The heating industry met with Whitehall officials recently to warn them of the dire economic consequences for UK manufacturing and UK consumers of their plans to promote heat pumps.
Under the Clean Heat Market Mechanism, currently being considered by MPs in the Energy Bill, boiler manufacturers in the UK face being fined over £300 million next year if consumers do not fit heat pumps. According to the Government’s own figures, an average heat pump installation costs over £13,000 compared to £2500 for a gas boiler replacement and under the new Ofgem Energy Price Cap, a heat pump costs 8 per cent more a year to run than a gas boiler.
Under government plans, the fines levied would mean gas boiler sales are subject to a stealth “boiler Tax”, which would be used to subsidise those who can afford to fit a heat pump. Alternatively, UK boiler manufacturers would shed jobs and cut investment in order to pay the fines.
Over 90 per cent of boilers fitted in the UK are made in the UK, compared to an estimated 30 per cent of heat pumps. The Government admit that at best only half of heat pumps will be made in the UK, with the rest imported.
Commenting on the proposals, Mike Foster CEO of the energy trade association, Energy and Utilities Alliance (EUA) said:
“The most senior figures in our industry voiced their concerns, again, directly to Whitehall officials. The industry knows either jobs will be lost, investment plans hit or the consumer will be asked to pay a “boiler tax” by stealth.”
“Under government plans, boats carrying foreign heat pumps will be flooding into the UK market. Put bluntly, for every foreign heat pump sold it is a British boiler being replaced. This has dire economic consequences here at home, which the Government seem oblivious to.”
“The UK market for boilers is unlike that of the rest of the world. They do not have a world-class gas network, they weren’t used to relatively cheap and abundant natural gas reserves and our housing stock was built with coal fires and then gas heating in mind. Heat pumps are sold in the millions across the world and the UK will simply end up importing these if gas boiler manufacturers are fined for making boilers.”
“Heat pumps have a role to play in net zero, so do hydrogen-ready boilers. The Brits invented the hydrogen-ready gas boiler; the Government wants to make them compulsory in homes, which is great, but other parts of Whitehall wants to fine them for making them. Chinese manufacturers will be laughing all the way to the bank.”