Summary
This report assesses thermal systems and HVAC engineering using the latest available data in the source pack. Heat pumps are the clearest technology shift. Global heat pump sales fell about 2% in the latest full year, but European sales rose 11% while United States sales fell 13%, partly because refrigerant shortages constrained supply 1. In the United States, heat pump shipments reached about 3.64 million units, above gas warm-air furnace shipments of 3.25 million 4. Trane Technologies reported a record backlog of 7.8 billion USD 5. The principal risks are skilled-labor shortages 13, refrigerant phase-down rules 89 and the absence of verified plant-level production data. The IEA projects substantial growth under current policies 2, but this is a forecast, not an observed outcome.
Key findings
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1
Heat pump demand diverged by region
Global heat pump sales fell about 2% in the latest full year, while Europe rose 11% and the United States fell 13%. The IEA links the US decline partly to refrigerant shortages, a qualitative statement with no volume data.
Confidence: High -
2
US heat pumps outsold gas warm-air furnaces
US heat pump shipments reached about 3.64 million units in the latest calendar year, 11% above gas warm-air furnace shipments of 3.25 million. Combined air conditioner and heat pump shipments fell 20% to about 7.75 million units.
Confidence: High -
3
Order intake at a major provider exceeded shipments
Trane Technologies reported record backlog of 7.8 billion USD, up 15%, and a fourth-quarter book-to-bill of 112%. These are company-reported figures and have not been independently verified.
Confidence: High -
4
Installation capacity is a binding constraint
A survey reported by a trade publication says 20% of HVAC companies cannot fill skilled technician positions, and hiring times in the Southeast and Midwest rose to 90 days from 60 days. The survey was not checked against the original.
Confidence: Medium -
5
Phase-down rules are binding but include review clauses
The EU F-gas regulation phases down virgin HFCs and allows a review of heat pump deployment against REPowerEU targets, with possible extra quota. The US EPA estimates net incremental benefits of at least 6.1 billion USD from its phasedown rule, an estimate.
Confidence: Medium -
6
No verified global market size or plant data
Market-size estimates conflict widely and none is an official statistic. Verified data on capacity utilization, yield, defect rates, lead times, energy intensity and safety incidents were not found, so production economics cannot be assessed.
Confidence: Qualitative
1Industry definition and scope
This report covers thermal systems and HVAC engineering: the design, manufacture, installation, service and retirement of equipment that heats, cools, ventilates and dehumidifies buildings. Heat pumps are the central technology in the latest evidence, alongside air conditioners and gas furnaces 14. Ventilation and dehumidification requirements appear in the US model energy standard 10.
The geographic scope is global, with United States and European Union detail where sources are national or regional. The reporting period is the latest available data in the source pack. Comparisons are stated for each figure, and no single period is forced onto sources that use different ones.
Terminology matters. The IEA reports heat pump sales, and one secondary compilation expresses them in gigawatts 3. US figures come from AHRI shipment counts reported in trade press 4. Sales, shipments and deployment are different measures and are not interchangeable. Labor data uses the HVAC/R label 11.
The segments covered are heat pumps, air conditioners and furnaces as equipment; commercial and residential installation and service; and the standards and refrigerant rules that shape them. Upstream raw materials, plant-level production data and end-of-life recovery are not covered by verified sources in the pack and are treated as gaps.
Scope follows the source pack. Gaps are stated rather than filled.
Assumptions behind these figures
- Shipment counts and sales measures are compared only within the same source.
2Market size, structure and value chain
No verified global market size is used in this report. Estimates conflict. One investment-manager profile describes the global HVAC market as generating about 275 billion USD in annual revenue and consolidated among a few scaled incumbents 7. This is an estimate from a non-official source, so it is treated as an unverified claim. Heat pump market-size estimates from research firms also range widely and are not used.
Heat pump sales are the most measurable indicator in the pack. Global sales fell about 2% in the latest full year, with China and Japan largely flat and Europe recovering 1. Regional movements diverged sharply, as the table shows.
The sector runs on two revenue streams. Trane Technologies reported full-year revenue of 21.3 billion USD, up 7% 5. Services were 34% of revenue by stream, and the Americas were 81% of revenue by segment 6. Equipment sales and recurring services therefore sit in the same business models.
