The consultation on a market-based mechanism for low-carbon heat closed on 12 January 2022, having been issued on 19 October 2021 by the then Department for Business, Energy and Industrial Strategy1. Responses were invited through the Citizen Space online platform, by email to the Heat Market Mechanism Team, or in writing1. The consultation covered the whole United Kingdom1.
Under the lead proposal, the mechanism would place an obligation on companies selling fossil fuel heating appliances, meaning gas and oil boilers, to achieve a growing number of heat pump installations in parallel1. The government proposed to introduce the mechanism from 20241. The obligation would require obligated parties to achieve the installation of a certain number of heat pumps up to 45kWth in existing UK properties1. Sales of fossil fuel boilers fired by natural gas, oil or liquefied petroleum gas up to 70kWth to UK consumers would generate the low-carbon heating obligation1. Meeting the obligation would require the installation of an air-to-water, ground-to-water or water-to-water heat pump1. Installations where multiple heat pumps within the capacity limit are installed together to heat one premises, summing to a total installed capacity larger than 70kW, would be out of scope1.
The government set out supporting schemes alongside the proposal. The £450m Boiler Upgrade Scheme, announced in the Heat and Buildings Strategy, would focus primarily on supporting heat pump installations from 2022 with consumer grants towards upfront costs, with household grants of up to £6,000 depending on technology1. The domestic Renewable Heat Incentive, in place since 2011, has funding confirmed for new deployment of renewable heat technologies up until 31 March 2022 and has supported the deployment of more than 60,000 heat pumps1. Other measures cited include the £60m Heat Pump Ready programme, the £1.8m Green Home Finance Innovation Fund supporting three projects, and the Home Upgrade Grant focused on the worst-performing off-grid homes1.
"We propose to introduce a new market-based mechanism from 2024"
The consultation document states that heat in buildings is responsible for 23% of the UK's greenhouse gas emissions, and that the market for heat pumps needs to grow to approximately 600,000 installations per year by 20281. It also states that the government's intention is that the proposed obligation should apply throughout the UK1. A 45kW limit would be consistent with the capacity used by the Microgeneration Certification Scheme for a single renewable heating product, and is the limit proposed for the Boiler Upgrade Scheme1.
| Item | Detail |
|---|---|
| Consultation issued | 19 October 2021 |
| Consultation closed | 12 January 2022 |
| Proposed mechanism start | 2024 |
| Heat pump capacity in scope | up to 45kWth |
| Fossil fuel boiler sales threshold | up to 70kWth |
| Boiler Upgrade Scheme funding | £450m |
| Maximum household grant | up to £6,000 |
Why it matters for households
The proposal would not place a direct obligation on households. It would fall on companies selling gas and oil boilers, who would have to deliver a rising number of heat pump installations in existing properties1. For a household, the practical effect would come through the heating appliance market: the availability, marketing and pricing of boilers and heat pumps as sellers adjust to the obligation. The consultation states that the government will work with industry on ambitions for 25 to 50% reductions in the installed costs of heat pumps by 2025 and approaching parity with boilers by the end of the decade1. It also states that low-income and fuel-poor households must not be disproportionately affected and that there must be support where it is needed1. The document notes that further choices remain over how the costs of the transition are met across society1. For a home's energy independence, the mechanism concerns the technology used to heat the property rather than the source of the energy itself; the consultation does not set out changes to household electricity or gas supply arrangements.
What happens next
The consultation document states that the government anticipates consulting further in due course on more detailed policy design proposals, informed by responses to this first consultation1. No date for that further consultation, or for a government response to this one, has been reported.
Sources1 cited
- Heat_Market_Mechanism_Consultation_Final.pdf, data.parliament.uk