Heat pumps are crucial for building decarbonization, but their widespread adoption could yield unintended climate consequences from the release of refrigerant greenhouse gases into the atmosphere. R-290 air-to-water heat pumps are an exciting solution due to both R-290’s ultra-low global warming potential value and their ability to provide hot water and thermal storage in addition to space heating and cooling. The technology is widely used internationally, but regulatory confusion impedes its inclusion in American utility incentives. This market study investigated these challenges and demonstrated the market potential and suitability of R-290 heat pumps—specifically monobloc air-to-water heat pump designs— as an end-to-end decarbonization solution for domestic heating, cooling, and hot water needs across California’s single-family residential market.