Along the value chain, refrigerant supply is a documented constraint. The IEA cites refrigerant shortages in the US decline, qualitatively, with no volume or price data 1. Contractors are the main employers of HVAC workers: about 68% were employed by plumbing, heating and air-conditioning contractors in the latest period 12. Design, component sourcing, distribution and end-of-life management are not quantified in the pack.
- Trane Technologies full-year reported revenue 21.3billion USD Observed Global, Latest full year [5]
| Geography | Change in heat pump sales | Measure | Period |
|---|---|---|---|
| Global | -2% | Year-on-year sales change | Latest full year versus prior year |
| United States | -13% | Year-on-year sales change | Latest full year versus prior year |
| Europe | +11% | Year-on-year sales change | Latest full year versus prior year |
The table uses three comparable observed figures from one source.
Assumptions behind these figures
- Regional percentages are as reported by the IEA and are not restated.
3Customers, demand and adoption
US demand is shifting toward heat pumps. Combined air conditioner and heat pump shipments fell 20% to about 7.75 million units in the latest calendar year 4. Heat pump shipments reached about 3.64 million units, 11% above gas warm-air furnace shipments of 3.25 million 4. The chart shows these three comparable figures. The combined total is shown for scale.
The IEA reports that annual heat pump sales now exceed gas boiler and furnace sales in France, Germany and the United States 2. This is an observed crossover, but the pack gives no sales counts for that comparison, so the size of the gap cannot be stated.
The IEA's projections depend on current policy settings 2. The pack does not provide verified purchasing criteria, price sensitivity or customer segment data. Buyer preferences are therefore not assessed beyond what the sources state.
The main barriers in the latest period are supply and installation capacity. A survey reported that 20% of HVAC companies cannot fill skilled technician positions, up 5% from the prior year 13. Hiring times in the Southeast and Midwest stretched to 90 days from 60 days 13. These are secondary reports of a survey, not verified against the original.
- 7.75 million unitsCombined air conditioner and heat pump shipments
- 3.64 million unitsHeat pump shipments
- 3.25 million unitsGas warm-air furnace shipments
Shipments as reported by AHRI and cited by ACHR News. The combined total includes air conditioners and heat pumps.
Source: ACHR News (reporting AHRI shipment data)
View the data
| Item | Value |
|---|---|
| Combined air conditioner and heat pump shipments | 7.75 million units |
| Heat pump shipments | 3.64 million units |
| Gas warm-air furnace shipments | 3.25 million units |
Heat pump crossover claims are observed in the IEA source but without volume counts.
Assumptions behind these figures
- Shipment figures are for the US market only.
4Competitive landscape and key players
Two named providers illustrate the top of the market. Trane Technologies reported a record backlog of 7.8 billion USD at year end, up 15%, with Americas Commercial HVAC backlog up 25% 5. Its fourth-quarter book-to-bill was 112%, and global Commercial HVAC book-to-bill was 114% 5. Its annual report lists 22.6 billion USD of bookings, 11% organic growth and 98% free cash flow conversion 6. These are company-reported figures and have not been independently checked.
Daikin is described by an investment manager as the world's largest manufacturer of HVAC equipment, serving customers in more than 170 countries 7. This is a third-party characterization. Verified Daikin financial results were not retrieved, so its revenue, margins and capacity cannot be compared with Trane on the same basis.
The business models differ in disclosed detail. Trane combines equipment with a large services stream, which was 34% of revenue 6. Daikin's revenue mix is not verified. A fair comparison is therefore limited to growth signals and disclosed scale, not profitability or cost efficiency.
Concentration is described as high, with the market consolidated among a few scaled incumbents 7. Competitive pressure is visible in demand data: the 20% fall in combined US shipments 4 and the regional declines in heat pump sales 1 affect all suppliers. Carrier and Lennox results were not retrieved and are not included.
