Why Heat Pumps Could Become a Hot Commodity

Heat pumps are a superior alternative to conventional heating systems that could reach much higher levels of global adoption given their energy efficiency and lower operating costs.

Air conditioners are one of the most important technologies of modern life.

Having grown up in a very warm climate (Miami), it's hard to imagine life without air conditioning. Entire cities have developed in large part thanks to air conditioners.

For instance, Phoenix, Arizona, is America's fifth-largest city today, but it only had just over 100,000 residents in 1950. From 1950 to 1960, the city's population more than quadrupled because air conditioners became available for residential use in 1951. Without A/C, Phoenix's scorching summers would not support the two million people who now call the desert city home. The same is true for American cities like Houston, Dallas, Atlanta, and New Orleans.

Air conditioners have done wonders across the world. As of 2020, the global supply of air conditioners is two billion, and that number is expected to rise to almost six billion by 2050 as climate change and population growth (especially in warmer climates), among other factors, boost demand for indoor cooling.

But air conditioners are far from an ideal technology to control indoor temperatures. What if I told you there is a technology that does everything air conditioners do but better, has more features, is more efficient, and is more environmentally friendly? It turns out there is such a technology, but you might not have heard of it.

The idea for a heat pump is 170 years old, meaning it's older than light bulbs, electricity, cars, and air conditioning. Lord Kelvin (who has a unit of temperature named after him) wanted to figure out how to efficiently heat homes in the cool U.K. winters and cool them in tropical locales.

He called for something with the properties of a "perfect thermo-dynamic engine." Kelvin envisioned a machine that evaporated or condensed a liquid to generate heat or cooling. While his concept never hit the mass market, the essence of Kelvin's idea fueled the rise of heat pumps in the 20th century, particularly heat pumps that drew from the ground rather than the air.

The term "heat pump" is confusing and belies what they actually do. It's key to understand how they work to appreciate why they are an amazing technology that is more useful than ever, particularly compared to how we typically heat and cool buildings today.

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How Heat Pumps Work

The heating systems in most of the residential and commercial buildings you and I walk into use forced-air furnaces that run on natural gas or electricity (and even heating oil in some cases). These systems burn a power source to heat the air and then blow that heated air around the indoor space via ducts into individual rooms. The technology is tried-and-true, but it's inefficient and heavily polluting, particularly when the power source is a fossil fuel like natural gas.

Rather than make heat and move air, heat pumps move heat without having to make it. They operate the same way a refrigerator does, pumping warm air in or out of a structure depending on what's needed. The technology behind heat pumps is fairly complex, but the basic principle is that they redistribute heat using a refrigerant that circulates between the indoor fan coil unit and the outdoor compressor to transfer heat. Their name is deceptive since they can both heat and cool indoor spaces, doing what air conditioners and furnaces do in one compact and efficient system that is far more efficient and environmentally friendly.  

In warmer months, heat pumps work the same way your refrigerator does, moving warm air away to keep your indoor space comfortable. In cooler months, they operate as essentially reverse refrigerators, taking heat from cold outdoor air and pumping it inside.

The heat pump's outdoor unit contains extremely cold fluid that circulates through coils of tubing. As the fluid absorbs heat from the surrounding warmer air, the fluid vaporizes and then compresses, transferring heat from outdoors to indoors. Heat pumps are most efficient in milder climates with subdued temperature swings, but their efficiency in frigid weather is improving. Only on bone-chilling cold days - when the air might be colder than this fluid - or in areas that experience extended periods of subfreezing temperatures might a heat pump not work well or require a boost from fossil fuels.

Air-source heat pumps are one of the most conventional types of heat pumps, along with water-source heat pumps, exhaust-source heat pumps, and arguably the best type: ground-source heat pumps. Ground-source heat pumps use land instead of outdoor air to transfer heat. They're also known as geothermal heat pumps because they run on the geothermal energy in your backyard, and you don't need to live on top of a hot spring or geyser to make this work. Once you dig deep enough underground, the soil stays at a fairly constant temperature year-round (usually between 50 and 60 degrees Fahrenheit, or about nine to 14 degrees Celsius).

