This paper discusses several different approaches to increase the energy efficiency and decrease the environmental impact of space-conditioning systems. The use of microchannel components and hydronic coupling is presented as a method to drastically reduce the size and refrigerant inventories of the refrigerant-carrying components of vapor-compression heat pumps. Design aspects of heat pumps using carbon dioxide, a natural refrigerant with minimal environmental impact, are discussed, and novel component geometries that offer compactness are presented. The advantages of absorption heat pumps using waste heat and natural gas are discussed, and innovative component designs are presented. It is believed that these innovations will hasten the commercialization of these environmentally benign alternatives to CFC- and HCFC-based vapor-compression systems. The environmental benefits of waste heat-driven absorption chillers are quantified in terms of the energy savings, greenhouse gas emission reductions, and installed electric power reductions. Ground coupling of these heat pumps is also discussed, with specific examples of the performance improvement over similar air-coupled heat pumps.