- Record year-end backlog 7.8billion USD Observed Global, Year end, latest period [5]
- Fourth-quarter book-to-bill, global Commercial HVAC 114percent Observed Global, Fourth quarter, latest period [5]
- Reported bookings 22.6billion USD Observed Global, Latest full year [6]
Only two named providers have verifiable company-level data in the pack, so the comparison is limited.
Assumptions behind these figures
- Company figures are used as reported and not adjusted.
5Technology, operations and workforce
The latest ASHRAE Standard 90.1 edition incorporates 105 addenda that advance efficiency levels and expand compliance options 10. It adds the integrated energy efficiency ratio metric for water-source heat pumps and updates dehumidification and ventilation requirements 10. These are changes to a model standard, so their effect depends on adoption by jurisdictions.
The pack contains no verified data on plant capacity utilization, yield, defect rates, lead times, energy or material intensity, downtime, or automation adoption for HVAC manufacturing. Productivity and capital intensity cannot be assessed from verified sources. Trane's bookings and backlog 56 show order visibility, not production throughput.
US employment of HVAC/R mechanics and installers was 440,900 jobs, with median pay of 61,010 USD in the May data period 11. The Bureau of Labor Statistics projects about 40,600 openings a year, with employment growth of 11% 11. A separate association report says HVAC technician employment grew nearly 20% over an earlier period and is projected to grow another 10.9% 12.
Skilled-labor data is US-only, and no verified global workforce statistic was found. In my assessment, installation capacity, not only equipment supply, is likely to govern how quickly heat pump deployment can scale. This is an interpretation of the sources, not a verified finding.
- HVAC/R mechanics and installers, employment 440,900jobs Observed United States, May data period, latest available [11]
- Projected average annual HVAC/R openings 40,600openings per year Forecast United States, Projection period as stated by the source [11]
The workforce figures are secondary summaries of official statistics.
Assumptions behind these figures
- Employment and openings figures are US-only and drawn from a summary of BLS data.
6Regulation, standards, risk and sustainability
In the European Union, the revised F-gas regulation phases down virgin HFCs 8. This is a binding regulation. It allows a review of the phase-down's effect on heat pump deployment against REPowerEU targets, with possible extra quota 8. The review is a provision, not a guaranteed allowance.
In the United States, EPA restrictions on higher-GWP HFCs in new refrigeration, air conditioning and heat pump equipment begin as soon as January 1 of the compliance year stated in the rule 9. EPA estimates net incremental benefits of the phasedown of at least 6.1 billion USD over its analysis period 9. This is an agency estimate, not an observed outcome.
ASHRAE Standard 90.1 is a model energy standard. It is binding only where a jurisdiction adopts it. ASHRAE plans to move optional Addenda M and N into a separate operational carbon publication 14. The source does not state the binding status of that publication, so it should be treated as separate from the core standard. The pack did not retrieve ISO, ASHRAE 15 or EN publications on refrigerant safety or equipment performance, so those requirements are not assessed.
Safety performance indicators, such as incident rates for installation and service work, were not verified. Manufacturing emissions and energy intensity are also unverified. Refrigerant supply shortages are cited only qualitatively 1. Requirements differ by jurisdiction, and this section is not legal or engineering advice. Readers should check current rules in the relevant jurisdiction.
- EPA estimated net incremental benefits of HFC phasedown 6.1billion USD (at least) Estimate United States, Analysis period stated by EPA [9]
Regulatory statements are drawn from a regulator, an industry association and a standard. Binding status is noted for each.
Assumptions behind these figures
- Regulatory status is stated as binding, model, proposed or voluntary as each source describes it.
7Challenges, opportunities and case examples
The main constraints in the pack are refrigerant supply 1, installation labor 13, the transition under EU and US phase-down rules 89 and the absence of verified production data. Each constraint affects different parts of the value chain, and the sources do not show how severe each is in volume terms.
Opportunities include the European recovery, with sales up 11% 1, and the US crossover in which heat pump shipments exceeded furnace shipments 4. Services also provide a route to recurring revenue, with services at 34% of Trane revenue 6.
Trane Technologies offers one example. Its record backlog and fourth-quarter book-to-bill of 112% 5 show order intake above shipments. For contractors and suppliers, this suggests demand visibility in commercial HVAC. It does not show whether installation capacity matches that demand.
