US Inflation Reduction Act, EU Net Zero Industry Act, and Heat Pump Action Plan: Important Climate Policies for Heat Pumps

In an effort to address some of the most pressing issues facing the world today, governments and policymakers around the globe have been busy introducing a variety of legislative measures aimed at reducing inflation, transitioning towards net zero emissions and promoting sustainable and secure energy.

In the United States, the government has recently passed the Inflation Reduction Act, while in the European Union, lawmakers have introduced the Net Zero Industry Act. Additionally, the Heat Pump Action Plan has been launched to encourage the adoption of more efficient heating systems.

On August 16 the US Inflation Reduction Act, signed into law by President Biden (read more on page 23). Among other impacts, the wide-ranging law is designed to lower the cost of prescription drugs, reform the U.S. tax code including instituting a minimum corporate tax of 15%, and reduce greenhouse gas emissions by offering clean energy incentives to stimulate domestic production of clean energy technologies, such as for example heat pumps. At roughly US$ 370 billion, the law includes the largest investment the U.S. government has ever made to fight climate change and has the potential to transform clean energy industries in the United States.

As has been widely reported, the IRA is the most impactful and transformative climate legislation in U.S. history. The bill includes heat pumps as a central technology in the mission of building a clean economy. Including a $14,000 in direct consumer rebates for families to buy heat pumps or other energy efficient home appliances, saving families at least $350 per year.

Meanwhile, the European Union has introduced the Net Zero Industry Act, which aims to accelerate the transition towards a carbon-neutral economy and enables to scale up the clean energy transition quickly. The Act will strengthen the resilience and competitiveness of net-zero technologies manufacturing in the EU, and make our energy system more secure and sustainable. It will create better conditions to set up net-zero projects in Europe and attract investments, with the aim that the Union's overall strategic net-zero technologies manufacturing capacity approaches or reaches at least 40% of the Union's deployment needs by 2030.

The act includes a range of measures aimed at promoting the use of renewable energy, increasing energy efficiency, and supporting the development of new technologies including solar, wind, batteries and storage, heat pumps and geothermal energy, electrolysers and fuel cells, biogas/biomethane, carbon capture, utilisation and storage, and grid technologies.

Finally, the the action plan to accelerate the roll-out of heat pumps accross EU has been launched to encourage the adoption of more efficient heating systems. The use of efficient heat pumps in buildings, industry and local heat networks is key for cutting greenhouse gases and achieving the Green Deal and REPowerEU targets.

The action plan on accelerating the heat pump market and deployment sets out four strands of action:

• partnership between the Commission, EU countries and the sector (including R&I)

• communication to all interest groups and a skills partnership for rolling out heat pumps

• legislation (ecodesign & energy labelling)

• accessible financing

These three initiatives represent a major step forward in the fight against climate change and to improved energy security. By addressing key issues such as inflation, industrial emissions, and heating and cooling, governments around the world are taking decisive action to reduce their carbon footprint and promote a more sustainable and secure future. With continued effort and investment in these areas, we can build a more resilient and sustainable world for future generations.