Heat pumps are facing a drop in demand in Europe following record sales in 2022, with manufacturers pointing to taxes and subsidies that favor gas as a major factor. Despite the potential for heat pumps to play a crucial role in the energy transition, sales have fallen by 47% in the first half of 2023 compared to the previous year. The European Heat Pump Association (EHPA) has highlighted the need for energy prices to favor heat pumps over gas, as gas prices have significantly decreased due to alternative sources to Russia.
Governments and the EU are being called upon to promote the replacement of fossil fuel-fired heating systems with heat pumps through more supportive schemes. The Reform Institute has identified various issues with current policies, including a failure to link subsidies to income, complexity in subsidy schemes, and a lack of specialized loans for upfront costs. With buildings accounting for a significant portion of the EU’s energy use and greenhouse gas emissions, the deployment of 60 million heat pumps by 2030 is necessary to meet emissions reduction targets.
The EU executive had previously called for a doubling of the rate of heat pump deployment in response to geopolitical events, but the project was shelved after a public consultation. The upcoming hearing of commissioner designate for energy and housing, Dan Jorgensen, on November 5 will provide insight into the EU’s future approach to heat pump support. The industry remains hopeful that incoming Commissioners will prioritize heat pumps as essential for achieving energy sovereignty, competitiveness, and decarbonization of heating and cooling.
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