When it comes to fighting the climate crisis, we’ve long known what the solutions are — it’s finding the funding to jump-start them that’s been the bigger challenge. The Inflation Reduction Act proposed by Sen. Joe Manchin (D-W.Va.) and Senate Majority Leader Chuck Schumer (D-N.Y.) offers historic investments in clean energy, electric vehicles and other measures that, if passed, would be the most ambitious climate legislation in U.S. history. It would also put the national goal of cutting U.S. emissions in half by 2030 within striking distance.
The bill includes many provisions that would leverage federal government support of critical clean energy technologies to reduce household costs, increase energy security and bolster supply chains that can help accelerate global decarbonization. To see how, let’s examine just one of these technologies: heat pumps, a solution that more states and cities are considering to reduce building emissions.
Replacing fossil fuel-powered heating and cooling systems in buildings with heat pumps — which, contrary to their name, not only efficiently warm buildings in cold weather but also function as air conditioners in summer — is a major way that households can fight climate change and save money. Even when it’s cold outside the air contains some heat, and heat pumps are able to use thermodynamics to convert each unit of electrical energy into several units of heat energy, making them more efficient than oil and gas-powered furnaces. While in cooling mode, heat pumps operate like traditional air conditioners. As many who have recently sweltered in heat waves in Europe and the Pacific Northwest can attest, having a home energy system that saves energy overall with the added benefit of a “cooling” setting in places that never previously needed it is a major benefit as the climate changes. Importantly, if the electricity used to run the heat pump comes from clean sources, there are no carbon emissions, something that is impossible to achieve with an oil or gas furnace.
According to the International Energy Agency, the number of heat pumps used worldwide must more than triple by 2030 in order for the planet to be on track to reach net-zero emissions by 2050. But while heat pumps are commonly used in places like Japan and Norway, and their sales are ramping up in the U.S., their adoption here still faces many barriers. Heat pumps remain quite expensive to install, and historically there have been few incentives for builders, contractors and homeowners to do so.
In June, President Biden invoked the Defense Production Act (DPA) to boost manufacturing for heat pumps (among other energy technologies), but the move didn’t come with significant funding. The proposed Inflation Reduction Act would remedy that by providing $500 million specifically to fund heat pump actions under the DPA. It also provides a consumer tax credit of up to $2,000 for the installation of residential heat pumps, as well as a rebate program of up to $8,000 for low-income households.
There are many ways this money could accelerate heat pump adoption by increasing both supply and demand. On the demand side, the federal government could use the money to purchase heat pumps (and pay for their installation) in public buildings. It could also purchase and directly distribute them or sell them at low cost to low-income homeowners who otherwise could not afford to install them.
The DPA can increase heat pump supply by subsidizing and accelerating manufacturing, which will create jobs in addition to making more heat pumps available on the market (and thus helping to reduce prices). Energy efficiency is already one of the biggest drivers of employment in the energy sector, and as demand for heat pumps grows, jobs related to their manufacture and installation will increase as well.
This national effort comes on the heels of related local commitments, such as San José, California’s ban of gas hookups in new buildings, which essentially requires that heat pumps be installed instead. Many other cities are adopting similar policies. At the state level, California Gov. Gavin Newsom’s (D) recently announced target of installing 6 million heat pumps by 2030 will further incentivize heat pump installation on a large scale.
There’s still more that must be done to complement the DPA and accelerate heat pump adoption in the United States. For example, the Department of Energy could issue efficiency standards for electric heaters that would set a minimum efficiency rate that would essentially make heat pumps a requirement. This would take time and would require factoring in what level standards are both feasible and economical, but it would be a strong regulatory action that would lead to real results.
In addition, more HVAC technicians and contractors must be trained in the benefits and installation of heat pumps. This will make them more likely to recommend them to their clients, who are often trying to replace a broken heating or cooling system as quickly as possible and are therefore inclined to adopt whatever the professional recommends.
But the most important thing Congress can do right now — to boost heat pump adoption in tandem with a slew of other crucial climate actions — is to pass the Inflation Reduction Act. Heat pumps may sound like magic, but they are a real and essential solution to provide more Americans with comfortable, affordable and climate-friendly homes.