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Charted: Home Heating Systems in the U.S.

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Heating in US

Charted: Home Heating Systems in the U.S.

Fossil fuel combustion for the heating of commercial and residential buildings accounts for roughly 13% of annual greenhouse gas emissions in the United States.

Decarbonizing the U.S. economy requires a switch from fossil fuel-combusting heating solutions to renewable energy sources that generate electricity.

Currently, the majority of new homes in the U.S. still combust natural gas for heating through forced-air furnaces or boilers. Just like cars need to be electric, homes will need to switch to electricity-powered heating systems that use renewable energy sources.

The graphic above uses census data to break down the different heating systems and fuels that are warming the 911,000 single-family homes built in the U.S. in 2020.

Types of Home Heating Systems

Most American homes use one of the following three heating systems:

  • Forced-air Furnaces: These typically have a burner in a furnace that is fueled by natural gas. A blower forces cold air through a heat exchanger which warms it up before it flows through ducts that heat the home with air as the medium.
  • Heat Pumps: The most common type of heat pumps are air-source heat pumps, which collect hot air from outside the home and concentrate it before pumping it through ducts that heat the air inside. They are usually powered by electricity. During warmer months, heat pumps can reverse themselves to cool the home, transferring hot air from the inside to the outdoors.
  • Hot Water/Steam: These systems typically work by boiling water (or generating steam) to the appropriate temperature using gas and sending it through a home’s pipes to radiators that heat the air.

How Home Heating Fuels Have Changed

U.S. home heating has been going through a transition over the last two decades. Electricity has steadily been replacing gas and biofuel/wood-powered home heating systems for new homes, and powers almost half of the heating systems in single-family homes built in 2020.

Here’s how the share of heat sources for new houses changed between 2000 and 2020:

Fuel2000 % of Heating for New Homes2020 % of Heating for New Homes
Gas70%55%
Electricity27%45%
Other4%1%

Percentages may not add to 100 due to rounding.

While electricity’s share has grown since 2000, most American homes are still heated with gas largely because of the fossil fuel’s affordability.

According to the U.S. Energy Information Administration (EIA), households relying on gas for space heating are expected to spend an average of $746 over the winter months, compared to $1,268 for electricity, and $1,734 for heating oil.

Heating in Newly-Built Houses Today

Of the 911,000 new single-family homes, 538,000 houses installed forced-air furnaces. Of these, 83% or nearly 450,000 homes used gas as the primary heating source, with 16% opting for electrified furnaces. By contrast, 88% of the 353,000 homes that installed heat pumps relied on electricity.

Here’s how the heating systems and fuels break down for single-family homes built in 2020:

System UsedHouses Built in 2020% Powered by Gas% Powered by Electricity% Powered by Other
Forced-Air Furnace538,00083%16%<0.5%
Heat Pump353,00012%88%0%
Hot Water/Steam8,00089%5%7%
Other/None12,00012%41%47%

Percentages may not add to 100 due to rounding.

Fewer than 1% of new single-family homes used hot water or steam systems, and the majority of those that did relied on gas as the primary fuel. Around 1.3% of new homes used other systems like electric baseboard heaters, smaller space heaters, panel heaters, or radiators.

While gas remains the dominant heating source today, efforts to decarbonize the U.S. economy could further prompt a shift towards electricity-based heating systems, with electric heat pumps likely taking up a larger piece of the pie.

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Electrification

Visualized: What is the Cost of Electric Vehicle Batteries?

The cost of electric vehicle batteries can vary based on size and chemical composition. Here are the battery costs of six popular EV models.

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The Cost of EV's Battery

What is the Cost of Electric Vehicle Batteries?

The cost of an electric vehicle (EV) battery pack can vary depending on composition and chemistry.

In this graphic, we use data from Benchmark Minerals Intelligence to showcase the different costs of battery cells on popular electric vehicles.

Size Matters

Some EV owners are taken by surprise when they discover the cost of replacing their batteries.

Depending on the brand and model of the vehicle, the cost of a new lithium-ion battery pack might be as high as $25,000:

VehicleBattery TypeBattery CapacityBattery CostTotal Cost of EV
2025 Cadillac Escalade IQNickel Cobalt Manganese Aluminum (NCMA)200 kWh$22,540$130,000
2023 Tesla Model SNickel Cobalt Aluminum (NCA)100 kWh$12,030$88,490
2025 RAM 1500 REVNickel Cobalt Manganese (NCM)229 kWh$25,853$81,000
2022 Rivian Delivery VanLithium Iron phosphate (LFP)135 kWh$13,298$52,690
2023 Ford MustangLithium Iron Phosphate (LFP)70 kWh$6,895$43,179
2023 VW ID.4Nickel Cobalt Manganese (NCM622)62 kWh$8,730$37,250

The price of an EV battery pack can be shaped by various factors such as raw material costs, production expenses, packaging complexities, and supply chain stability. One of the main factors is chemical composition.

Graphite is the standard material used for the anodes in most lithium-ion batteries.

However, it is the mineral composition of the cathode that usually changes. It includes lithium and other minerals such as nickel, manganese, cobalt, or iron. This specific composition is pivotal in establishing the battery’s capacity, power, safety, lifespan, cost, and overall performance.

