Heat Pumps Are Coming to New CA Homes. What About Existing Homes?

The future of home heating and cooling in California is looking a whole lot greener thanks to the latest building code proposal from regulators. In a big win for the climate, new efficiency rules will mean the vast majority of new homes and buildings are built with heat pumps rather than gas starting in 2026.

Let that sink in. Just a few years ago, California was adding more new gas customers than anywhere in the nation besides Texas. Now the state is poised to course-correct in a huge way to stem the tide of fossil fuel lock-in. This code blazes the trail for emissions-free heating and cooling across California's new housing stock.

But the draft also contains a glaring missed opportunity when it comes to cutting pollution from existing homes. The proposed code scrapped a critical provision included in a previous draft that would have encouraged households statewide to install two-way heat pumps when replacing old air conditioning (AC) units. Instead, it punts that responsibility to individual local governments to push for heat pump swaps when existing ACs burn out.

That's a real problem for California's already narrow path to meeting its 2030 climate targets. Heat pumps are two-for-one climate winners—providing efficient cooling and zero-emission heating that can displace dirty fossil fuel furnaces with a single appliance. A heat pump installed in California today will cut emissions from space heating by 93% over the lifetime of the equipment compared to a gas furnace. 

The good news? There's still time before the code gets finalized in August for regulators to course-correct. Reinstating that provision would be a catalyst for transitioning millions of existing California households to affordable heating and cooling powered by clean electricity.

The Opportunity of AC for Heat Pump Swaps 

For many homeowners, installing a two-way heat pump when their existing AC stops working is a remarkably simple switch. These dual systems are essentially ACs with one extra, ingenious part—a reversing valve that allows them to provide efficient heating too.

Most installations follow the same process as traditional cooling units, but open the door to using clean electricity, instead of burning fossil fuels, to keep homes warm. It's a common-sense climate solution in an affordable package.

Federal and state incentives are slashing away at the heat pump price premium. According to an RMI analysis of wholesale data the average cost of a minimum efficiency air conditioning unit ranges from $2,400 to $4,150 depending on the condenser capacity. The average cost of a minimum efficiency heat pump ranges from $2,900 to $5,200. In the cases where there is a small cost differential between outdated ACs and two-way heat pumps, the federal and state incentives can more than cover the gap. 

The IRA offers a tax credit of up to $2,000 per year per owner-occupied residence to cover up to 30% of costs to install a high-efficiency heat pump, inclusive of materials and labor. This same tax credit offers up to $600 per year for up to 30% of any electrical expenses needed to support heat pump installations. There are also incentives available from the state through the TECH Clean California program, and other local programs.

Additionally, low-to-moderate income households could actually save even more money by installing a heat pump through the federal HEEHRA program launching this year, which offers up to $8,000 in rebates to install high-efficiency heat pumps. Plus, a new electrification direct-install program through the California Energy Commission (CEC) is slated to launch shortly, which will cover the cost of appliances plus health and safety improvements for low income households.

Avoiding the installation of one-way ACs now will also save families money and hassle down the road, as the California Air Resource Board (CARB) moves toward zero-emissions appliances standards in 2030 which will require heat pumps to be installed instead of polluting gas furnaces. This rule is already in place in the Bay Area where, starting in 2029, when a gas furnace burns out it will need to be replaced with a heat pump thanks to approved air quality regulations. 

Households that install a central AC system now, just to have their furnace burn out a few years down the line, could end up paying for two expensive systems when they could just pay for one. But who is thinking about these future regulations when they are just trying to get their AC replaced on a hot summer day? A reversing valve should be in every AC unit in the state as standard practice, to avoid this wasted opportunity. That way, a consumer trying to replace a broken AC on a hot summer day is presented with options that make the most sense for their wallet and their health. 

Despite this Missed Opportunity, the Proposed Code Makes Significant Progress

While the draft code misses this opportunity to encourage central ACs to be replaced with heat pumps at burnout, it does make significant progress in several other areas. A few notable wins in the proposed code:

• Expanding existing requirements for new homes to encourage heat pumps for both space and water heating, rather than just one end-use. 
• For new commercial buildings, strengthening requirements that encourage heat pump space heating to larger systems in schools and office buildings. 
• Encouraging small rooftop unit (RTU) air conditioners in commercial office buildings to be replaced with heat pumps at burnout – a major improvement that will encourage the adoption of heat pumps in existing commercial buildings! 
• Additional efficiency and electric-ready measures that will reduce costs for Californians and help pave the way to a decarbonized future. 

CA Is Behind its 2030 Adoption Targets—the Code Could Accelerate Progress

While the building code represents climate progress, California has farther to go on its overall heat pump goals. Governor Newsom aims for 6 million heat pumps installed statewide by 2030, but as of last fall, that number hovered around just 1.5 million across 800,000 homes. 

With the state swapping roughly 500,000 residential HVAC systems each year, ensuring those installations are heat pumps is a critical lever to get back on target. Simply continuing the current install pace with mostly ACs means California likely misses its climate-saving heat pump potential in existing homes and buildings.

The upcoming code adoption is a pivotal opportunity for California to boost its heat pump pathway to a decarbonized future—for new and existing buildings alike. Strong statewide standards can provide the policy certainty to ramp up heat pump supply chains, turbocharge consumer adoption, and mainstream these affordable climate solutions in time to meet our fast-approaching 2030 climate goals.