Daikin offers a second example. Its reach across more than 170 countries 7 shows how global operations can spread regulatory and supply exposure across markets. The source is a vendor-style investment report and is not an audited statement.
Comparable case examples were limited. Only two providers appear in the pack, and only Trane has company-reported financial data.
Case examples are drawn only from the pack and are described as company-reported or third-party.
8Outlook and strategic implications
The IEA's Current Policies Scenario projects global heat pump deployment to rise about 80% from the latest sales level by the end of its forecast horizon 2. This is a forecast under stated policy settings, not an observed outcome, and the pack gives no independent check on it.
Two scenarios follow from the evidence. In a policy-led scenario, European growth and the US heat pump crossover continue 14, and deployment approaches the IEA projection. In a supply-constrained scenario, refrigerant shortages and installer shortages 113 slow the rate of growth even where demand exists. These scenarios are my interpretation of the sources.
For manufacturers, refrigerant supply planning and backlog conversion are the priorities. For contractors, installer recruitment and training determine how much of the demand can be served. For buyers, lifecycle service and efficiency standards 10 affect total cost. For regulators, review clauses such as the EU provision 8 will shape the transition.
Key uncertainties include the true scale of the market, the durability of the US decline 4, the effect of the phase-down on heat pump costs and the lack of verified production and safety data.
Forecast content is limited to the IEA projection and is labelled as such.
Assumptions behind these figures
- Scenarios are interpretive and not forecasts from the sources, except where stated.
9Conclusion
The sector's central question is installation and supply capacity, not only demand. Heat pumps are gaining ground in Europe and the US crossover is established 14, but labor shortages 13 and refrigerant constraints 1 limit how fast that demand can be served. The most defensible takeaways are the regional divergence in sales, the workforce constraint and the binding status of the EU and US phase-down rules.
How this was built
This report uses only the verified source pack. Figures are labelled as observed, estimated or forecast. Company-reported, vendor, secondary and estimated figures are identified in the text. Where verified data was not available, the gap is stated rather than filled. Regulatory statements distinguish binding rules from model standards and voluntary guidance.
Limits to keep in mind
- No verified global market-size figure exists in the pack. Estimates conflict and none is an official statistic.
- No verified manufacturing capacity utilization, yield, defect rate or lead-time data was found for HVAC plants.
- No verified energy or material intensity, or manufacturing-stage emissions data, was found.
- No verified project cost or schedule variance data was found for HVAC installation projects.
- No verified safety incident rates were found for installation or service work.
- Refrigerant supply effects are cited only qualitatively. No volume or price data for HFC or HFO supply was verified.
Sources
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1
Global Energy Review (latest edition): Technology: Heat pumps
iea.org -
2
Key findings, Heat Pump Monitor (latest edition)
iea.org -
3
Heat Pump Monitor and key findings: global heat pump sales 107 GW in the latest period (as cited in a third-party statistics compilation)
hvacloadcalculator.app -
4
Heat Pump, A/C Shipments See 20% Declines in the Latest Period
achrnews.com -
5
Trane Technologies Reports Strong Fourth-Quarter and Full-Year Results
investors.tranetechnologies.com -
6
Trane Technologies Latest Annual Report and Proxy Statement (Form ARS)
sec.gov -
7
Daikin Industries: Highlighted Holding, Fourth Quarter (latest period)
pzena.com -
8
EU F-Gas Regulation (EU) No 573, as summarised by the European Heat Pump Association
ehpa.org -
9
Frequent Questions on the Phasedown of Hydrofluorocarbons
epa.gov -
10
Standard 90.1 (latest edition), ASHRAE
ashrae.org -
11
HVAC/R mechanics and installers: employment, wages and openings (BLS-based summary)
boostpoint.com -
12
Alliance for America's Skilled Trades: The State of America's Skilled Trades (as reported by HomePros)
homepros.news -
13
HVAC Technician Shortage Hits 20%, Causing 90-Day Install Delays
hvac365.com -
14
ASHRAE strengthens Energy Standard 90.1, with focus on carbon reduction and operational emissions
fmlink.com