100 Million Tons per Year

How much carbon can 2040 Energy eliminate with our heat pumps?

Something I think about often is the total climate impact that 2040 Energy could have. How much greenhouse gas would be avoided if our technology becomes fully deployed across the country?

(Not unrelatedly, this is also a key criteria that high-profile climate investment funds like Breakthrough Energy and Clean Energy Ventures consider when investing in startups.)

There are really two components to this question:

1. How many heat pumps can 2040 Energy sell?
2. How much does each 2040 Energy heat pump help the climate?

Once we figure out a potential unit count and the impact per unit, we just multiply them together for a total impact. Fortunately, we can answer both of these questions pretty well, using some readily-available data and a bit of estimation. Let’s dig in!

How many heat pumps can 2040 Energy deploy?

First, let’s estimate how many heat pumps we could conceivably sell. Since we’re thinking big here, let’s fast-forward to a point in the future where 2040 Energy offers a space and water heating system suitable for every home in the country: from Minneapolis to Miami, from mobile homes to mansions.

The question is really, how many house-sized buildings in the US require heating?

The Census Bureau tracks a ton of data about housing, including heating and air conditioning data. They break down how every type of housing unit in the country does its heating, including primary fuel type, primary heating appliance.

Just looking at households per structure type that have any heating system at all, there are:

• 76.3 million in detached single-family homes (SFHs).
• 8.9 million in attached SFHs (rowhouses, townhouses, etc.)
• 8.3 million in 2-4 unit apartments, which are pretty much just large-ish houses. It’s unclear how many such structures there are; let’s assume an average of 3 households per building, which would be 2.8 million buildings.
• 20.4 million in 5+ unit apartments. These types of buildings usually have very large commercial-grade heating systems, which are a very different sort of product. So, we’ll exclude them as potential customers.
• 6.7 million in mobile homes.

Adding up all of these except the 5+ units, we have a total of 94.7 million potential customers in the US.

But of course they won’t all upgrade their heating every year. A typical lifetime for a heating system is 20 years – so that’s 4.7 million potential customers per year.

Another 1.5 million or so homes are built new each year. These will pretty much all need a heating and hot water system, so now we’re up to 6.2 million potential customers per year.

But unfortunately they won’t all buy from 2040 Energy. If we are amazingly successful, a 30% market share is probably the best we could hope for. (UTC/Carrier/Bryant currently leads the HVAC market with 17% market share.) That would leave us with 1.9 million U.S. customers per year.

That’s a lot of heat pumps!

What is the climate impact of each 2040 Energy heat pump?

Next, we need to estimate how much carbon is avoided by an average heat pump that we sell.

The climate impact of a heat pump depends on a few different factors that vary from location to location:

• The space & water heating requirements of the building
• The carbon intensity of the heat source we’re replacing (i.e. the type of fuel and the efficiency of the equipment)
• The carbon intensity of the local electrical grid

However, for this exercise we want to figure out the average across all of our potential customers in the US. This is pretty easy – we just need to determine the overall space and water heating emissions from all of our potential customers, and divide it by the number of buildings. And again, the government has the data we need for this.

Fossil Fuel Heat

Most homes in the US get heat and hot water by burning fossil fuels like natural gas, fuel oil, or propane. The Energy Information Administration tracks tracks this usage by fuel type: 5.2 quadrillion BTUs (quads) of natural gas, and 1 quad of petroleum (which is about 50/50 fuel oil and propane).

But what about those 5+ unit apartments we can’t sell to? They account for about 9% of residential energy, and use a bit less of their energy for space and water heating compared to lower-density homes. So, we will subtract out 8% of that energy.

Additionally, some of that natural gas and propane is used for non-heat purposes like cooking and clothes drying, so we’ll knock another 8% off those totals.

That brings us down to 4.4 quads of gas, 0.46 quads of fuel oil, and 0.42 quads of propane.

We’ve previously covered how much greenhouse gas is emitted across the full lifecycle for natural gas (69kg/MMBTU) and petroleum (71kg/MMBTU for propane, 91kg/MMBTU for fuel oil).

Doing the math on all of that gets us:

• 304 million metric tons of CO₂-equivalent (MMT CO₂e) emissions from natural gas heat
• 42 MMT CO₂e from fuel oil
• 30 MMT CO₂e from propane

Replacing with a 2040 Energy Heat Pump

Since the fuel-burning equipment loses about 10% of its energy out the chimney, the actual heat we need to replace is 4.75 quads.

We conservatively estimate that 2040 Energy heat pumps will achieve an average COP of 3 – about 10,000 BTU per kWh. This means we would use about 475 billion kWh to replace the fossil fuel heat. The EIA estimates the carbon impact of each kWh to be just under one pound. Calculating that out, we get a total of 214 MMT CO₂e from running our heat pumps that replaced the fossil fuels.

That’s a savings of 162 MMT CO₂e per year.

Electric Heat

Many U.S homes use electricity rather than fuel combustion for space and water heating. Most of this is inefficient electric resistance heat, which will achieve a COP of exactly 1. Replacing this equipment with a 2040 Energy heat pump will cut electricity use by two-thirds.

The Energy Information Administration tracks how much electricity is used for these purposes:

• 209 billion kWh for space heating
• 174 billion kWh for water heating

If all of this energy was going to electric resistance, we could just say we’re going to cut it by 2/3 and be done. But some of this space heating is already being done with heat pumps. Our system will still improve upon these existing heat pumps, but the savings will be much smaller. For simplicity, we will exclude these entirely.

(There is also some water heating being done with heat pumps, but this is such a tiny portion of the market that we can ignore it for now.)

Based on the census data we saw earlier, there are 36.8 million homes using electricity as their primary heating fuel, and 11.5 million of them use a heat pump as their primary heating appliance. Since heat pumps are about 31% of all electric-heat homes, and heat pumps use 35-40% of the energy of electric resistance, we can figure that they’re using about 15% of the total heating electricity.

When we subtract out that 15% of space heating, the total annual electricity usage from resistance heat is 347 billion kWh. A 2040 Energy heat pump could reduce that by two-thirds, saving 232 billion kWh/year across 25.3 US million homes.

Based on the average electricity emissions from above, that’s a savings of 104 MMT CO₂e per year.

Putting it All Together

Between fossil heat and electric resistance, our total carbon savings opportunity is 266 MMT CO₂e per year across 94.7 million homes. That’s an average of 2.8 metric tons per home, per year. Based on the 20-year heating system lifespan, that would mean the total impact per customer would be 56 metric tons CO₂e.

So, if we’re able to sell to 1.9 million customers annually, that would be a total impact of…

106 million metric tons CO₂e per year.

As we say in Minnesota: not too bad!

Thinking Bigger

The estimate above is actually pretty conservative. It’s narrowly focused on the residential sector, considers only the U.S. market, and calculates only the most obvious and easily provable emission reductions. There are a whole lot of reasons why I think this number should be much higher! Stay tuned for future articles on this topic.