A phase change heat pump employs a liquid with a low boiling point, once typically freon (CFC), now generally liquid ammonia, or occasionally the less corrosive propane or butane. This liquid requires energy (called latent heat) to evaporate, and it drains that energy from its surroundings in the form of heat (in the same way that sweating cools the body). When the vapour condenses again, it releases the energy, again in the form of heat.

First the liquid's pressure is lowered by an expansion valve on the side that is to cool down, forcing it to evaporate and extract heat from its surroundings. The gas is then pumped to the other side (the compressor) where it is compressed into a liquid, causing it to release its heat.

The result is that on the end of the pump where the heat is dumped, we get the heat that was pumped from one side to the other plus the amount of heat that corresponds to the electrical power we used to run the engine (100 joules per second).

How much heat we can pump depends on the difference in temperature between where we pump from (outside) and where we dump it (inside). The colder outside the less we can pump. If the pump is based on the phase change principle, in very cold weather the machine stops working when the outdoor part, the condenser, freezes. In these conditions a simple electric heater works better unless the phase change heat pump is replaced by a more suitable type such as a gas compression device.