Heat Pumps: A Key Driver in Global Energy Transitions and Climate Goals in the IEA’s World Energy Outlook 2024

The World Energy Outlook 2024 by the International Energy Agency (IEA) highlights the growing significance of heat pumps in the global transition to sustainable energy systems. Heat pumps have seen considerable adoption in residential heating, now accounting for 12% of global sales in this sector. They have already surpassed sales of fossil fuel-based systems in key markets like France and the United States. The report forecasts a substantial increase in heat pump deployment, with their market share expected to reach 30% by 2035 in the Announced Pledges Scenario (APS) and as high as 40% in the Net Zero Emissions by 2050 Scenario (NZE).

The IEA World Energy Outlook report, released on October 17, is published every year and is the most authoritative global source of energy analysis and projections. One of the main messages of the report is that geopolitical tensions and fragmentation are major risks for energy security and for coordinated action on reducing emissions. Clean energy transitions have accelerated sharply in recent years, shaped by government policies and industrial strategies, but there is more near-term uncertainty than usual over how these policies and strategies will evolve.

This applies also to heat pumps. Despite the upward trajectory for heat pumps, the heat market faced a temporary slowdown in 2023, with global sales declining by 3% after two consecutive years of double-digit growth. The energy crisis of 2022 had initially driven strong growth, but a combination of factors, including falling natural gas prices, policy changes, inflation, and lower demand for large-scale purchases due to high interest rates, contributed to this recent contraction. China was the only major market to see an increase, with a 12% rise in heat pump sales during 2023, bucking the global trend.

The outlook for heat pumps remains positive, driven by their increasing cost competitiveness compared to traditional gas boilers. In regions like the United States, where natural gas prices are relatively low, heat pumps are already one of the most cost-effective solutions when both heating and cooling are considered. Policies like the U.S. Inflation Reduction Act, aimed at expanding local manufacturing and lowering costs, are expected to support further growth in this sector.

According to the report, faster uptake of heat pumps is central to boosting energy efficiency and cutting fossil fuel use in buildings. Around 110 GW of heat pumps were installed in 2023. Although sales of heat pumps slowed in 2023 in some regions, and saw a major slowdown in Europe in the first half of 2024, their market share in space heating is still set to almost double by 2035 in the STEPS (Stated Policies Scenario), and to reach approximately 30% in the APS (Advances Pledges Scenario) and 40% in the NZE (Net Zero Emission Scenario). If heat pump additions were to remain at 2023 levels, natural gas demand would be around 40 bcm higher in 2040 than in the STEPS.

The high efficiency of heat pumps means the additional electricity demand from them is modest, adding only around 325 TWh by 2035 in the STEPS, 445 TWh in the APS, and 425 TWh in the NZE Scenario.

Furthermore, heat pumps play a crucial role in meeting global climate goals, according to the report. Their widespread deployment across residential, commercial, and industrial applications can significantly reduce reliance on fossil fuels. However, lower natural gas prices, particularly in the European Union and China, pose a risk to the pace of heat pump adoption, potentially slowing down the replacement of gas boilers. Sensitivity analysis within the report suggests that heat pump sales could fall by 20% in these regions, leading to a 10% reduction in overall stock by 2030, which would increase gas demand and delay electricity savings from heat pump usage.

Overall, the IEA underscores the importance of continuing to expand heat pump technology in order to achieve emissions reductions and improve energy efficiency, particularly in the face of fluctuating fossil fuel prices and evolving policy landscapes (WorldEnergyOutlook2024). IEA (2024), World Energy Outlook 2024, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2024, Licence: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)

The IEA’s Technology Collaboration Programme on Heat Pumping Technologies (HPT TCP) plays a significant role in advancing the heat pump sector through international collaboration on research, development, demonstration, and deployment projects. The HPT TCP works closely with researchers, manufacturers, and policymakers to ensure that the latest technological advancements and findings are incorporated into global energy strategies and has a continuous dialogue with the analysts at IEA, providing them with data and expertise.

Through this collaboration, the HPT TCP ensures that heat pumps remain at the forefront of the global energy transition, helping countries meet their climate targets while providing reliable and affordable energy solutions. With the continued momentum behind both technological advancement and international cooperation, heat pumps are poised to become a cornerstone of sustainable energy systems worldwide.