In “Heating up the global heat pump market,” recently published in Nature Energy, researchers at the Regulatory Assistance Project – a global NGO with offices in China, Europe and the United States – proposed a number of policy recommendations to build confidence in heat pump technology and meet climate goals.
First, policymakers should ensure that there are clear financial incentives for building owners to invest in heat pumps. The researchers said that building owners should be given subsidies, grants, tax rebates or low interest loans to reduce the capex burden of heat pumps. They noted that such policies have already been implemented in many countries. They cited Sweden, Norway and Finland as examples in how to raise taxes on fossil fuel to reduce the operating costs of heat pumps.
Second, regulatory measures like introducing building, renovation, and appliance performance standards, as well as bans on fossil-fuel appliances, are recommended to scale up heat pump deployment. The United States, the United Kingdom, Germany, the Netherlands, Belgium, Sweden, Norway, Finland, and Denmark are among the countries identified as already having variations of these measures in place.
Finally, trust and consumer confidence must be built in less mature markets. The researchers give the example of Sweden, where information campaigns, training, technical standards for installations and equipment, and costumer complaint services played a crucial role in making the technology a mainstream heating system option.
“Recent policy announcements, including bans of fossil fuel heating, mandates for heat pumps and pricing reform, suggest that policy makers have understood and are willing to provide markets with the necessary technology clarity to ensure that heat pump installation rates will increase further in future years,” the authors said. “Recent market expansion instils confidence that more rapid deployment of heat pumps is feasible if supported by well-designed policies.”
Heat pump sales grew by 34% in Europe in 2021. The European markets with the highest growth last year were Poland (+87%), Ireland (+69%), Italy (+63%), Slovakia (+42%) Norway (+36%), France (+36%) and Germany (+28%). The five biggest European heat pump markets were France (537,000 units), Italy (382,000), Germany (177,000), Spain (148,000), and Sweden (135,000).
Northern European countries have the largest share of heat pumps, with 60% of Norwegian households using heat pumps, 43% in Sweden, 41% in Finland, and 34% in Estonia. In Sweden, 29% of heating demand from buildings is covered by heat pumps, and 15% in Finland.
China is the world’s largest market for air source heat pumps, where sales grew around 7% in 2021, reaching 12.5 million units. Japan is the second largest market in the world, but its heat hump market contracted by 5% in 2021. The United States came in third, with market growth of 15% in 2021. Sales of air-source heat pumps in the country were higher than gas furnaces for the first time in 2020. Around 40% to 50% of new buildings in the United States install heat pumps as their heating device, varying by building type.
Initial figures for 2021 show that the heat pump market recovered from 2020, when the global market grew by just 3%, according to IEA data. The pandemic and associated decline in economic activity mostly explain the slow market growth at that time. At rates observed until 2020, only 253 million heat pumps would be installed globally by 2030.
Before 2020, the global market had been growing by around 10% on a yearly basis. But 13% year-on-year global market growth will be needed until 2030 to achieve the International Energy Agency’s net-zero scenario. If it is achieved, 600 million heat pumps will be installed throughout the world by 2030.
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