Plans to delay the Clean Heat Market Mechanism ‘kick the can further down the road’

Just over a month after rumours that the Clean Heat Market Mechanism (CHMM) could be scrapped, it has now been confirmed that Government plans to delay its implementation by a year.

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The scheme, originally due to take effect this April, requires large-scale boiler manufacturers to meet annual targets for heat pump installations, or face a £3,000 fine for every installation missed against the target.

Manufacturers need to match, or substitute, 4% of their boiler sales above 20,000 units with heat pump sales for year one, rising to 6% for year 2.

Speculation was rife last month that the scheme might be scrapped amid accusations of ‘price gouging’ by boiler manufacturers who have already increased the price of boilers, giving the CHMM as the reason.

It remains to be seen whether those increases will now be reduced in light of the scheme’s delay.

The Department for Energy Security and Net Zero has opened a seven-week consultation seeking feedback on its proposal to postpone the CHMM launch, in the same format, until April 1 2025.

It says it wants to ‘provide industry with further time to prepare their business, and for more consumers to take up heat pumps’.

Cynics argue that the delay ‘kicks the can further down the road’ until after the General Election.

‘Rest of Europe is flying while UK stalls’

Thomas Farquhar, co-founder of clean tech start-up, Heatio, said: “The news that the Clean Heat Market Mechanism (CHMM) has been delayed for another year is disappointing. This was a proposal to increase competition and drive down prices for clean heat technologies such as heat pumps, making the move to clean energy more affordable and accessible for consumers.

“For years now, commitment to a low carbon future and energy security in UK homes has been a can, kicked further and further down the road. The rest of Europe is flying ahead with heat pump technology that is successfully and efficiently warming homes in cold climates. Instead, the UK is stalling. We are still installing 1.7million gas boilers and are handcuffing ourselves to high gas prices that spike – leaving more and more people in fuel poverty. There is a haze of misinformation about the efficiency and practicality of heat pumps and the decision to delay the CHMM adds to it.”

Heat pump target in ‘serious jeopardy’

David Cowdrey, director of external affairs at the MCS Foundation, said: “It is extremely disappointing to see that the Government has postponed one of the most important policies for getting the UK off fossil fuel heating. 

“The Clean Heat Market Mechanism is crucial to the rollout of heat pumps, which are the only viable option to decarbonising at scale the 17% of UK emissions that are created by heating our homes.

“The Government needs to immediately set out plans for how it intends to fill the huge gap in heat pump plans that they have just created.  We need clear and consistent policy more than anything, and without that the UK’s target of installing 600,000 heat pumps a year by 2028 is in serious jeopardy.”

‘Delay provides time’

Charlotte Lee, CEO of the Heat Pump Association, whose membership includes heat pump manufacturers which provide over 85% of the heat pumps in the UK, said: “The Government has issued an addendum to their consultation response on the Clean Heat Market Mechanism, proposing a one-year delay to its introduction.

“Whilst this does not provide the certainty industry desperately needs; it does offer an opportunity for the Government to deliver functioning processes in a transparent manner to enable the mechanism to work. This delay also provides time for the Government to lay the required Statutory Instruments to introduce the policy.

“We will continue to work closely with the Government to support the introduction of the CHMM in due course and call on them to use this time to take meaningful action to rebalance the price of electricity relative to gas, so the lowest carbon heat is the lowest cost heat, to further support the acceleration of decarbonised heat.”

Giving in

The Energy and Climate Intelligence Unit (ECIU) previously said that scrapping the CHMM would be hurting consumers and ‘giving in’ to boiler companies.

Jess Ralston, energy analyst at the ECIU, said: “The UK has been the worst hit by the energy crisis because of our heavy reliance on gas, including for heating, according to the International Monetary Fund. Policies which reduce this gas dependency should be a priority for any government that has energy independence at the top of its agenda.

“The big four boiler manufacturers have said that they will scrap their ‘boiler tax’ – which they may make millions from – if the Government scraps its scheme. Citizens Advice has said that scrapping the policy would ‘hurt’ consumers and any U-turn would make us more dependent on foreign gas imports as the North Sea continues its inevitable decline. The question is, does the Government want to protect consumers and the UK’s energy security, or give in to these boiler companies?”

Continued support for multi-technology approach

On news of the postponement, the Heating and Hotwater Industry Council (HHIC) has reaffirmed its commitment to work with the government to develop a multi-technology approach to help the UK reach net zero.

Stewart Clements, Director of the HHIC, welcomed the news saying: “The heating industry remains dedicated to reaching net zero, and we will continue to engage with the government to drive decarbonisation and support their relevant targets while also protecting consumers.

“Moving forward, an all-technological approach to decarbonisation will undoubtedly help the nation’s efforts. Heat pumps will have a role to play in the decarbonisation of heat, alongside other technologies such as heat networks, hybrid systems and hydrogen, and it’s important that we support customers in understanding the most suitable efficient upgrade available to them and their home.”

‘Trap set for future administration’

A number of boiler manufacturers introduced price increases on the cost of a boiler when the initial CHMM consultation was published, which said the levies would be applied from this April.

Energy Security Secretary Claire Coutinho has asked the Competition and Markets Authority to review the industry in response to this so-called ‘boiler tax’.

Responding to the plans for a delay, Mike Foster, CEO of the trade body the Energy and Utilities Alliance, said: “We welcome the delay in the introduction of the ‘boiler tax’, as confirmed today by the Government. It ends weeks of speculation in the media. However, this decision is clearly political, not about heating policy. The Government have set a trap for a future administration, which according to the polls is likely to be Labour, knowing the boiler tax from 2025 is likely to be around £200.

“But it is an obvious trap, so obvious it has warning lights and bells attached. It could be up to Labour ministers to decide whether to go ahead with the boiler tax, but they have been warned, the public don’t like it; it hits the least well off the hardest and the whole policy needs to be revisited before it harms British companies and British workers.”

More views can be read in our previous article about the CHMM.

It’s been a big week for energy announcements, with other revelations including plans for electricity market reform and changes to the Boiler Upgrade Scheme.