IEA’s World Energy Outlook: Sales of heat pumps and electric heaters will surpass sales of fossil fuel heaters before 2030

At the moment we are not in line with climate targets, but instead heading towards a temperature increase of 2.4 degrees, which is too high. However, during the launch of the 2023 edition of IEA’s World Energy Outlook, the Executive Director of IEA, Fatih Birol pointed out that there is still a legitim reason to be hopeful. Because, said Mr Birol, even with stated policies the energy world in 2030 will look very different from today.

During the launch of the report on October 24, Fatih Birol explained that within the transport sector, the sales of electric vehicles have increased rapidly during the last years and in 2030 every second cars will be electric. In addition, there is a steady growth of renewable electricity production by solar and wind and in 2030 the share of electricity generated by fossils fuels will have decreased from 70% today to 40%. When it comes to home heating, penetration of heat pumps is increasing in many countries and the sales of them, together with other electric heating, will surpass sales of fossil fuel boilers within this decade. His final example to be optimistic referred to investments in offshore wind which is foreseen to be three times higher than investments in oil and gas in 2030. This together means that oil, gas and coal demand will peak before 2030 and thereafter decrease.  

All these figures refer to IEA’s Stated Policies Scenario (STEPS). If governments introduce new policies to reach climate ambitions, the figures will look even better. IEA concludes that the pathway to a 1.5 °C limit on global warming is very tough, but it remains open. Four reasons for hope, where heat pumps are mentioned as illustrative examples, are listed in the report. 

  • Clean energy policies are stepping up 
  • Clean energy deployment is accelerating fast 
  • We have the tools to go much faster 
  • The world is finding innovative answers 

What will it take to decarbonize the building sector? 

The report explores on this question and explains that heating – space and water heating – accounts for around 45% of energy demand and 80% of direct CO2 emissions from buildings. In the STEPS and APS (Announced Pledges Scenario), the share of energy service demand for heating met by fossil fuels decreases but not completely. In the NZE Scenario, by contrast, heating is entirely decarbonised through a switch to electricity, renewables and district heat and through efficiency gains via envelope and technology improvements according the IEA’s analysis. Electrification in the NZE (Net Zero Emission) Scenario relies strongly on the uptake of heat pumps, which have seen rapid expansion in recent years, according to the report. 

To reach the NZE Scenario, policies that support the decarbonisation of heating include building energy codes, heating intensity standards, carbon pricing, incentives to adopt heat pumps and clean technologies and bans on the sale of new fossil fuel equipment need to be implemented, according to IEA. Examples of such policies are already seen in several countries in Europe, America, Asia and also in Australia.