China’s ambitious goal of reaching carbon neutrality by 2060 isn’t just a challenge—it’s a thrilling opportunity for innovation and collaboration. Recently, the International Energy Agency (IEA), in partnership with Tsinghua University, spotlighted a powerful ally in this mission: heat pumps. These innovative devices, which efficiently transfer heat from one location to another, could revolutionize the way China’s energy-intensive buildings and light industries operate, slashing their carbon footprints.

The IEA’s report reveals that embracing heat pumps on a larger scale could cut direct emissions from building heating by a staggering 75%, reducing them to just 70 million tonnes of CO2 by 2050. This dramatic decrease would be powered by greater electrification and enhanced energy efficiency, positioning heat pumps as a cornerstone in China’s strategy to decarbonize its economy.

But that’s just the beginning. Heat pumps could also transform China’s light industries, driving emissions down from over 110 million tonnes of CO2 today to under 10 million tonnes by mid-century. In a market where heat pump sales were among the few to see an increase in 2023, the stage is set for expansion. However, to fully unlock this potential, stronger policy support is crucial to drive broader adoption and facilitate the transition of buildings and industries to cleaner energy sources.

The Heat Demand: China’s Energy Landscape at a Glance

China’s energy needs are colossal. In 2022, the nation consumed an astounding 107 exajoules (EJ) of energy, with heat accounting for nearly half—about 50EJ. This represents roughly a third of the world’s total heat consumption, highlighting the massive global impact any shift in China’s heating practices could have.

Over the past decade, the demand for heat in China’s buildings has surged more rapidly than in any other country, reaching 12EJ in 2022. This surge, largely driven by the growing need for space and water heating, has nearly tripled emissions since 2000. Yet, progress is being made: direct coal consumption for heating has decreased by 15% since 2010, thanks to government initiatives initially focused on air quality improvement and later on promoting clean, low-carbon heating solutions.

However, district heating—a centralized system that dominates urban areas in northern China—remains a significant hurdle. Over 80% of the heat produced by these networks still comes from coal, making it a major contributor to coal consumption in building heating across the country. Shockingly, a 2019 study found that emissions from China’s district heating alone exceed the total CO2 emissions of the entire UK.

Yet, there’s a silver lining. Lead authors of the IEA report, Dr. Chiara Delmastro and Dr. Rafael Martinez Gordon, commend China’s recent advances in cleaner and more efficient heating systems. The shift from coal-fired boilers to more efficient combined heat and power plants marks a significant step forward.

As China’s district heating networks—already 250% longer than they were in 2010—continue to expand, particularly in northern urban areas, the need for innovative solutions like heat pumps becomes increasingly critical. For businesses eager to engage with China, this presents a unique opportunity to contribute to and benefit from the country’s ambitious transition to a low-carbon future.

Heat Pumps: The Engine of China’s Industrial Revolution

As China sprints toward its “dual carbon” goals—peaking carbon emissions by 2030 and achieving carbon neutrality by 2060—heat pumps are emerging as a key player in the industrial sector. In 2022, the nation’s industrial heat consumption reached a staggering 38 exajoules (EJ), with a significant portion of this demand concentrated in low- and medium-temperature processes. These processes, which require temperatures below 200°C, are prevalent in light industries as well as in sectors like pulp and paper and certain chemical manufacturing processes.

The IEA reports that demand for low- and medium-temperature heat, which can be easily met by advanced heat pump technology, amounted to 4.7 EJ in 2022. This demand also led to over 110 million tonnes of direct CO2 emissions, underscoring the potential for heat pumps to drastically reduce the carbon footprint of these industries.

However, the majority of China’s industrial heat demand—over 80%—is for high-temperature processes exceeding 200°C, particularly in energy-intensive sectors like iron and steel manufacturing, non-metallic minerals, and certain chemical and petrochemical processes. These industries consumed a massive 33 EJ of energy in 2022, representing the lion’s share of industrial heat demand.

The Path Forward: Leveraging Heat Pumps for a Greener Future

China’s heavy reliance on coal for heating in both buildings and industry is a major contributor to its carbon emissions, with these sectors accounting for 40% of the nation’s coal consumption and CO2 emissions. Nevertheless, there has been a slight reduction in coal use for heating, driven by policies aimed at improving air quality, reducing emissions, and enhancing energy efficiency.

In 2022, carbon emissions from space and water heating alone contributed around 290 million tonnes of CO2, while light industry added another 110 million tonnes. Given that China’s total carbon emissions for the year were a staggering 12,135 million tonnes, addressing heating is crucial to meeting the country’s climate targets.

The IEA report presents two potential future scenarios for the uptake of heat pumps in China: the “Announced Pledges Scenario” (APS) and the “Stated Policies Scenario” (STEPS). The APS assumes that China will fully meet its climate commitments, while STEPS reflects the IEA’s assessment of current government policies.

If China adheres to its “dual carbon” commitments under the APS, the IEA estimates that heat pump capacity in buildings will skyrocket to 1,400 gigawatts (GW) by 2050, covering a quarter of the heat demand in this sector. This would require installing 100 GW of heat pump capacity annually—a scale equivalent to the combined capacity deployed in the U.S., China, and the EU in 2022.

Such an expansion would lead to a dramatic reduction in emissions from building heating, cutting them from 290 million tonnes of CO2 to just 80 million tonnes by 2050. Heat pumps alone would account for 30% of this reduction, with the remaining cuts driven by increased electrification, energy efficiency improvements, and changes in consumer behavior.

