"Heat Pumps to Supply 55% of Heating and Cooling by 2050"... Will They Become the Savior of Carbon Neutrality? [Digging Energy]

[Specialist Report]
The Basic Principle: Heat Exchange Between Indoors and Outdoors
Utilizing Natural Heat Sources Such as Air, Geothermal, and Water
Absorbing Heat in Winter, Releasing Heat in Summer
Key Tool for Carbon Neutrality in Many European Countries
Korea Aims to Distribute 3.5 Million Units by 2035
High Installation Cost of 10 Million Won Per Household
Opposition from Stakeholders Including the Geothermal Association

Since 2023, Samsung Electronics UK has been working with Oxford City on the 'Clean Heat Streets' project. This initiative aims to reduce carbon emissions by distributing heat pumps in the Rose Hill area of Oxford.

Oxford City has an ambitious plan to achieve net-zero carbon emissions by 2040, a decade ahead of the UK government’s target. To realize this goal, the city is replacing heating and cooling systems in buildings-which account for 60% of carbon emissions-with heat pumps. Oxford City and Samsung Electronics plan to distribute more than 30,000 air source heat pumps.

The UK central government is also actively promoting the adoption of heat pumps. Since May 2022, the UK government has been running the Boiler Upgrade Scheme (BUS), which provides subsidies for replacing fossil fuel-based boilers with heat pumps.

According to Ofgem, the UK energy regulator, 328.2 million pounds (approximately 651.9 billion won) in subsidies were provided for 49,136 cases by March 2025. Of these, 97% were for air source heat pumps. The UK government aims to distribute 600,000 heat pumps annually by 2028.

The adoption of heat pumps by UK residents is rapidly increasing each year. According to the Department for Energy Security and Net Zero (DESNZ), the number of new heat pump installations in the UK reached 35,387 cases by the third quarter of last year. This represents an 11% increase compared to the same period the previous year (31,819 cases) and a 76% increase compared to the same period in 2023 (20,142 cases).

Conceptual Diagram of Residential Heat Pump System. LG Electronics

The UK is not alone. Many European countries are already actively introducing heat pumps as a key measure for building carbon neutrality.

According to the European Heat Pump Association (EHPA), as of 2024, Norway had the highest installation rate in Europe, with 632 heat pumps per 1,000 households. Finland followed with 524 per 1,000 households, then Sweden (496), Estonia (351), Denmark (217), and France (204). By 2024, the cumulative number of heat pumps installed across 19 European countries reached 25.5 million units.

The International Energy Agency (IEA), in its 'Net Zero by 2050 Roadmap,' projected that heat pumps will meet about 55% of heating demand by 2050. The number of installed heat pumps is expected to increase from 180 million in 2020 to 600 million in 2030 and 1.8 billion by 2050.

"Heat pumps to supply 55% of heating demand by 2050"

The main reason major countries are focusing on heat pumps is that replacing fossil fuel-based boilers with renewable energy-based heat pumps can accelerate building carbon neutrality.

One of the most challenging aspects of building carbon neutrality is supplying heat energy, such as for heating, in an eco-friendly manner. According to research by the Korea Energy Economics Institute, heat energy accounts for 48% of total energy consumption in Korea, which is much higher than transportation (27%) or electricity (21%). Heat energy also accounts for 29.2% of carbon emissions in the energy sector. Until now, heat energy has been obtained from fossil fuels, but achieving carbon neutrality requires a transition to eco-friendly heat sources.

Heat pumps are a representative eco-friendly heat source technology. The basic principle of a heat pump is to exchange heat between indoors and outdoors using a heat exchanger. For example, in winter, heat is extracted from outside and delivered indoors to heat buildings. Conversely, in summer, heat is extracted from inside and expelled outdoors. Air source, geothermal, and water source heat pumps are used as heat sources, with air source heat pumps being the most common type.

Operating Principle of Heat Pump. Ministry of Climate, Energy and Environment

A heat pump consists of an evaporator (outdoor unit), compressor, condenser (indoor unit), and expansion valve. In winter, the refrigerant vaporizes as it passes through the evaporator installed outdoors. The gaseous refrigerant then passes through the compressor, increasing its temperature. The heated refrigerant passes through the condenser, warming the indoor space. After releasing its heat, the refrigerant cools and returns to a liquid state. The liquid refrigerant then passes through the expansion valve, where its temperature drops sharply. The refrigerant, now colder than the outdoor temperature, absorbs heat as it passes through the outdoor unit and vaporizes again.

Operating a heat pump requires a certain amount of external electricity. Electricity is needed to condense or expand the refrigerant. However, because it uses natural heat sources, the amount of electricity consumed is relatively low.

The efficiency of a heat pump is expressed as the Coefficient of Performance (COP). For example, if a heat pump has a COP of 4, it means the amount of heat energy produced is about four times the amount of electricity consumed. The COP of air source heat pumps is known to be between 3.0 and 3.5, geothermal heat pumps up to 4.8, and water source heat pumps up to 6.0.

If the electricity required to operate a heat pump comes from renewable energy, it can become a completely carbon-neutral technology with zero greenhouse gas emissions. Even if fossil fuel-based electricity is used, heat pumps are still significantly more energy efficient than conventional gas boilers. This is why heat pumps are considered a core technology for decarbonizing heat energy.

