BDC Report: Heat Pumps Hold 58% of U.S. Heating Market

The Building Decarbonization Coalition’s Momentum Q3 | 2026: Special Legislation Edition report finds that heat pumps made up 58% of space-heating equipment shipped in the first half of 2026, matching their 2024 first-half record, despite last year’s expiration of the $2,000 federal 25C heat pump tax credit.

The report also found that state legislatures have passed 41 building decarbonization bills so far this year, as rising utility bills made energy affordability one of the defining issues of this year’s legislative sessions.

The report’s legislative roundup describes how energy affordability drove many of the building-decarbonization bills introduced and passed in 2026. The approaches these bills used to tackle affordability varied: some states passed bills to streamline permitting, others updated energy efficiency programs to include heat pumps, and others addressed the underlying systems that drive high utility costs, including data centers.

Examples of some of the building decarbonization-related bills passed by legislatures in 2026 that addressed energy affordability include:

• California’s Heat Pump Access Act (SB 222), which makes California the first state in the nation to streamline heat pump permitting by updating its permitting process to make it faster, easier and more affordable for homeowners and contractors to install heat pumps.
• Maryland’s Utility RELIEF Act (HB1532), which will help lower Marylanders’ energy bills and create jobs through several building decarbonization provisions that encourage heat pump adoption. The bill also includes other energy affordability provisions, including provisions on utility ratemaking, data center tariffs and the creation of a reverse auction to encourage new clean energy generation.
• Rhode Island’s Thermal Energy Network and Jobs Act (RI H7879A), which requires the state’s public utilities to identify between two and 12 potential locations for thermal energy network feasibility studies, with at least two feasibility studies implemented within the next 18 months. After completing a feasibility study, the utility may develop a pilot TEN project and recover the associated costs through rates, subject to Public Utilities Commission approval

At the same time that legislators and utility regulators are raising more affordability concerns regarding current energy system, utilities are seeking substantial increases in customer rates. As of the end of the third quarter of 2026, electric and gas utilities are requesting a combined $17.2 billion in rate increases, even as energy costs rose 16% over the last 12 months — nearly 5 times the rate of inflation.

This year marks BDC’s fifth annual legislative roundup. Since 2022, BDC has tracked 580 building decarbonization bills across 44 states, up from 16 states in the first year, and 206 of those bills have passed.

The report is available at https://buildingdecarb.org/momentum-q3-2026.