The global heat pump market is forecast to nearly double in value, growing from $88.81 billion in 2026 to $169.04 billion by 2031, according to a September 2026 forecast by MarketsandMarkets. That represents a compound annual growth rate of 13.7%.

Electrification and decarbonisation are driving demand. But for HVAC manufacturers, growth also brings a more complex compliance landscape. Refrigerant transitions, safety requirements and carbon reporting are becoming part of the commercial equation.

Here are three developments manufacturers should consider:

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Low-GWP Refrigerants: A Product and Compliance Decision

The forecast identifies low-GWP refrigerants—including R-32, R-290 (propane) and CO₂—as important technical drivers for the market. In Europe, the revised F-Gas Regulation is accelerating the phase-down of HFCs, increasing pressure on manufacturers to plan for changing refrigerant availability.

Natural refrigerants such as R-290 can avoid F-gas quota constraints and some future PFAS-related risks. They also bring safety and certification requirements, including A3 flammability considerations and applicable European ATEX directives and local building codes.

For OEMs, refrigerant compliance is therefore becoming a product-development decision, with implications for system design, certification and market access.

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Commercial and Industrial Systems: Larger Charges, Greater Exposure

Residential applications have historically dominated the market narrative, while North America is forecast to record regional growth of 17.0% CAGR. The latest figures also point to commercial buildings as the fastest-growing end-user segment, with high-temperature heat pumps opening further opportunities in industrial process heating.

The International Energy Agency estimates that commercially available heat pumps could technically supply around 20% of global industrial heat demand. These larger commercial and industrial systems can contain significantly more refrigerant per unit, increasing the potential impact of quota constraints.

For exporters, quota forecasting and refrigerant planning become more consequential as they move into these applications.

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CBAM and Carbon Traceability: Preparing the Supply Chain

As heat pumps replace fossil-fuel boilers across Europe, regulatory attention is extending from operating emissions to emissions embedded in manufacturing.

The article’s cited outlook anticipates a downstream expansion of the EU Carbon Border Adjustment Mechanism (CBAM) to finished HVAC equipment from January 1, 2028. Exporters targeting the European market should therefore begin preparing supply-chain data, including information on the steel, aluminium and energy used in production.

The carbon footprint of manufacturing may become an additional consideration alongside a system’s seasonal coefficient of performance (SCOP).

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Operational Takeaways for Heat Pump Manufacturers

The market opportunity comes with new requirements for product and supply-chain planning:

• Build refrigerant strategy into product development: Consider availability, quota exposure, safety requirements and certification early.

• Forecast quota needs for larger systems: Commercial and industrial applications can increase exposure to refrigerant constraints.

• Prepare supply-chain data: Start collecting the production information needed to assess and document embedded emissions.

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At AFS Cooling, we focus entirely on helping businesses navigate these regulatory shifts. We specialize in quota procurement, open-market quota transfers, and meticulous yearly F-gas reporting across European jurisdictions.

Let our team secure your 2027 quota allocations early so your business remains fully compliant and operational.