Korea, a Latecomer in Heat Pumps, Plans to Distribute 3.5 Million Units by 2035

Until now, building heat energy in Korea has mainly relied on city gas and district heating. According to the 2020 national statistics portal data on heating by housing type, city gas boilers accounted for the highest share at 67%, followed by district heating (15.2%), oil boilers (8.8%), central heating (3%), electric boilers (2.7%), and liquefied petroleum gas (LPG) boilers (2.4%).

Compared to gas boilers or district heating, heat pumps have higher installation costs, and concerns about progressive residential electricity rates have slowed their adoption. Installing a heat pump also requires additional space for a thermal storage tank besides the main unit. Until recently, there were no incentives for heat pumps in Korea. In addition, air source heat was not recognized as renewable energy, so it could not be used for public institutions’ renewable energy supply obligations or for Zero Energy Building (ZEB) certification.

With the new administration, the atmosphere has changed. On December 16 of last year, the Ministry of Climate, Energy and Environment announced the 'Plan to Promote the Distribution of Heat Pumps' at the Industrial Competitiveness Enhancement Ministers' Meeting and Growth Strategy Task Force (TF) Meeting. The new government set a goal to distribute 3.5 million heat pumps by 2035, aiming to reduce greenhouse gas emissions by 5.18 million tons.

To achieve this, the government plans to prioritize heat pump distribution in areas not served by city gas. Support will also be provided to install both solar panels and heat pumps in single-family homes with solar installations and in shared facilities such as community centers. The government also plans to support the installation of heat pumps in social welfare facilities for vulnerable groups, such as nursing homes for the elderly, and to help greenhouse farms use heat pumps for heating.

For industries with high heating and hot water demand, such as bathhouses and swimming pools, the government will expand subsidies for heat pump installation and provide long-term low-interest loans. The government will also expand the supply of self-sufficient building-type heat pumps, which combine heat pumps, solar power, and energy storage systems (ESS), to public facilities such as schools and government buildings. From 2027, the government is considering introducing a long-term installment payment plan for heat pumps (a kind of subscription service).

In addition, the Ministry of Climate, Energy and Environment is pushing to revise the Enforcement Decree of the 'Act on the Promotion of Development, Use, and Diffusion of New and Renewable Energy' to include air source heat as a type of renewable energy. The European Union (EU), Japan, and some states in the United States already recognize air source heat as renewable energy.

The ministry is also working to provide a legal basis for supporting heat pumps by amending the high-efficiency energy equipment notice under the Energy Use Rationalization Act to add 'residential air-to-water heat pumps.' It also announced plans to introduce a dedicated electricity rate system for residential heat pumps to ease consumers' electricity cost burden.

Heat Pump Industry Expected to Grow... High Prices and Stakeholder Opposition Must Be Addressed

As a result, the domestic heat pump industry is also expected to grow. In Korea, more than 20 companies-including Samsung Electronics, LG Electronics, Daesung Heat Enersys, Century, Autec Carrier, and Kyungdong Navien-manufacture and import heat pumps.

As of 2022, domestic sales of air source heat pumps stood at around 360,000 units. According to the 'Study on Certification Technical Standards for the Introduction of Large-Capacity Heat Pumps' published by the Korea Energy Agency in 2024, if the average annual growth rate of 26.7% from 2020 to 2023 continues until 2030, annual domestic heat pump sales are expected to reach 2.4 million units.

The Ministry of Climate, Energy and Environment explained, "High-efficiency heat pumps are a realistic decarbonization solution, as Korean companies have established manufacturing and production bases, and they can also become a new growth engine for exports." The government expects that the spread of heat pumps will contribute to the growth of small and medium-sized enterprises and the expansion of the domestic market in areas such as design, construction, piping, and maintenance.

However, there are also concerns about the government’s heat pump distribution project. Despite the government’s strong commitment, there are likely to be several obstacles before heat pumps can become firmly established in Korea.

The biggest hurdle is the cost. Installing a heat pump, including a thermal storage tank per household, requires about 10 million won. Even with government subsidies, the out-of-pocket cost for consumers can amount to several million won. This is a significant burden compared to the 1 to 2 million won needed to install a gas boiler.

Existing stakeholders are also strongly opposed. More than 1,800 objections were submitted to the partial amendment of the Enforcement Decree of the Renewable Energy Act, which the government preannounced on December 3 last year to include air source heat as renewable energy. On January 13, the Korea Geothermal Association and related industries held a protest in front of the Government Complex Sejong against the government’s policy to designate air source heat as renewable energy.

On the 13th, in front of the Government Complex Sejong, the Korea Geothermal Association and related industries held a protest against the inclusion of air source heat pumps in renewable energy. January 13, 2026. Photo by Korea Association of Mechanical Equipment Construction

They argued, "Renewable energy refers to primary energy produced naturally, such as solar, wind, hydro, and geothermal," and criticized, "Designating air source heat pumps as renewable energy in Korea, where thermal power generation is dominant, is a policy that runs counter to carbon neutrality."

On January 21, Assemblywoman Kim Sohee of the People Power Party also voiced opposition, stating, "Air source heat pumps are systems that necessarily use electricity, and especially during cold spells, they require a large amount of power. In Korea, where the share of renewable energy is still only about 10%, pushing ahead with the widespread adoption of such power-consuming systems could ultimately lead to increased emissions rather than a low-carbon transition."

In response, an official from the Ministry of Climate, Energy and Environment explained, "Only the renewable portion of the air source heat extracted by heat pumps, taking into account the coefficient of performance, will be recognized as renewable energy. We also plan to establish Korean-style certification standards (KS certification) for high-efficiency residential heat pumps, taking into account the domestic preference for underfloor heating."