pathway.⁴²^,⁴⁴

In the United States, federal support is mainly provided through the Energy Efficient Home Improvement Credit, which offers up to $2,000 per year for qualified heat pumps, and through Home Energy Rebates, under which an eligible electric heat pump for space heating and cooling may qualify for rebates of up to $8,000.⁴⁵^,⁴⁶ At state level, New York provides an important example through the Climate Leadership and Community Protection Act (CLCPA), which requires economy-wide greenhouse gas emissions reductions of 40% by 2030 and at least 85% by 2050 compared with 1990 levels, alongside state programmes and incentives that support heat pump adoption.⁴⁷^,⁴⁸

In China, heat pumps are increasingly linked to national decarbonization goals, especially in buildings, industry, and district heating. The International Energy Agency notes that heat pumps can play an important role in helping China achieve its goals of peaking CO₂ emissions before 2030 and reaching carbon neutrality before 2060.⁴³ Together, these cases show that heat pump policy is shaped not only by climate ambition, but also by the design of financial incentives, legal targets, and sector-specific implementation strategies.⁴²^,⁴⁵^,⁴³

• Key implementation barriers

Despite strong policy support, the wider deployment of heat pumps still faces several implementation barriers. One important challenge is affordability. High upfront costs can remain a major obstacle even when grants, tax credits, or rebates are available.³³^,⁴⁹ Another barrier is workforce capacity. The International Energy Agency notes that many countries already face shortages of qualified workers in occupations related to heat pump installation, which means that large-scale deployment will require significant training and reskilling.³³

A further challenge is grid readiness and system integration. As electrified heating expands, electricity systems must be able to manage higher and more flexible demand. This increases the importance of grid planning, smart controls, and efficient heating and cooling strategies.⁵⁰ Dynamic tariffs and smart controls can help shift heating demand away from peak periods and improve system flexibility, which may reduce pressure on electricity networks.⁵⁰ In addition, the benefits of policy support are not always distributed equally. Some support schemes are more accessible to owner-occupiers than to renters, while low-income households may still face difficulties in covering remaining costs even when rebates are available.⁴⁶^,⁴⁹ Therefore, policy effectiveness not only depends on the size of financial support, but also on how easily different social groups can access it.⁴⁶^,⁴⁹ Successful deployment also relies on product standards, installer certification, and consumer protection frameworks, which help improve quality, build trust, and reduce the risk of poor installation outcomes.⁴²^,⁴⁶

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Rao, N. D. et al. A critical review of heat pump adoption in empirical and modeling literature. iScience 28(1), 111666 (2025).
27
Umweltbundesamt. Annoyance and Sleep Disturbance Due to Noise from Air-Source Heat Pumps and Air Conditioners. German Environment Agency (2024).
28
International Energy Agency (IEA). World Energy Outlook 2021: People-centred Transitions. IEA (2021).
29
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30
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31
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32
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European Commission. Commission adopts guidance to EU countries on implementing the revised directives on renewable energy and on energy efficiency. European Commission (2024).
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International Energy Agency (IEA). The Future of Heat Pumps in China. IEA (2024).
44
Climate Change Committee (CCC). The Seventh Carbon Budget. CCC (2025).
45
Internal Revenue Service (IRS). Energy Efficient Home Improvement Credit. IRS (2023).
46
U.S. Department of Energy (DOE). Home Upgrades. DOE (2024).
47
New York State Department of Environmental Conservation. Climate Change Statutes, Regulations, and Policies. NYSDEC (2023).
48
New York State Energy Research and Development Authority (NYSERDA). Heat Pump Program (NYS Clean Heat). NYSERDA (2024).
49
U.S. Department of the Treasury. Coordinating DOE Home Energy Rebates with Energy-Efficient Home Improvement Tax Credits: An Explainer. U.S. Treasury (2024).
50
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Dongellini, M. et al. Energy and environmental performance comparison of heat pump systems working with alternative refrigerants. Applied Sciences 13, 7238 (2023).
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Edwards, M. R. et al. Assessing inequities in electrification via heat pumps across the US. Joule 8(10) (2024).
25
Xu, J. et al. Impact of heat pumps and future energy prices on regional inequalities. Energy and Climate Change 6, 100182 (2025).
26
Rao, N. D. et al. A critical review of heat pump adoption in empirical and modeling literature. iScience 28(1), 111666 (2025).
27
Umweltbundesamt. Annoyance and Sleep Disturbance Due to Noise from Air-Source Heat Pumps and Air Conditioners. German Environment Agency (2024).
28
International Energy Agency (IEA). World Energy Outlook 2021: People-centred Transitions. IEA (2021).
29
Wang, C. et al. A systematic review of associations between energy use, fuel poverty, energy efficiency improvements and health. International Journal of Environmental Research and Public Health (2022).
30
International Energy Agency (IEA). Heat Pumps in Moldova. IEA (2024).
31
Langerova, E. Air-to-water heat pump noise in residential settings: A comprehensive review. Renewable and Sustainable Energy Reviews (2025).
32
European Heat Pump Association (EHPA). Heat Pump Market and Statistics Report 2024. EHPA (2024).
33
International Energy Agency (IEA). The Future of Heat Pumps. IEA (2022).
34
European Heat Pump Association (EHPA). Training for Tomorrow: Building Europe’s Clean Heating Workforce. EHPA (2025).
35
European Commission. Energy Performance of Buildings Directive. European Commission (2024).
36
European Commission. Renewable Energy Directive. European Commission (2024).
37
European Commission. Installation and operation of electric heat pumps. EU Taxonomy Activity Navigator (2023).
38
European Commission. Taxonomy Climate Delegated Act, Annex I. European Commission (2021).
39
European Commission. Commission adopts guidance to EU countries on implementing the revised directives on renewable energy and on energy efficiency. European Commission (2024).
40
European Commission. F-gas legislation. European Commission (2024).
41
European Commission. Air conditioning – Climate-friendly alternatives to F-gases. European Commission (2024).
42
GOV.UK. Apply for the Boiler Upgrade Scheme: What you can get. UK Government (2024).
43
International Energy Agency (IEA). The Future of Heat Pumps in China. IEA (2024).
44
Climate Change Committee (CCC). The Seventh Carbon Budget. CCC (2025).
45
Internal Revenue Service (IRS). Energy Efficient Home Improvement Credit. IRS (2023).
46
U.S. Department of Energy (DOE). Home Upgrades. DOE (2024).
47
New York State Department of Environmental Conservation. Climate Change Statutes, Regulations, and Policies. NYSDEC (2023).
48
New York State Energy Research and Development Authority (NYSERDA). Heat Pump Program (NYS Clean Heat). NYSERDA (2024).
49
U.S. Department of the Treasury. Coordinating DOE Home Energy Rebates with Energy-Efficient Home Improvement Tax Credits: An Explainer. U.S. Treasury (2024).
50
European Commission. Heating and cooling. European Commission (2023).

Executive summary

1 Description and history

2 Economic performance

3 Ecological performance

4 Social impact

5 Political and legal aspects

References

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