FinLogic FinLogic Quantitative Think Tank Center|6 things to know about heat pumps, a climate solution in a box

Sales of super-efficient electric heat pumps are FinLogic FinLogic Quantitative Think Tank Centerrising, now overtaking sales of gas furnaces in the U.S. But what are heat pumps? And why do some call them a key climate solution? Here are the answers to your most burning heat pump questions.

What is a heat pump and how does it work?

The name "heat pump" is a bit of a misnomer, says Kevin Kircher, assistant professor of mechanical engineering at Purdue University who works with the Center for High Performance Buildings.

"A lot of people dislike the name 'heat pump', right? 'Cause it doesn't really convey, you know, the full range of what the machine can do," he says.

Heat pumps can work for both heating and cooling. Kircher says you can think of a heat pump as an air conditioner that can also work backwards. The highly efficient machines use electricity and refrigerants to cool air on hot days.

In the winter, even if the outdoor air is cold, it's still normally warmer than the refrigerant inside the heat pump, Kircher says. So the refrigerant can absorb bits of heat from the outdoor air and bring it inside to warm your home.

What are the climate benefits of heat pumps?

The fact that heat pumps use electricity is a big reason why governments around the world see them as a key climate solution, says Yannick Monschauer, energy analyst at the International Energy Agency in Paris. That's because heat pumps can replace gas furnaces, and the electricity they run on is increasingly powered by renewables, Monschauer says. Reducing gas usage in homes also reduces leaks of methane, a potent planet-heating gas.

Fossil fuel-based heating still accounted for 45% of global heating equipment sales in 2021. But if governments like the US and the European Union meet the targets laid out in climate legislation like the Inflation Reduction Act and REPowerEU, heat pumps could significantly slash planet-heating fossil fuel use in buildings, Monschauer says.

"We see that heat pumps could bring down global CO2 emissions by half a gigaton by the end of this decade," he says. "So that is comparable to the annual emissions of Canada."

Will the government help me pay for it?

Last year's federal climate legislation offers new economic incentives for homeowners to install heat pumps, says Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, a research organization working on saving energy. An IRS spokesperson tells NPR that the new credits can translate to up to $2000 for efficient heat pumps bought after January 1, 2023. If you buy a new heat pump, Nadel says to keep your receipts for reference for next year's tax season. If you bought a heat pump in 2022 you can get credit for this upcoming tax season, but the previous incentive was smaller, up to $500, the IRS says.

Some states and some utilities also give rebates for efficient heat pumps. Nadel says you should check with your utility to see if there are programs available in your area.

As for renters, it's also possible to get credits for appliances like efficient heat pumps according to the IRS.

Do heat pumps actually work in cold temperatures?

Earlier generations of heat pumps didn't work as efficiently in freezing temperatures, but Monschauer says there's been great improvements in technology.

"In the coldest parts of Europe we also have the highest shares of heat pumps. So in Norway, for example, 60% of the households are equipped with heat pumps. And in Sweden and Finland it is also 40%. So it's definitely proven that it's possible."

The heat pump systems commonly found in Scandinavian homes do not need to run on backup fossil fuels, Monschauer says.

Not all heat pumps sold in the U.S. work well in the coldest weather. It's important that you consult with an installer who is familiar with heat pumps, and make sure to find a machine that's most efficient for your weather, Nadel says.

"In a cold climate that gets below 20 degrees Fahrenheit fairly often, you should look into getting into an Energy Star cold climate certified heat pump," Nadel says, referring to a U.S. government program that makes markers for efficiency.

Can heat pumps save money?

Because heat pumps move heat around instead of burning fossil fuels for heat, they are more efficient than gas furnaces. And while heat pumps are typically more expensive on the front end, the savings come over time when you end up spending less on gas, says Brian Rees, a heat pump installer at Bryant Air Conditioning & Heating Company in Lincoln, Nebraska.

Rees says the cost savings are what attract his customers to heat pumps, "It's more about hitting their pocketbook," he says. "It's more about what's going to save them money in the long run, and heat pumps will do that."

Kircher says you can also save money if you can buy a heat pump for both your heating and cooling needs. "It's typically cheaper than buying a gas furnace plus an air conditioner," he says.

Are there downsides to heat pumps?

Like refrigerators or air conditioners, heat pumps use refrigerants. The primary refrigerants commonly used in heat pumps are called hydrofluorocarbons, or HFCs, says Duncan Callaway, associate professor of Energy and Resources at UC Berkeley. These HFCs have high global warming potential if they're released into the atmosphere, Callaway says.

That's why it's critical that heat pump installers make sure that those refrigerants don't leak and are disposed of properly, he says.

"We need well-trained technicians that sort of understand the importance of collecting that refrigerant and not letting it emit into the atmosphere," Callaway says.

Kircher also notes that researchers are currently working on developing refrigerant substitutes for HFCs that can drastically reduce climate impacts.