For light industry, the APS envisions the installation of approximately 1.5 GW of heat pumps annually from 2025 to 2050, ultimately meeting one-fifth of the sector’s heat demand. This shift would “drastically” cut carbon emissions, reducing them by 95%, from over 110 million tonnes of CO2 to just 10 million tonnes by 2050. Electrification, particularly through the use of heat pumps, would be responsible for 70% of this reduction.

Harnessing Heat Pumps: A Strategic Move for China’s Industrial and Environmental Future

As China forges ahead on its path to carbon neutrality by 2060, the transformative potential of heat pumps in key industries is becoming increasingly clear. The latest IEA report highlights two energy-intensive sectors, in particular, as prime candidates for this shift: the pulp and paper industry, where up to 55% of current heat demand could be met by industrial heat pumps, and the chemical sector, where about 18% of demand could similarly be addressed.

However, for industries requiring temperatures above 200°C—such as iron and steel manufacturing, non-metallic minerals, and certain chemical processes—heat pumps are not yet a viable solution. The technology for such high-temperature applications is still in its infancy, with only a few early-stage prototypes currently available and far from ready for widespread commercial use.

China’s Path Forward: Heat Pumps and Policy Scenarios

Even under the IEA’s more conservative “Stated Policies Scenario” (STEPS), which reflects the current trajectory of government initiatives, the stock of heat pumps in China’s buildings is expected to double by 2050, reaching over 1,100 gigawatts (GW). This expansion would contribute to a more than 25% reduction in building-related emissions, with fuel-switching options, such as transitioning from coal to gas, also playing a crucial role.

For light industries, however, the impact of heat pumps under STEPS would be more modest. The current pace of deployment suggests that by 2050, heat-related emissions in this sector would only fall by 15%. To achieve more significant reductions, accelerated policy support and investment are necessary.

The IEA’s “Announced Pledges Scenario” (APS), which assumes full implementation of China’s climate commitments, paints a more ambitious picture. This scenario would see some industries, such as mining and machinery, significantly expand to meet the growing demand for clean energy technologies both domestically and globally. While this would raise China’s overall heat demand by 5% compared to STEPS, the associated emissions would be more than offset by widespread electrification and the adoption of clean heating technologies.

By 2050, the deployment of heat pumps could lead to a 20% decline in the energy intensity of heat supply, meaning the energy required per unit of heat would be significantly lower than today. This reduction, combined with the decarbonization of the electricity system, could see indirect emissions from power generation for heating drop by over 40% by 2030. By mid-century, electricity could account for more than 75% of heat generation in China.

A Spotlight on the Pulp and Paper Sector

One of the most promising sectors for heat pump deployment is the pulp and paper industry, where coal use could be “almost entirely phased out by 2050” if China meets its climate goals. The sector has already made significant strides, reducing coal’s share in its energy mix and increasingly adopting more sustainable practices. Heat pumps, with their ability to efficiently supply the necessary heat for various industrial processes, present a particularly compelling opportunity to accelerate this transition.

The Technical Potential of Heat Pumps

The pulp and paper industry is particularly well-suited for the deployment of industrial heat pumps due to the nature of its heat requirements. Many processes within the sector, such as chemical pulping, bleaching, and drying, operate at temperatures that are within the optimal range for heat pump technology (typically below 200°C). This makes it feasible to replace conventional heating methods with heat pumps without compromising operational efficiency.

Moreover, the integration of heat pumps can enhance process flexibility and energy recovery. For example, heat pumps can be used to capture and reuse low-grade waste heat generated during pulp processing, which would otherwise be lost. This not only reduces the overall energy demand but also lowers operational costs in the long term.

Overcoming Barriers to Adoption

Despite the clear benefits, the widespread adoption of heat pumps in the pulp and paper sector faces several challenges. The high initial capital investment required for heat pump systems is a significant barrier, particularly for smaller facilities that may lack the financial resources to make such upgrades. Additionally, there is a need for more comprehensive data on the long-term performance and reliability of heat pumps in industrial settings to build confidence among industry stakeholders.

To overcome these challenges, targeted government policies and incentives will be crucial. Subsidies, low-interest loans, and tax breaks could help offset the upfront costs and encourage more companies to invest in heat pump technology. Furthermore, establishing industry standards and providing technical support for heat pump installations can help ensure that these systems are implemented effectively and yield the expected environmental and economic benefits.

The Road to 2050: A Vision for a Low-Carbon Industry

As China continues to pursue its carbon neutrality goals, the pulp and paper industry stands at a crossroads. The sector has the opportunity to lead the way in industrial decarbonization by embracing heat pumps and other clean energy technologies. If the current momentum continues, and with the right policy support, coal could be nearly phased out from the industry by 2050, marking a significant achievement in China’s fight against climate change.

In this context, heat pumps are more than just a technological solution; they represent a strategic move towards sustainability, competitiveness, and resilience in a rapidly changing global market. The successful deployment of heat pumps in the pulp and paper sector could serve as a model for other industries, demonstrating that it is possible to achieve substantial emissions reductions while maintaining economic growth.

As the world watches China’s energy transition, the pulp and paper industry’s embrace of heat pump technology could become a powerful symbol of the country’s commitment to a sustainable future. By 2050, with the right investments and policies, China’s pulp and paper sector could not only meet its climate targets but also set new standards for low-carbon industrial practices globally.