Heat pumps

According to Eurostat data, about 50% of all energy consumed in the EU is used for heating and cooling, and more than 70% still comes from fossil fuels (mostly natural gas). In the residential sector, around 80% of the final energy consumption is used for space and water heating.

Heat pumps are a mature technology that is much more energy efficient than boilers. They allow greater use of renewable energy sources, ambient energy, and waste heat. In buildings, heat pumps are used for heating, hot water, and in some cases also for cooling. Rather than producing heat, they extract and upgrade ambient energy (heat or cold from outdoor air and surface or sewage waters) or geothermal energy (heat or cold from the ground or groundwaters). The refrigeration cycle is in most cases a vapour compression cycle consuming electrical energy, but there are also sorption cycles that are heat driven.

EU roll-out of heat pumps 

A report published in 2022 by the International Energy Agency (IEA) predicts that heat pumps will lower Europe’s gas demand for heating in buildings by at least 21 billion cubic metres in 2030.

In addition, with the phase-out of stand-alone boilers by 2029 (under ecodesign rules), the deployment of at least 30 million additional heat pumps can be expected by 2030 compared to 2020, most of them hydronic (including hybrids). This ambition was expressed in the Green Deal Industrial Plan.

New skills

To ramp up the heat pumps production and their deployment, 750 000 more installers are needed and at least 50% of existing installers will have to be reskilled to work with heat pumps.

Investments 

The total investment in heat pumps across the EU almost doubled from €13 billion in 2020 to €23 billion in 2023 despite a slow-down in 2023, due to cooling energy prices and subsidy cuts. (Source: BloombergNEF, March 2024)

Social Climate Fund

New financing instruments will support the roll-out of heat pumps. As of 2026, all EU countries will be able to benefit from the Social Climate Fund. It is an €86.7 billion EU Fund that will notably allow EU countries to support energy efficiency measures and the decarbonisation of heating and cooling in buildings, including the installation of heat pumps, for vulnerable households (in particular those in energy poverty) and micro-enterprises.

The Social Climate Fund is sourced by a dedicated share of the revenues from the auctioning of emission allowances under the new emissions trading scheme (“ETS2”) that will put a carbon price on the fuels used in buildings, road transport and other sectors as of 2027, hence further strengthening heat pumps’ competitiveness. Beyond the Social Climate Fund, the ETS2 will also provide significant auction revenues for EU countries to support the green transition notably in the building sector.

EU Heat Pump Action Plan  

There is an urgency to switch to renewable efficient heating and cooling technologies in buildings, industry, and networks. The 2022 Commission report on the competitiveness of clean energy technologies indicates that the deployment of all kinds of heat pumps (from single-family houses to large multi-apartment, tertiary buildings and heat network heat pumps to high-temperature heat pumps for industrial applications) is necessary to meet our reinforced climate objectives.

However, without a dedicated EU action plan, 22 million old individual heating appliances and several thousand large old fossil-based heating units are at risk of being replaced by fossil boilers. 

A call for evidence on the action plan was launched on 28 April 2023. The input provided will be taken into account as the Commission further develop and fine-tune the initiative. In addition, a public consultation was open between 7 June and 30 August 2023 to allow for additional feedback and ideas.

The action plan will aim at accelerating heat pump deployment in the EU through 4 building blocks.

Heat pump accelerator

This partnership will bring together the Commission, EU countries, the sector itself, financial institutions and training providers across the whole heat pump value chain to ensure heat pumps can be widely deployed without downgrading power grid stability.  

Communications and skills

Through targeted communication, the action plan will aim to provide citizens, businesses, and small industries with easily accessible information on existing heat pump solutions, the heat-pump readiness of their buildings, industrial plants, and networks, among other topics. A dedicated heat pump skills partnership will aim to provide an operational response to the skills gap in the EU and promote the development of an expert workforce in the sector. 

Legislative work

Provisions from the ongoing legislative work will aim to ensure a sufficiently strong policy signal for the heat pump market, including a phase-out by 2029 of stand-alone boilers. It will be supported by various existing EU policy initiatives

• the Renovation Wave (COM/2020/662)
• the ongoing reviews of heating and cooling product-specific regulations under the Ecodesign and Energy Labelling framework
• the ongoing revision of the Energy Performance of Buildings Directive (EPBD), the Renewable Energy Directive (RED) and the Energy Efficiency Directive (EED)

• the Social Climate Fund (EU/2023/955)

• the revision of the ETS Directive (EU/2023/959)

• Article 122 Emergency measure on permitting for renewables (COM/2022/591)
• the revision of the Electricity Market Design (COM/2023/148)
• Commission’s proposal for a Net-Zero Industry Act (COM/2023/161) and for a Critical Raw Materials Act (COM/2023/160)
• Commission’s proposal for the recast of the Energy Taxation Directive (COM/2021/563) and for a Regulation on fluorinated greenhouse gases (COM/2022/150) 

Financing

In order to facilitate access to all relevant EU funding programmes, the action plan will come with a mapping of financing possibilities for both heat pump deployment at the individual level and heating networks supplied by large heat pumps, as part of heating and cooling strategies at local and regional levels.

• Have your say - heat pumps action plan
• Energy label and ecodesign of space and water heaters
• 2022 Competitiveness Progress report  
• RePowerEU plan
• European Green Deal
• Frequently asked questions - European heat pump association