Virtually every household has at least one heat pump — a refrigerator. Heat pumps work by using electricity to run pumps which move a compressible fluid around a thermodynamic cycle between two reservoirs of heat, and effectively “pump” heat against its natural direction of flow, from cold to hot. This is what your fridge does. It takes heat from the inside of your fridge (cold) and dumps it into the air in your kitchen (hot). This is why the air behind your fridge is hot. Since heat energy cannot be destroyed, if you take it away from the inside of your fridge, it has to be dumped somewhere else.
What heat pumps used for home heating do is instead pull heat out from the ground, and dump it into your house. They typically pump four times more energy as heat than they use in electricity, making them 500% “efficient” (not technically correct, but for analysis we can use the term “efficient”). By contrast, regular electric heaters are 100% efficient. Natural gas furnaces are about 200% “efficient” in comparison, since natural gas can be converted to electricity at about 50% efficiency. So, as science geeks can see, heat pumps are way more efficient than the alternatives, and because of this, they are much cheaper to run. Their drawback is the higher cost of installation (you need to dig up your lawn and bury a bunch of heat exchange coils), which explains why they have been slow to catch on.
Another benefit of heat pumps is that they do not contribute to global warming, unless the electricity used to run them was produced with carbon intensive fuels. Heat pumps remove heat from the ground or water and increase the temperature of your house. On clear nights this heat is radiated away to outer space, so heat pumps actually COOL the planet! And if the electricity used to power the heat pump comes from a hydro dam on a river somewhere, then the energy taken out of the river water to generate electricity results in a lower water temperature which also cools the planet!
How significant could this technology be? Very. To put it into perspective, the entire downtown core of Vancouver could be heated with heat pumps, and amazingly all this would require is a few 1 meter diameter pipes sucking sea water out of English Bay. The water would be sucked out at 10 degrees C, the heat pulled out, and then returned to the ocean at 5 degrees C. This would supply 80% of the heating energy for downtown, with the remaining 20% coming from the electricity needed to run the heat pumps. The heat energy would be transferred through heat exchangers to glycol alcohol lines which then distribute to each building through the sewers.
Why don’t we do this? Well, we decided years ago to instead pursue natural gas to provide building heat. Unfortunately, we didn’t build our infrastructure to accommodate this kind of centralized heating system, and now we are all paying for it because we are locked into using an unsustainable fossil fuel which produces carbon dioxide. While it would not be practical to put in this extensive heating system after the fact, what we can do instead is install air-to-air heat pumps. These transfer heat from the outside air to the inside air (an air conditioner run in reverse). Because air does not carry as much heat as liquids or the ground, these are not as efficient. However, for moderate temperatures above freezing, they are reasonably efficient. These could be used for half the year in Vancouver, with its moderate climate. In summer they would work in reverse, cooling the buildings. In the cold snaps in winter we would still use natural gas. But installing these air to air heat pumps would dramatically reduce energy use, running costs, and carbon emissions. The only drawback is the higher cost of installing them along with natural gas furnaces. This is why new units are available that use both natural gas (for when it’s below freezing), and the heat pump for when it’s not.
For homeowners, it now makes no financial sense to install a natural gas furnace in new homes or retrofits. While heat pumps are more expensive initially, they pay for themselves in a few years due to their much lower operating costs. If homeowners wanted to, they could even get off the grid, from both natural gas and electricity. With a solar panel installation on their roof they could charge their old electric car batteries during the day to store the energy, then use this energy to run a heat pump to heat their house at night. This setup would have problems dealing with a week of rainy Vancouver weather in November (not enough solar energy to run your house), but it would work in summertime or sunny winter stretches, and it would work all year long in more sunny locations like California. For rainy Vancouver, some other source of supplemental energy would be required during rainy periods and fortunately, when it’s raining in Vancouver we have lots of hydro power. But the technology all exists; it is just a matter of mainstream adoption to ramp up mass production and therefore reduce costs and fuel further innovations and efficiencies.
The Wikipedia page describes heat pumps well.