Heating accounts for almost 20% of energy use in industry and buildings globally, and about one-quarter of energy-sector emissions. Heat pumps offer a proven solution for decarbonising low- and medium-temperature heating. Keeping homes warm in winter and providing hot water are essential energy services. Yet meeting international climate goals requires further efforts to decarbonise heating, which accounts for about a quarter of energy sector emissions globally.

Growing demand for heat pumps in China is supporting clean energy progress. Today, China is the second largest market for space and water heating in buildings, and the provision of heat is heavily reliant on coal. However, sales of heat pumps – which offer a proven solution for decarbonising heating – are growing strongly, driving progress towards the country’s energy and climate goals. 

Heating is a fundamental service to society that needs to be decarbonised further, and heating choices in China have a major influence on global heating trends. China is responsible for nearly 33% of global heat consumption, with the share of the industrial sector accounting for as much as 40%, and the buildings sector for around 20%.

China’s buildings and industry sectors account for about one-third of global heat consumption and therefore have a major influence on global trends. Heat consumption in buildings has grown faster in China than in any other country over the past decade, making China the second-largest market for space and water heating in buildings today, just behind the United States. 

Electrification through heat pumps can provide a key lever for decarbonising heating, and sales have increased in recent years in China, driven by growing demand for space and water heating, and clean heating policies. Heat pumps can play an important role towards meeting China’s goal of CO2 emissions peaking before 2030 and achieving carbon neutrality before 2060, and this report highlights key opportunities to increase adoption.

This trend shows no sign of slowing down as uptake of heating equipment in China continues to increase. In Chinese industries, heat consumption grew by 13% between 2010 and 2022, reaching 38 EJ. The direct use of coal for heat supply accounts for around half of final energy use for heating in buildings and industry. If coal used in district heating and to generate electricity for heating in buildings and industry is included, heat provision is responsible for 40% of national CO2 emissions and coal use in China. However, this share has fallen by more than 5% over the past decade, thanks to policies to improve air quality, reduce CO2 emissions and maximise energy efficiency. 

Heat pumps that are already on the market in China offer one of the most efficient options for decarbonising heat in district heating networks, buildings and industry. Heat pumps accounted for 8% of heating equipment sales for buildings in China in 2022, and they are already the norm in new and existing buildings in some areas of central and southern China, where they are used for heating and cooling. 

The use of heat pumps for domestic hot water production is emerging, primarily in urban areas and commercial buildings, but the water heating market is still dominated by conventional electric heaters and gas boilers. Heat pumps consume on average three to five times less energy than electric heaters or fossil fuel-based solutions, though use in industry and district heating is still uncommon, in part due to low awareness and upfront costs.

Decentralised heat pumps installed in Chinese buildings currently account for one-quarter of the global installed capacity. The combined capacity is more than 250 GW, covering around 4% of heating needs in buildings. In the Announced Pledges Scenario (APS), which takes into account China’s carbon neutrality target, this capacity reaches 1 400 GW by 2050, meeting 25% of heating needs. About 100 GW of heat pumps would need to be installed in buildings every year until 2050 to meet the ambition of the APS, equivalent to the capacity deployed in the United States, China and the European Union combined over 2022. 

The greatest potential for decentralised heat pumps in buildings is in rural China and in urban areas in southern and central regions, although growth is also expected in new buildings in northern urban China. In the APS, heat pump capacity in these areas is projected to more than double by 2030 and increase fivefold by 2050.