The UK government has finished consulting on the Clean Heat Market Mechanism, one of its flagship heat pump policies, according to Nesta, which published its assessment of the scheme on 9 June 20231. The consultation closed shortly before that blog was published1.
Under the proposed scheme, companies that sell boilers to homes in the UK would have to sell a quota of heat pumps for every boiler they sell1. In the first year, that quota would be four heat pumps for every hundred boilers, rising gradually over time1. Companies that miss their targets could buy credits from companies that sell extra heat pumps or, as a last resort, pay a fine1. The fine would be set at £5,000 for every heat pump they were required to install under their quota but did not1.
"The UK government has just finished consulting on one of its flagship policies on heat pumps: the glamorously named Clean Heat Market Mechanism"
The mechanism would apply to retrofit installations only, Nesta states, and consumers and companies that sell and deliver gas are exempt from the policy1. Nesta notes that parts of the boiler-making industry are reportedly opposed to the scheme, framing it as imposing fines on manufacturers while leaving them with little control over heat pump sales1. Nesta also records the industry's counter-argument that heat pump makers with no history in boilers, such as Mitsubishi and Daikin, are not covered by the policy1.
The wider policy context, as Nesta sets it out, includes a phase-out date for new gas boilers in 2035, which the UK has pencilled in alongside many other countries1. Burning gas to heat homes accounts for around 15% of the UK's carbon emissions, according to the same blog1. New homes will have low-carbon heating installed by default following the 2025 Future Homes Standard1. Nesta cites a BEIS study finding that no property type was unsuitable for a heat pump, and its own research finding satisfaction with heat pumps as high in older properties as newer ones1.
| Element | Detail as reported |
|---|---|
| First-year quota | Four heat pumps per hundred boilers1 |
| Trajectory | Rising gradually over time1 |
| Non-compliance options | Buy credits, or pay a fine as a last resort1 |
| Fine level | £5,000 per missed heat pump1 |
| Scope | Retrofit installations only1 |
| Exempt | Consumers; companies that sell and deliver gas1 |
Why it matters for households
The mechanism does not regulate households directly. It places the obligation on the companies that sell boilers, so its effect on a home would come through what those companies choose to sell, promote and price, and through the supply of installers able to fit low-carbon heating. Nesta states that the policy affects retrofit installations only, which is the segment that covers existing homes rather than new builds1. For a household weighing the future of an existing gas heating system, the scheme is one of several dated signals about the direction of UK heat pump policy, alongside the 2035 gas boiler phase-out date and the 2025 Future Homes Standard for new homes1. Nesta also points to a shortage of skilled heat pump installers as a constraint the industry can raise, and suggests the mechanism could nudge manufacturers to take a more active role in installer skills1. The government has not been reported as confirming final design details, target levels beyond the first year, or a start date.
What happens next
The consultation has closed1. Nesta's blog does not state when the government will respond, when the mechanism would come into force, or what the final quota trajectory would be; those points have not been reported1. Nesta's own position is that targets must be set in advance to allow manufacturers to plan1. The 2035 phase-out date for new gas boilers and the 2025 Future Homes Standard remain the other dated milestones cited1. For the wider framework these sit within, see the guide to UK home energy regulation and policy.