Clean Heat Market Mechanism will start in 2024

The Clean Heat Market Mechanism (CHMM) will go ahead in 2024, the government has confirmed. The scheme’s proposals had been met with fierce opposition from some boiler manufacturers and industry associations. It places an obligation on them to meet targets on the sale of heat pumps relative to their sales of gas and oil boilers or face financial penalties.

In the first year of the scheme, from April 2024 to March 2025, they will need to sell heat pumps equivalent to 4% of their boiler sales in the UK, rising to 6% in year two. The mechanism affects those manufacturers with sales of more than 20,000 gas boilers or 1,000 oil boilers a year.

Installation and notification of heat pumps via a certification scheme such as MCS will earn the manufacturer ‘credits’ and those that miss the targets will have to pay £3,000 per missing credit. Installation of a hybrid – a heat pump alongside a fossil fuel boiler – will earn half a credit.

The installation of boilers in new-build properties will not go towards the target calculation, at least before the introduction of the Future Homes Standard in 2025, which is expected to make this exclusion redundant.

The penalty for missing targets was lower than the £5,000 that had been originally proposed, and the government did not go ahead with its proposal that heat pump manufacturers must produce supply chain plans, although it suggested that this may become a requirement in the future.

Those manufacturers affected by the CHMM will need to provide a report on their annual boiler sales, which must be verified independently.

The government said: “While we acknowledge that some respondents [to the consultation on the CHMM] have suggested that the scheme’s launch be delayed by a number of years, we are clear that introducing the CHMM as planned in 2024 is important for providing market actors with the necessary certainty and confidence to invest in scaling up the UK heat pump market at the pace needed to improve national energy security, contribute to our decarbonisation objectives and keep pace with developments in other countries.”

The scheme will be administered, regulated and enforced by the Environment Agency. The EA will impose penalties for failure to make a required payment by the due date, failure to submit verified boiler sales data by the due date, submitting inaccurate data and not registering with the scheme.

The government says it will bring forward the scheme regulations when parliamentary time allows under the powers granted by the Energy Act 2023. The Environment Agency will publish more detailed guidance ahead of the scheme’s launch.