This summer was one record-breaking heat wave after another, sending many of our electricity bills through the roof. As extreme weather becomes the norm, it’s a matter of health and safety that we all have reliable, affordable, and environmentally friendly means of keeping our homes sufficiently cool in the summer and warm in the winter.

Thankfully, heat pumps check all of our boxes. They’re an increasingly popular alternative that can replace both your air conditioner and heater, all in one system, with benefits for both the climate and your wallet. That’s great news, given that heating and cooling are the biggest sources of carbon emissions in most U.S. homes. With the seasons changing and chillier nights on the way, here’s some background.

How do heat pumps work anyway?

It’s all in the name: Electric heat pumps work by moving heat from one place and pumping it somewhere else. In the summer, they move hot air from inside your home and pump it outdoors, much like a traditional AC—but in a more efficient and cost-effective way.

In the winter, they reverse this process by picking up heat from outside and pumping it indoors, something that is often left to a separate gas-powered heating system. This magic happens by way of refrigerant gases that are expanded and compressed inside the heat pump system.

Why are heat pumps more efficient?

Unlike traditional furnaces, heat pumps don’t create heat by burning fuel. Per unit of energy, this makes them several times more efficient—two to five times or better, depending on the conditions—compared with standard equipment. In fact, an NRDC-supported study showed that gas-fired furnaces produce 45 to 70 percent more emissions than heat pumps, which come out ahead as the clear climate winner. Even better, models with lower “global warming potential” refrigerants will soon be hitting shelves. (Refrigerant gases are found in conventional ACs, too, and have their own environmental impact.)

What about when it’s super cold outside?

Modern heat pumps can now deliver heat down to -15 degrees Fahrenheit, and they can use electric resistance backup when it drops below that temperature, so they work in all U.S. climates. In fact, one of the leading states in heat pump adoption is Maine, where winters can be brutally cold.

Are they affordable?

Heat pumps typically only cost a few hundred dollars more than equivalent-size air conditioners, but they offer a two-for-one deal because they can also function as heaters. The models you choose will depend on what you’re replacing: A central heat pump, for example, takes the place of a central AC; it sits in the same spot and uses the same air ducts and thermostats. So, too, for other types of ACs and heat pumps.

New federal incentives are also subsidizing upfront costs. The Energy Efficient Home Improvement Credit refunds taxpayers up to $2,000 per year for heat pumps. And by early 2024, two more rebate opportunities will be available: the Home Owner Managing Energy Savings (HOMES) rebate program and the High-Efficiency Electric Home Rebate Act. An increasing number of state programs, like Maine’s trailblazing effort to put a heat pump in every home, are also bringing down the cost. Expect savings to roll in monthly, too, in the form of reduced energy bills.

Inspired? Check out our guide for tackling a full energy efficiency home makeover.

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