Taxation key to heat pump sales
29th November 2025
BELGIUM: European countries that tax electricity more than gas see slower adoption of heat pumps and are more dependent on fossil fuels, according to a new report.
In contrast, the analysis of sales figures by the European Heat Pump Association (EHPA) reveals that countries where electricity is taxed less heavily than gas makes heat pumps more affordable and attractive to consumers.
As an example, Belgium has one of the highest electricity-to-gas price ratios in Europe, with electricity costing nearly four times more than gas for households. This is largely due to higher taxes and levies on electricity. The EHPA maintains that, as a result, heat pump uptake remains low, with heat pumps having a space heating market share of just 14.7%.
On the other hand, Sweden has long used taxation to support “clean” heating by heavily taxing fossil fuels and keeping electricity taxes low. The country has one of the world’s highest carbon taxes – around €122 per tonne of CO2 – applied to gas, while electricity remains lightly taxed, especially in colder regions. The EHPA insists that this consistent policy has helped Sweden achieve one of the highest heat pump adoption rates in Europe.
The EHPA recommends that countries should adopt a range of fiscal measures to promote the electrification of heat, with the multiple benefits of improved energy security, decreased volatility of household energy costs, decreased air pollution, reduction in greenhouse gases amongst many others.
“Governments use tax to discourage harmful things like smoking. It makes no sense to tax electrification, which we know is crucial for our energy security and the clean economy,” said EHPA director general Paul Kenny. “Instead, EU countries must shift taxes off power bills and instead put a price on harmful carbon emissions from fossil fuels.”
The EHPA is critical of the fact that while the EU has changed the minimum VAT on solar PV to 0%, it has not yet done the same for heat pumps.
It also recommends that the cost of electricity should be at most twice the price of gas and that the taxation should be shifted away from electricity and put a price on the use of carbon instead.
The full report is available here.
