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Converting AC sales to heat pumps can rapidly decarbonize homes, cut summer energy demand as temperatures rise

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June 13, 2023

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New report from the Building Decarbonization Coalition finds capturing the market for cooling can fast-track electrification while lowering energy bills, saving on heating appliance costs, and boosting the resilience of state electricity grids

SAN FRANCISCO — Converting central air-conditioning (AC) unit sales to heat pumps can dramatically accelerate the decarbonization of homes while boosting grid resilience, lowering technology and installations costs, and improving the health and safety of the nation’s housing stock, but policymakers must act quickly to harness this market, according to a new report out today from the Building Decarbonization Coalition.

The findings come as hotter and more frequent heat waves are driving a surge in demand for home cooling. Central AC sales have already increased a substantial 15% in the U.S. over the past ten years in comparison to the previous decade, and the trend is likely to accelerate, especially in regions with historically mild summers, like the Pacific Northwest and Northern California. Electric heat pumps provide highly-efficient cooling, lower energy bills, and zero-emission heat – all at a similar price point to central AC.

“Millions of central AC units are installed each year that could be electric heat pumps – consumers just aren’t aware that this superior technology is an option. Our report finds that states can make incredible progress towards their electrification targets this decade alone by converting the market for central AC to heat pumps. This is a no-brainer step to cut pollution, lower utility bills, and improve resilience in the face of extreme heat,” said Matt Rusteika, Director of Market Transformation at Building Decarbonization Coalition.

The report, Why cooling is key: How to decarbonize buildings with one weird trick, analyzes data on the shipments of heating and cooling technology in five states, and finds that by 2030, converting the sale of central AC units to heat pumps could decarbonize space heating in 51% of California homes, 47% of New York homes, 56% of New Jersey homes, 26% of Massachusetts homes, and 73% of Maryland homes. In each of these states, the pace of electrification would accelerate substantially compared to their current trajectory.

Upgrading homes with zero-emission appliances like heat pumps is a critical component of policymakers’ strategies for both meeting state climate targets, and ensuring households are equipped with clean energy technologies they need to weather more extreme weather impacts like heat waves and wildfires. According to an analysis from the Sierra Club, using heat pumps for both space and water heating cuts climate pollution from the average US home by more than 45% over the next ten years – the equivalent of cutting a gasoline car’s carbon pollution by more than half.

“Policymakers at the state, local, and national level are pursuing strategies to cut greenhouse gas emissions from homes and buildings by displacing fossil fuel heating systems through increased heat pump adoption. But by overlooking the market for cooling as a key policy lever, they are missing a critical opportunity to support the most cost-effective transition,” said Panama Bartholomy, Executive Director of the Building Decarbonization Coalition.

Equipping homes with heat pumps rather than central AC units can boost the resilience of electricity grids that are already struggling to keep up with cooling demand on the hottest days. The report finds that the average heat pump sold uses as much as 29% less electricity during periods of peak demand than a central AC unit – major savings that could help keep the lights on during heat waves. Due to heat pumps’ efficiency benefits, Energy Star, a program run by the U.S. Environmental Protection Agency and U.S. Department of Energy promotes energy efficiency, recently proposed sunsetting the certification pathway for central AC units.

“As climate change pushes up temperatures, cooling is becoming a public health necessity across the country to protect against heat-related health impacts. Policymakers need to move quickly to get cooling units in homes, and our report shows that heat pumps are the superior choice from a climate, economic, and grid resilience perspective to meet this growing need,” said Ted Tiffany, Senior Technical Lead at the Building Decarbonization Coalition.

In addition to climate and grid resiliency benefits, the report finds that installing a heat pump instead of a central AC system delivers substantial economic benefits, due to the avoided cost of a second heating appliance. Starting later this year, households will also be able to access incentives through the Inflation Reduction Act that will further tilt the scales towards heat pumps. Low-income homeowners will be able to take advantage of up to $8,000 in rebates for air-source heat pumps, up to $2,500 for electrical wiring, up to $1,600 for weatherization.

“With heat pumps, you get two appliances for the price of one. When your fossil fuel furnace breaks, you won’t have to replace it. Policymakers need to do more to ensure that households across the nation are aware that heat pumps are an option for meeting their cooling needs, so that they don’t install a central AC unit, and leave thousands of dollars on the table,” said Matt Rusteika, Director of Market Transformation at Building Decarbonization Coalition.