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Rishi Sunak is poised to drop plans to fine boiler makers who fail to meet strict production targets for heat pumps in the UK prime minister’s latest retreat from measures to tackle climate change
Industry bosses have been lobbying Whitehall to delay or scrap the policy, arguing that the quotas are unrealistic given sluggish demand for heat pumps and a shortage of installers.
The new system set to launch in April would force big boiler companies to ensure heat pumps account for 4 per cent of their total boiler unit sales, or be penalised £3,000 for every item by which they fall short.
Companies have claimed that the target was already forcing them to put up prices on their gas boilers by as much as £125 in anticipation of having to pay the fines.
The government has argued that heat pumps already make up around 4 per cent of most businesses’ production total. However, in the second year of the scheme that target would rise to 6 per cent.
In December, Claire Coutinho, energy secretary, accused the companies of “price gouging”, arguing that it was “extremely unlikely” any of them would have to pay fines.
However, Coutinho is now poised to decide on whether to maintain the target, according to a Sunday Times report. She is inclined to drop it in the coming weeks, although details have not yet been finalised, according to government figures.
The move would be the latest in a series designed ostensibly to protect consumers from the cost of going green during a cost-of living-crisis.
Last summer, Sunak announced he would delay a ban on the sale of new diesel and petrol cars from 2030 to 2035, relax the 2035 phaseout target for the installation of new gas boilers, and delay a ban on new oil boilers from 2026 to 2035.
Some climate experts have warned that the policy changes will make it harder for the UK to reach its 2050 net zero target.
Ministers need a big overhaul of home heating to reach that goal, since a large majority of UK homes still use gas boilers.
Heat pumps draw warmth from the outside air and run on electricity, which is increasingly generated from low carbon sources.
The government wants heat pump installation rates to hit 600,000 per year by 2028, although uptake has been damped by their relatively high costs. The number of registered installations grew to a record 36,799 in 2023 from 29,490 the previous year, thanks in part to increased state grants for installing them.
The UK heat pump industry is consolidated around a handful of big, Europe-wide groups that already make and sell heat pumps alongside boilers.
On Sunday, the Department for Energy Security and Net Zero said the government remained committed to its target of installing 600,000 heat pumps a year by 2028.
“We want to do this in a way that does not burden consumers and we’ve increased our heat pump grants by 50 per cent to £7,500 — making it one of the most generous schemes in Europe,” they said. “This pragmatic approach is working, with a nearly 50 per cent increase in people applying in December 2023 compared to the same month in 2022.”