Nesta and the Behavioural Insights Team (BIT) published their full report on 20 April 2022 assessing the UK Government's proposal to obligate boiler manufacturers to support heat pump installations1. The government consulted on the policy earlier in 2022, and it remains under consideration1.
Under the proposed mandate, manufacturers of fossil fuel heating appliances would have to achieve the sale and installation of heat pumps equal to a proportion of their fossil fuel boiler sales in a given period1. The government has not specified what that proportion would be, and has noted it could be "stepped up" over time1. Manufacturers might be allowed to trade credits, with those holding excess heat pump credits selling them to manufacturers with insufficient installations1. Those failing to produce or procure enough credits would face penalties, such as a fine proportionate to the number of fossil fuel boilers sold beyond their allowance1. The mandate would apply across all parts of the UK1.
The report sets the policy against current installation figures. The government's goal is 600,000 heat pump installations per year by 2028, against approximately 30,000 per year at present1. Heating homes accounts for 17% of all UK emissions1. Heat pumps use electricity, which by 2035 should be 100% zero-carbon, and turn one unit of electricity into between two and four units of heat1. The report notes that heat pumps are expensive upfront, often have higher running costs than gas boilers despite being around three to four times more efficient at turning electricity into heat, and can take about a week to install1.
The report draws on a hypothetical choice experiment run online between 9 and 14 December 2021, in which participants saw a randomly selected heat pump price ranging from £2,000 to £12,0001. Seven in ten of those who chose gas boilers said they would change their mind and buy a heat pump if it were cheaper to install1.
"Ultimately, we concluded that the policy was a crucial tool to increase heat pump adoption, but that it needs supporting policies to work well, chiefly a scale-up in installer training, policies to increase consumer demand, and ideas to ensure high-quality installations."
The report's stated concern is that the policy would encourage an increased quantity of heat pumps without ensuring high quality1. It recommends supporting policies including installer training, measures to raise consumer demand, and a centralised review platform intended to help consumers identify high-quality heat pumps and installers while encouraging manufacturers and installers to compete on quality1.
Why it matters for households
The mandate would not require any household to install a heat pump. Its effect on homes would come through the market: the report assumes manufacturers would meet the obligation by reducing the cost or increasing the desirability of heat pumps, likely financing that by raising the cost of gas and other fossil fuel boilers1. In those terms, the report describes the mandate as creating an implicit subsidy for heat pumps financed by an implicit tax on fossil fuel boilers1.
For a household, that points to two possible price movements in opposite directions, neither of them settled: what a heat pump costs to buy and install, and what a replacement gas boiler costs. The report notes that the annual running costs of a typical heat pump in the UK are currently higher than for a gas boiler1, so a lower upfront price would not by itself change running costs. On energy independence, the shift the policy targets is from gas, oil and other fossil fuels burned at home to electricity, which the report says should be 100% zero-carbon by 20351. The pace of that shift depends on installer numbers and quality, which the report identifies as constraints rather than certainties1. Further detail on the rules and targets sits in the site's guide to UK heat pump policy, targets and the rules coming, and on the technology itself in the full UK guide to heat pumps.
What happens next
The report states that by 2035 new fossil fuel boilers will likely be completely phased out, and that given boilers last approximately 12 to 15 years, the vast majority of the 29 million existing homes in the UK will end up with a low-carbon heating system by 20501. It lists a Future Homes Standard under which new homes must come with low-carbon alternatives to fossil fuel boilers from 20251, and £3.9bn to 2025 to be shared by the Social Housing Decarbonisation Fund, the Home Upgrade Grant scheme, the Boiler Upgrade Scheme, the Heat Networks Transformation Programme and the Public Sector Decarbonisation Scheme, alongside £60m towards a Heat Pump Ready programme1. The proportion to be set under the mandate, and the timing of any final decision on it, have not been reported1.