Heat pump sales slumped in the second and third quarters of the year – putting €7 billion ($7.6 billion) of production facility investments at risk, the European Heat Pump Association (EHPA) has cautioned.

The Brussels-based association said data collected from 10 European countries shows heat pump sales were strong in the first quarter of the year, but by the third quarter, dropped by 14%.

Sales were down 66% in Finland, 55% in Denmark, and 45% in Italy. Germany was the only country that bucked this trend with 60% growth in the third quarter, but “even here, the gap is closing as the year progresses,” according to EHPA.

The almost unanimous third quarter drop – across Austria, Denmark, Germany, Finland, France, Italy, Netherlands, Norway, Sweden and Switzerland – is an “alarming trend” that could put the EU’s decarbonization targets at risk, the association said in a press release.

It blames “ambiguous communication” and “changing government policies and subsidies” for creating an uncertain market leading to the drop.

EHPA Secretary General Thomas Nowak said policymakers need to correct the record by “committing unambiguously” to heat pump technologies and by establishing favorable economic conditions. “As an immediate measure, policy must aim at reducing the cost of electricity for residential, commercial and industrial applications. It should not be more than twice the price of fossil gas,” he said.

EHPA said these concerns must be addressed in the European Commission’s upcoming “Heat Pump Action Plan” planned for publication in early 2024. The program aims to accelerate the heat pump market and deployment through partnerships between the government, communication with interest groups, legislative support and accessible financing.

The association said national governments should also propose solutions in their national energy and climate plans and make energy taxation more “balanced,” phase out fossil subsidies and reduce the burden of electricity from taxes and levies.