Rising temperatures and higher energy costs have created the imperative for Australian households to reduce energy consumption via more efficient heating and cooling systems. These energy efficient systems could lower the overall environmental impacts as heating and cooling accounts for around 20%–50% of total energy usage of residential buildings. Nonetheless, the embodied energy of efficiency upgrades and whether it is offset by operational savings as well as decarbonisation of the electricity grid, is often overlooked. This research aims to determine the environmental impacts of 59 gas heater to electric reverse cycle air conditioner upgrades via a life cycle assessment. A reference gas heater and air conditioner were deconstructed and assessed on their material compositions. The operational energy savings of one year prior and after were collected for all upgrades.The results show that operational energy savings offset the embodied energy for the following impact categories: climate change (short-term), fossil and nuclear energy use, mineral resources use and ozone layer depletion. However, climate change (long-term), photochemical oxidant formation, human toxicity (cancer) freshwater and terrestrial acidification, marine eutrophication, particulate matter formation, ionizing radiation, water scarcity, land occupation and transformation (biodiversity) can only be offset with the decarbonisation of the electricity grid. Notwithstanding, human toxicity (non-cancer), freshwater ecotoxicity and eutrophication cannot be offset even with a complete decarbonisation of the electricity grid, as the impacts from the production stage are too high. Notwithstanding the limited effectiveness of full decarbonisation, it is worthwhile considering the materials used in the appliance to further lower the environmental impact.