Heat pumps can effectively heat homes and buildings even in cold climates, although their efficiency does decrease as the temperature drops. With the help of technologies like variable-speed compressors and advanced refrigerants, they can extract heat from the outside air efficiently. However, in extremely cold climates, a supplemental heat source, such as an electric resistance heater or a gas furnace, may be necessary to maintain comfortable indoor temperatures. Dual-fuel or hybrid heat pump systems, combining a heat pump with a furnace, offer the optimal balance of efficiency and comfort in cold climates.