‘Boiler tax’ delayed putting heat pump target in ‘jeopardy’

The government has confirmed that the launch of the Clean Heat Market Mechanism (CHMM) has been delayed, after months of speculation around the scheme.

The Department for Energy Security and Net Zero (DESNZ) has announced a one-year delay to the scheme with just weeks to go before the so-called “boiler tax” was due to come into force.

Instead, the scheme has been postponed by one year to April 2025, with industry experts warning that the move puts the government’s heat pump installation targets in “jeopardy”.

The CHMM, which is modelled on the zero emissions mandate being introduced in the car market, is designed to ensure manufacturers install a certain number of heat pumps for every fossil fuel boiler that they sell.

Under the scheme, which was due to come into force next month, manufacturers would have to pay a £3,000 fine for each heat pump installation that they fail to deliver, leading to the CHMM being branded a “boiler tax”.

While the scheme’s launch has been postponed, DESNZ has said that the proposed 2025/2026 heat pump installation target levels of 6% of boiler sales, would remain in place.

The government has also eased the energy efficiency requirements on households receiving Boiler Upgrade Scheme (BUS) grants.

Under the changes, installation of loft and cavity wall insulation recommended on dwellings’ EPCs will no longer be required to access the £7,500 grants, resulting in estimated savings of around £2,500 per property.

Both announcements follow a furious row within government sparked by a report in the Sunday Times last month that energy secretary Claire Coutinho was considering scrapping the CHMM after boiler companies hiked the prices of their products to cover the expected £3,000 fines.

As revealed by Utility Week, junior ministers within DESNZ threatened to resign if the scheme was abandoned because it is a key plank of the government’s efforts to decarbonise home heating, while officials worried that such a decision would leave the government open to a judicial review.

David Cowdrey, director of external affairs at the MCS Foundation, said it is “extremely disappointing” that the government has postponed “one of the most important policies for getting the UK off fossil fuel heating”.

“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,” he said. “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.”

Jess Ralston, energy analyst at the Energy and Climate Intelligence Unit, said Coutinho and No 10 Downing Street had “clearly given in” to boiler manufacturers, while Good Energy head of policy Kit Dixon urged the government to stop “kicking the can down the road [and] wake up and recognise the urgency of the situation”. 

Meanwhile, Mike Foster, CEO of the Energy and Utilities Alliance (EUA) and vocal critic of the CHMM, welcomed the delay but said the government had set a “political trap” for the Labour party, which is on track to win the next general election.

He added: “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.”