You can install plastic pipes that enable heat exchange between the land your residence sits on and your indoor space. In essence, you can transform your property into a thermal battery. When you need heat in the winter, you can move it indoors from land. When you need to cool off in the summer, you can move heat underground from your house. Because of how consistent temperatures remain underground, geothermal heat pumps are the most efficient type of heat pump.

Ground-source heat pumps use land instead of outdoor air to transfer heat.

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Why Heat Pumps Save Money And Emissions

Since the underlying technology is a bit complex, you probably won't be able to install a heat pump on your own. Today, initial heat pump installation often costs between $5,000 and $10,000 more than a typical gas furnace, especially since you'll likely need skilled, trained professionals for installation. But that upfront cost is expected to decline as the technology improves and more units are sold, just like solar panels and electric vehicles. And the cost of operating a heat pump is lower than an air conditioner because they use much less electricity than electric furnaces and baseboard heaters.

For instance, heat pumps could save a typical homeowner in the Northeast or Mid-Atlantic a few hundred dollars (and even up to $1,000) per year compared to electric resistance heaters or oil-based heating systems.

Heat pumps are three to four times more efficient than furnaces, largely because it's always cheaper to move energy than to convert it from one form to another (which is what conventional heating systems do). That's why power plants lose a lot of their energy when they produce electricity and why your car's internal combustion energy loses most of the energy stored in the gas tank. And when the electricity that's needed to operate a heat pump is carbon-free, the environmental friendliness of regulating the temperature inside your indoor space goes through the roof.

As climate change ravages the planet and technological improvements present better alternatives, heat pumps might become a hot commodity.

How many emissions could heat pumps save? A recent paper written by experts at Harvard University CLASP, a nonprofit that advises governments on energy efficiency, estimated that homes with two-way heat pumps rather than one-way air conditioners could cut their fossil fuel use during the colder months by at least one-third. That figure will rise if the share of electricity generated via carbon-free energy sources rises as well.

This presents an opportunity to save a lot of future emissions both in areas that already use a lot of air conditioning and areas that are expected to need more indoor temperature control in the future, thanks to climate change. For example, in the Pacific Northwest, many homes lack air conditioning because the region's mild climate mitigates the need for indoor cooling. But the June 2021 heatwave that sent thermometers soaring across the region was an ominous reminder that the mild climate of the past is just that: a thing of the past. Heat pumps could allow places like the Pacific Northwest to adapt to the climate crisis without burning the fossil fuels that cause climate change in the first place.

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Around the world, 180 million heat pumps were used for heating in 2020


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Why This Matters

When you think of ways to lower your carbon footprint, you probably think of renewable energy or electric vehicles first. Those sexier aspects of sustainability are undoubtedly a critical piece of the puzzle, but there are also plenty of things you might find boring that is nonetheless vital as well. Heating and cooling falls into that category.

Buildings are responsible for a major chunk of global greenhouse gas emissions - about a third, according to the best estimates. A 2019 United Nations report found that buildings account for 38% of the world's greenhouse gas emissions, and that percentage is rising. And of those emissions, almost half come from heating and cooling. In 2019, commercial and residential buildings accounted for more than one-seventh of U.S. greenhouse gas emissions.

Most of today's buildings are heated or cooled with one fossil fuel or another like coal, oil, natural gas, or propane. Heat pumps are one of the best ways to reduce those emissions because they don't require fossil fuels. They need electricity, which today is often unfortunately generated with fossil fuels, but if we decarbonize the electric grid, we can stop heating and cooling our homes with flammable, polluting fuels that are cooking the planet.

