Heat Pumps

This report by the Rocky Mountain Institute (RMI) examines the economic and environmental costs of heating oil in the Northeast United States and proposes heat pumps as a viable, low-cost alternative to both oil and natural gas expansion.

• Heating oil represents a significant economic burden for the Northeast (comprising New England, New York, New Jersey, and Pennsylvania), costing residents and businesses over $14 billion annually in fuel costs. This burden falls disproportionately on rural households, 55% of which use fuel oil or propane for heating, compared to 25% of urban households.
• Replacing all oil heating in the region with heat pumps could save $5.5–6.0 billion in annual fuel costs, representing a roughly 40% reduction in the current $14 billion annual bill. For an average residential household, annual heating bills could drop from $1,600 to between $625 and $950, depending on electricity rates.
• Heat pumps offer superior environmental benefits compared to oil and natural gas. Transitioning from oil to heat pumps would reduce emissions of NOx, SOx, and CO2 by 81%, 66%, and 81% respectively based on the current Northeast grid. While replacing oil with natural gas only reduces overall heating emissions by 9%, heat pumps paired with a renewable grid could result in a nearly 50% reduction.
• Heat pumps are more cost-effective than expanding natural gas infrastructure, particularly in rural areas. Air-source heat pumps cost approximately $10,000 per household to install, whereas expanding the natural gas system costs between $11,800 and $35,000 per household. Natural gas distribution expansion costs range from $0.4–1.2 million per mile, and transmission costs range from $1.5–2 million per mile.
• Several barriers hinder the adoption of heat pumps: high upfront capital costs, a lack of consumer awareness, and the technical difficulty of retrofitting existing buildings. Additionally, there is a shortage of qualified installers and designers, and some customers associate ductless systems with poorly performing motel-style units.
• To accelerate market adoption, the report suggests reducing upfront costs through state and local incentives, third-party financing (such as PACE bonds), and leasing models. It notes that if 50% of oil customers switched to heat pumps over 20 years, it would generate $37 billion in direct investment and $20 billion in cumulative net present value savings.
• The report identifies two primary heat pump technologies: air-source and ground-source. Air-source pumps are ideal for retrofits and have become more efficient in cold climates due to variable refrigerant flow (VRF) technology. Ground-source pumps offer higher operating efficiency and lower costs but have higher capital costs due to drilling and excavation, making them better suited for new construction or large institutional projects.

APA

Matley, R. (2013). Heat Pumps. RMI. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2013-05_HeatPumps.pdf

Chicago

Matley, Ryan. Heat Pumps. RMI, 2013. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2013-05_HeatPumps.pdf.

Wikipedia

{{cite report |last1=Matley |first1=Ryan |title=Heat Pumps |publisher=RMI |date=March 2013 |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2013-05_HeatPumps.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{matley2013heat, author = {Matley, Ryan}, title = {{Heat Pumps}}, institution = {RMI}, year = {2013}, month = mar, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_2013-05_HeatPumps.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }