Subsidies for residential heat pumps in Europe

Since the investment costs for low-carbon heating and cooling systems such as heat pumps are still higher than for fossil fuel-based heating devices, financial support schemes are still necessary to remove the barriers to investment. These financial incentives can cover measures such as low-interest loans, grant programs, and tax rebates. They are often different for lower and higher income households. At the same time, the EU’s REPowerEU plan, which aims to get the EU clean of fossil gas, states that the Member States should refrain from incentivising fossil fuel boilers and direct these subsidies to heat pumps instead.

What is the current situation with regard to heat pump subsidies across Europe? How does it differ from country to country? This document provides an overview of the different heat pump subsidy schemes in the EU Member States, the UK, Norway and Switzerland, as of early 2023.

EU Member States have been encouraged to set up subsidy schemes for heat pumps by a range of EU legislative initiatives covering the energy transition and decarbonisation policies. These include the Renewable Energy Directive, the Energy Efficiency Directive, and the Energy Performance of Buildings Directive. Most recently, the REPowerEU plan emphasises the need to accelerate green technologies. It proposes increasing the EU’s headline 2030 target for renewables from 40% to 45%. To reach this, it focuses on faster permitting procedures and doubling the rate of deployment of heat pumps, as well as measures to integrate geothermal and solar thermal energy in modernised districts and communal heating systems. It also emphasises the need to accelerate the heat pump roll-out through dedicated financing and fiscal incentives and by ending subsidies for fossil fuel boilers and targeting these to heat pumps.

EHPA also calls for long-term ambition on heat pumps to be spelled out by decision-makers and reinforced through consistent policies, and for skills and training, as well as R&D, to be boosted. Another key request is to make clean heating the financially most attractive choice. As long as clean heating is more expensive than fossil fuel heating, heat pump subsidies have to be continued with a long-term vision. These asks are brought together under the 'accelerator' initiative that we are currently developing with others.

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