While Howe considers the 19-year-old centre-back as a potential longer term target, the Burnley boss believes Duffy could also have a part to play in the Clarets' bid to force their way into the top six.
"He's a young player who has done very well this season for Everton's reserves and he is a player with big potential," Howe told the club's website.
"I'm delighted with the deal. It's a double benefit in that it gives us a chance to look at him with a view to next season but he also increases competition for places now and comes straight into the squad.
"We have got a lot of games in April. We will need to use the whole squad and Shane will add more depth."