Lithium nickel cobalt aluminum oxide (NCA) battery cells have an average price of $120.3 per kilowatt-hour (kWh), while lithium nickel cobalt manganese oxide (NCM) has a slightly lower price point at $112.7 per kWh. Both contain significant nickel proportions, increasing the battery’s energy density and allowing for longer range.

At a lower cost are lithium iron phosphate (LFP) batteries, which are cheaper to make than cobalt and nickel-based variants. LFP battery cells have an average price of $98.5 per kWh. However, they offer less specific energy and are more suitable for standard- or short-range EVs.

Which Battery Dominates the EV Market?

In 2021, the battery market was dominated by NCM batteries, with 58% of the market share, followed by LFP and NCA, holding 21% each.

Looking ahead to 2026, the market share of LFP is predicted to nearly double, reaching 38%.

NCM is anticipated to constitute 45% of the market and NCA is expected to decline to 7%.

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How Clean is the Nickel and Lithium in a Battery?

This graphic from Wood Mackenzie shows how nickel and lithium mining can significantly impact the environment, depending on the processes used.

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How clean is the lithium and nickel in battery

How Clean is the Nickel and Lithium in a Battery?

The production of lithium (Li) and nickel (Ni), two key raw materials for batteries, can produce vastly different emissions profiles.

This graphic from Wood Mackenzie shows how nickel and lithium mining can significantly impact the environment, depending on the processes used for extraction.

Nickel Emissions Per Extraction Process

Nickel is a crucial metal in modern infrastructure and technology, with major uses in stainless steel and alloys. Nickel’s electrical conductivity also makes it ideal for facilitating current flow within battery cells.

Today, there are two major methods of nickel mining:

  • From laterite deposits, which are predominantly found in tropical regions. This involves open-pit mining, where large amounts of soil and overburden need to be removed to access the nickel-rich ore.

  • From sulphide ores, which involves underground or open-pit mining of ore deposits containing nickel sulphide minerals.

Although nickel laterites make up 70% of the world’s nickel reserves, magmatic sulphide deposits produced 60% of the world’s nickel over the last 60 years.

Compared to laterite extraction, sulphide mining typically emits fewer tonnes of CO2 per tonne of nickel equivalent as it involves less soil disturbance and has a smaller physical footprint:

Ore TypeProcessProductTonnes of CO2 per tonne of Ni equivalent
SulphidesElectric / Flash SmeltingRefined Ni / Matte6
LateriteHigh Pressure Acid Leach (HPAL)Refined Ni / Mixed Sulpide Precipitate / Mixed Hydroxide Precipitate13.7
LateriteBlast Furnace / RKEFNickel Pig Iron / Matte45.1

Nickel extraction from laterites can impose significant environmental impacts, such as deforestation, habitat destruction, and soil erosion.

Additionally, laterite ores often contain high levels of moisture, requiring energy-intensive drying processes to prepare them for further extraction. After extraction, the smelting of laterites requires a significant amount of energy, which is largely sourced from fossil fuels.

Although sulphide mining is cleaner, it poses other environmental challenges. The extraction and processing of sulphide ores can release sulphur compounds and heavy metals into the environment, potentially leading to acid mine drainage and contamination of water sources if not managed properly.

In addition, nickel sulphides are typically more expensive to mine due to their hard rock nature.

Lithium Emissions Per Extraction Process

Lithium is the major ingredient in rechargeable batteries found in phones, hybrid cars, electric bikes, and grid-scale storage systems. 

Today, there are two major methods of lithium extraction:

  • From brine, pumping lithium-rich brine from underground aquifers into evaporation ponds, where solar energy evaporates the water and concentrates the lithium content. The concentrated brine is then further processed to extract lithium carbonate or hydroxide.

  • Hard rock mining, or extracting lithium from mineral ores (primarily spodumene) found in pegmatite deposits. Australia, the world’s leading producer of lithium (46.9%), extracts lithium directly from hard rock.

Brine extraction is typically employed in countries with salt flats, such as Chile, Argentina, and China. It is generally considered a lower-cost method, but it can have environmental impacts such as water usage, potential contamination of local water sources, and alteration of ecosystems.

The process, however, emits fewer tonnes of CO2 per tonne of lithium-carbonate-equivalent (LCE) than mining:

SourceOre TypeProcessTonnes of CO2
per tonne of LCE
MineralSpodumeneMine9
Mineral Petalite, lepidolite and othersMine 8
BrineN/AExtraction/Evaporation3

Mining involves drilling, blasting, and crushing the ore, followed by flotation to separate lithium-bearing minerals from other minerals. This type of extraction can have environmental impacts such as land disturbance, energy consumption, and the generation of waste rock and tailings.

Sustainable Production of Lithium and Nickel

Environmentally responsible practices in the extraction and processing of nickel and lithium are essential to ensure the sustainability of the battery supply chain.

This includes implementing stringent environmental regulations, promoting energy efficiency, reducing water consumption, and exploring cleaner technologies. Continued research and development efforts focused on improving extraction methods and minimizing environmental impacts are crucial.

Sign up to Wood Mackenzie’s Inside Track to learn more about the impact of an accelerated energy transition on mining and metals.

 

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