The Role of Heat Pumps in Decarbonization | EnVisioneering Exchange podcast ep. 45

Host Vic Marinich, global marketing director for air conditioning at Danfoss, is joined by Steve Nadel of ACEEE to discuss heat pumps and their role in decarbonization and climate policy.

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Guest Bio

Steve Nadel is the Executive Director of American Council on an Energy-Efficient Economy (ACEEE), a nonprofit research organization that develops policies to reduce energy waste and combat climate change.

Episode Summary

Host Vic Marinich, global marketing director for air conditioning at Danfoss, is joined by Steve Nadel of ACEEE to discuss heat pumps and their role in decarbonization and climate policy.

Main Points

  • If the U.S. is going to decarbonize, full availability of natural gas is not going to be an option. ACEEE recently released a report comparing electric key pumps using a decarbonized electricity to fuels that are largely carbon-free, such as biogas or hydrogen.
  • Alternative fuels such as green hydrogen or synthetic hydrogen made from synthetic natural gas are quite a bit more expensive than traditional natural gas. In a sample of over 2000 homes in the U.S., most of the time an electric heat pump will have a lower lifecycle cost.
  • Heat pumps will be the better path for decarbonization where temperatures routinely get fairly cold. From about Washington, DC and points north, people will want a cold climate heat pump and not a conventional heat pump. Cold climate heat pumps tend to maintain good performance at temperatures as low as 5 degrees Fahrenheit. Where temperatures get really cold, such as in northern New England, consumers will want a backup, using decarbonized fuel, to prevent the electric grid from becoming overloaded.
  • At the moment, most of the U.S. reaches peak electricity usage during the summer months. But gradually, the winter peaks will increase and by the 2030s, most of the U.S. will peak in the winter, with the exceptions of California, Florida and a few other relatively warm places. So the ACEEE recommends use of a backup fuel to prevent the really high peaks in locations that get below 5 degrees.
  • Heat pumps tend to work better when the outdoor temperature is not that cold, so the southern U.S., which has historically had lower electricity prices, is a good place to start converting homes and businesses to heat pumps. The South uses a lot of electric resistance heat but heat pumps will be much more efficient and the incremental cost is pretty small for a heat pump relative to a central air conditioner.
  • There are barriers to heat pump adoption. The average American homeowner probably doesn’t really understand heat pumps We have to educate the consumers as well as contractors. Some contractors are familiar with heat pumps but many aren’t, particularly with cold climate heat pumps that may need more sophisticated controls.
  • For both consumers and contractors, cost can be an issue. In many northern states, we might need new electricity rate structures that recognize a lot of the benefits of heat pumps. We probably need to re-examine rate structures to fairly charge heat pumps without unduly transferring costs to low-income homeowners.
  • There is limited availability of the whole home cold climate heat pump. The U.S. Department of Energy has an initiative now called the Cold Climate Heat Pump Challenge where they are challenging manufacturers to improve their heat pumps, including being able to produce full heat output at temperatures as low as 5 degrees. Hopefully, products resulting from the Challenge will become widespread by the 2030s.
  • With high-rise multi-family buildings, ACEEE found that decarbonized fuels may be the cheaper decarbonization option than heat pumps. It gets difficult to install heat pumps in high-rise buildings and with shared walls, the energy use is typically low.
  • There is a need to increase financial incentives for building owners to install heat pumps. There could be financial assistance for the building owners to install the heat pumps, recognizing that this would be in the interest of the tenants, who might be more moderate in income. We can also educate the tenants about the energy use of apartment heating systems and create more of a tenant demand. In the case of commercial buildings, LEED-certified buildings have higher occupancy rates and higher average rents. It may be possible to change the market to where rental tenants start demanding heat pumps and adoption could be in the landlords’ financial interests.
  • As demand for electric power increases, we have to look at the effects on power generation and what the key peak costs are and how to keep them down. In some many cases, heat pumps will help lower electricity prices because the generation plants will be better utilized. But we also need to consider backup fuels and how to reinforce the grid in ways that keep costs down.
  • Commercial buildings, particularly in cities with building performance standards, are beginning to adopt heat pumps, usually as part of a rooftop unit. In cities that have adopted building performance standards, buildings are beginning to replace their chillers with heat pumps, utilizing a backup fuel or boiler in colder climates.
  • Heat pump water heaters will become widespread in the U.S. now in homes and commercial buildings. The ACEEE found that the economics of heat pump water heaters are favorable to decarbonized fuel, as long as there is space to put a heat pump water heater.
  • Industry is another large opportunity. A lot of process heat is at low to medium temperatures. Presently, in the U.S., you can buy industrial heat pumps that will get up to about 160 degrees Celsius but there are products being developed that will go up to 280 degrees Celsius, which is 70% of process loads.
  • The next step in electrification research is to look at best practices – which programs are working and which aren’t. In the U.S., the Inflation Reduction Act included about four and a half billion dollars in incentives for residential heat pumps and heat pump water heaters. The ACEEE will be looking at the new tax credits for energy efficiency and will be advising on how those get implemented at the federal, state and local levels. They will also look at decarbonization pathways in both the commercial and residential sectors, exploring how electrification can be cost-effective for all income levels.


To learn more about the ACEEE and its research, visit

To learn more about the energy and climate provisions of the Inflation Reduction Act, visit

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