In today’s era of growing energy demand and costs, policymakers should be laser-focused on actions that can quickly deploy more energy efficient equipment and built-in efficiency measures. Energy efficiency is a proven cost saving resource that can keep energy rates low, combat fossil fuel price inflation, and reduce pollution. The best path to energy efficiency, safer buildings and factories, and cleaner air is using heat pumps, electric boilers, and other electric heating equipment in factories. Residential heat pumps, which are also air conditioners, have outsold gas furnaces since 2021, now representing 56 percent of the U.S. market share for space heating equipment and approximately 43 percent for residential cooling. As this trend continues, policymakers, including utility regulators, should also develop strategies to ensure customers that still rely on gas have accessible pathways to avoid rising and volatile costs.

The challenges to widespread energy efficiency and electrification are primarily economic and logistical in nature: building owners and industrial firms may lack the upfront capital for facility retrofits; on the other hand, the biggest concern for building and industrial owners to electrify their heat is higher electricity rates. Lack of space or electric upgrades may prevent technology adoption. Outdated building codes for new construction impede built-in efficiency that can result in consumers, businesses, and industries paying higher prices for energy over time and paying more for renovations.

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