Heat Pumps: A Turning Point for European Energy and Affordability?
European leaders are increasingly focused on tackling high energy costs, with a particular spotlight on electricity taxes. This shift in attention comes as heat pump sales, while still growing, have shown signs of slowing after a period of rapid expansion. Addressing electricity tax disparities – where electricity is taxed more heavily than gas – is now seen as crucial to unlocking wider heat pump adoption and bolstering Europe’s energy independence.
The Tax Hurdle: Why Electricity Costs Matter
For consumers, the upfront cost of a heat pump is only part of the equation. Running costs are equally important, and high electricity taxes can significantly impact affordability. In several European countries, electricity taxes are substantially higher than those levied on gas, effectively negating some of the energy efficiency gains offered by heat pumps. This creates a disincentive for switching, even for those committed to reducing their carbon footprint.
“If people are worried, they will pay more, they won’t switch to a heat pump,” explains Milagros García Salciarini, Policy Officer at the European Heat Pump Association (EHPA). “As our report shows, they see changing national support schemes and high electricity taxes, and hesitate. This delays Europe’s move to clean heating and cooling powered by homegrown renewable energy.”
Sales Trends and the Current Landscape
Recent data indicates a slight slowdown in heat pump sales. Approximately 2.62 million heat pumps were sold in 16 European countries last year, a rise from 2.38 million in 2024. Despite this growth, the deceleration highlights the sensitivity of the market to economic factors and policy decisions. Europe now boasts around 28 million installed heat pumps.
The European Commission, responding to calls from European leaders, is committed to proposing lower mandatory tax rates on electricity, ensuring it is taxed less than fossil fuels. This commitment, announced by Commission President Ursula von der Leyen, represents a significant step towards leveling the playing field for heat pumps.
The Broader Electrification Agenda
Lowering electricity taxes on heat pumps is part of a larger push towards electrification across Europe. The REPowerEU plan aims to reduce reliance on imported fossil fuels by doubling the current rate of heat pump installations and accelerating the deployment of large district heating and cooling network heat pumps. This aligns with the broader Energy Union 2030 agenda, focused on secure, sustainable, and affordable energy for all Europeans.
The push for electrification isn’t limited to heating. Initiatives like the Clean Industrial Deal and the European Competitiveness Fund are designed to drive decarbonisation and innovation across various sectors, with heat pump technology playing a key role.
What’s on the Horizon?
The coming months will be critical. The European Commission is expected to present a toolbox of targeted temporary measures to address fossil fuel price spikes, alongside urgent measures covering all components of electricity pricing. The July Emissions Trading System (ETS) review, including the proposed ETS Investment Booster – a €30 billion fund – will similarly be pivotal in supporting decarbonisation projects.
Co-legislators are urged to agree on an ambitious grids package in 2026 to support increased electrification. The European Council will review progress in June, signaling a continued focus on energy affordability and security.
FAQ
Q: Why are heat pumps more efficient than gas boilers?
A: Heat pumps are 3-5 times more energy efficient than gas boilers because they move heat rather than generate it.
Q: What is the REPowerEU plan?
A: REPowerEU is a plan to reduce fossil fuel imports and accelerate the deployment of renewable energy technologies, including heat pumps.
Q: What is the ETS Investment Booster?
A: It’s a €30 billion fund financed through ETS allowances, designed to support decarbonisation projects.
Q: How much energy does heating and cooling account for in the EU?
A: Approximately 50% of all energy consumed in the EU is used for heating and cooling.
Did you know?
Heat pumps can reduce the EU’s dependence on imported fossil fuels, potentially lowering gas demand for heating in buildings by at least 21 billion cubic meters in 2030.
Pro Tip:
Explore available government incentives and tax breaks in your country to offset the upfront cost of a heat pump installation.
Learn more about heat pumps and the latest developments at the European Heat Pump Association (EHPA).
What are your thoughts on the future of heat pumps? Share your comments below!
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