Government reduces fines for boiler makers to encourage the adoption of heat pumps

November 22, 2024 TruthUSA

Encouraging more households to switch to heat pumps is a crucial goal for the government in achieving its target of net zero carbon emissions by 2050.

The Department for Energy Security and Net Zero (DESNZ) announced on Thursday that the government has reduced fines for boiler manufacturers who do not meet targets for selling heat pumps.

Under the Clean Heat Market Mechanism, the penalties for falling short of heat pump sales targets have been decreased from £3,000 to £500 per unit for the initial year of the scheme.

The target for heat pump sales in 2025/2026 is set at 6 percent of boiler sales.

DESNZ has also adjusted the counting period for boiler sales in the scheme to run from April 1, 2025, to March 31, 2026, as opposed to January 1 to December 31, 2025.

“This change allows obligated parties more time to prepare in light of the scheme details being confirmed,” DESNZ mentioned in response to the Clean Heat Market Mechanism Consultation paper.

Initially introduced by the Conservative government, the plans entail fines for boiler makers who fail to sell a certain proportion of heat pumps. The fine per missing credit was initially £5,000, before being reduced to £3,000 by the Conservatives.

The department stated that the revised changes aim to provide manufacturers with adequate time to enhance their supply chains, making heat pumps a more appealing option for households and increasing sales without penalizing those opting for a new gas boiler.

Referred to as the “boiler tax,” some manufacturers raised prices on gas boilers by up to £120 to cover potential fine expenses.

Energy and Utilities Alliance CEO Mike Foster remarked that ministers have engaged positively with British manufacturers, who have welcomed this new approach.

“Through collaborative work, we have achieved an outcome that no longer unfairly penalizes businesses and consumers, which is a significant win for households nationwide,” Foster stated.

Boiler Upgrade Scheme

Transitioning more homes from gas boilers to heat pumps remains a pivotal objective for the government in reaching its net zero carbon emissions target by 2050.

However, heat pumps are significantly pricier than traditional gas boilers. According to consumer choice group Which?, the average cost of installing an air source heat pump is £12,600, compared to £500-£3,000 for a new gas boiler installation.

The government asserts that switching from a gas boiler to an electric heat pump can save families £100 annually.

To assist homeowners with affording the costly new heating system, the government introduced a £7,500 grant through the Boiler Upgrade Scheme.

The government recently announced an injection of £30 million into the Boiler Upgrade Scheme for this fiscal year, with the budget nearly doubling to £295 million in 2025/2026.

The government is also eliminating the rule requiring heat pumps to be installed at least one meter away from a property’s boundary, which may have hindered installation for those in flats or with limited space.

Warm Homes Plans

DESNZ is also championing its Warm Homes Plan, aimed at assisting people in reducing energy bills and improving home warmth, benefiting up to 300,000 homes next year.

Minister for Energy Consumers Miatta Fahnbulleh stated, “Our Warm Homes Plan aims to provide all families with affordable heating for their homes.”

“For too long, many have struggled with cold homes and exorbitant bills. Today, we are taking immediate steps to offer cleaner heating options to more households,” Fahnbulleh added.

The Office of National Statistics revealed that inflation rose by 2.3 percent in October, driven by increased electricity and gas prices, marking the highest level in six months.

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