Today, about 5% of the world's heating systems use heat pumps. If we want to reach net-zero emissions by 2050, that share must expand to one-third by 2030 and much higher after that. In warmer climates with low heating demands, an air-source heat pump will probably do the trick. In colder climates with higher heating demands, a ground-source heat pump likely makes more sense. And if you can power your heat pump with local renewable energy like rooftop solar panels, you can wean yourself off the grid and meet all of your power needs with zero greenhouse gas emissions.

How Government Policy Could Help

Around the world, 180 million heat pumps were used for heating in 2020, with annual growth rates hovering around 10% over the preceding five years. Nonetheless, heat pumps still only meet 7% of global heating demand, presenting a major growth opportunity for an overlooked technology that can save money and emissions while keeping people comfortable inside their homes, offices, and other indoor spaces.

Government policy could help realize that opportunity. In 2012, 1.7 million heat pumps were installed across the U.S. In 2021, that figure rose to 4 million. Renowned climate activist Bill McKibben recently wrote a blog post called "Heat Pumps for Peace and Freedom," in which he outlined how a rapid expansion of heat pump production could wean the world off of Russian fossil fuels (particularly Europe, which sources about 40% of its natural gas from Russia).

McKibben's idea has gained traction in the White House to the point where according to the Washington Post, the Biden administration is strongly considering invoking the Defense Production Act - the same law used to jumpstart COVID vaccine production - to boost production and reduce global dependence on Russian fossil fuels.

Around the world, 180 million heat pumps were used for heating in 2020

The administration is currently drafting an executive order invoking the Defense Production Act to alleviate shortages of key materials needed for clean energy technology, so it's not much of a stretch to imagine a similar order being drafted for heat pumps.

Other government policies that could help include tax credits, utility rebates, and other subsidies meant to lower costs for both producers and consumers. Utility rebates are included in the Biden administration's Build Back Better plan, while the U.K. now gives homeowners grants to install heat pumps, and Germany has mandated that every new home heating system must run on 65% renewable energy by 2025. Some Chinese provinces offer financial subsidies for customers who purchase air-source heat pumps.

Likewise, through at least the end of 2022 in the United States, taxpayers can earn a 26% federal tax credit on the installation of geothermal heat pumps. Various analyses indicate that if the U.S. government were to give homeowners rebates (of around $5,000) to install heat pumps, the emissions savings could equate to half the country giving up driving.

Wrapping It Up

It remains to be seen how many heat pumps will be adopted worldwide going forward. They don't have the best reputation, and air conditioners and gas furnaces have become commonplace in both wealthy and less wealthy corners of the world. Many people don't trust non-fossil fuel options for heating, and many don't know that it's even feasible to heat their homes without fossil fuels. Like other aspects of sustainability, awareness and trust are lacking.

But as climate change ravages the planet and technological improvements present better alternatives to the inefficient ways we currently heat and cool our indoor spaces, heat pumps might become a hot commodity. Thanks largely to their efficiency, they help save money and emissions. Heat pumps perform two main functions - heating and cooling - within one system, and they are just as reliable as the traditional carbon-heavy heating and cooling devices that dominate residential and commercial areas both near and far.

All in all, you would be hard-pressed to find an easier win-win for your bottom line, your indoor comfort, and the health of the planet we all call home. We encourage you to learn more about heat pumps and, if possible, consider putting them to good use in your favorite indoor spaces.

As climate change ravages the planet and technological improvements present better alternatives, heat pumps might become a hot commodity.

photo: Nick Lavecchia

Business Takeaways

Heat pumps are three to four times more efficient than furnaces, largely because it's always cheaper to move energy than to convert it from one form to another (which is what conventional heating systems do).
Homes with two-way heat pumps rather than one-way air conditioners could cut their fossil fuel use during the colder months by at least one-third.
Buildings are responsible for a major chunk of global greenhouse gas emissions - about a third according to the best estimates.
A rapid expansion of heat pump production could wean the world off of Russian fossil fuels.

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