Decarbonisation of heating is a key priority of the EU’s climate agenda, given that the building sector is responsible for 36% of total greenhouse gas emissions. Heat pumps play a central role in enabling the transition towards a climate-neutral society, and are also seen as a crucial tool in achieving independence from foreign oil and gas sources. The EU has set out a plan to quickly ramp up the manufacturing and installation of heat pumps. This study examines the potential impacts arising from this scale-up of heat pump installations. The analysis shows that replacing 30 million fossil fuel individual boilers in residential dwellings with heat pumps would reduce the EU’s gas and oil consumption by 36% in these dwellings. In the large majority of cases, switching from a fossil fuelled boiler to a heat pump will result in lower bills for heating. The study also concludes that a rapid scale-up of heat pumps will require more and higher skilled workers across the whole value chain. The EU’s heat pump supply is chain is vulnerable in a few areas, including a large dependence on imported compressors and semiconductors. Furthermore, there is a clear risk of financially vulnerable groups being excluded from this transition without targeted financial support. Finally, the EU is currently a leader in the production of several heat pump segments, but competition from American and Asian companies is rapidly increasing. Nevertheless, the EU is well placed to benefit economically from increased focus on heat pumps.