Market-based mechanism for low carbon heat focus of new consultation

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A new consultation seeks views on proposals to introduce a market-based mechanism to support the development of the UK market for low-carbon electric heat pumps.

According to Department for Business, Energy & Industrial Strategy (BEIS), this mechanism will create a market incentive to grow the numbers of heat pumps installed in existing premises each year, providing industry with a ‘clear, long-term policy framework’ for investment and innovation.

The government proposed to introduce a new market-based mechanism from 2024, which will create a market incentive to grow the numbers of low-carbon heating appliances installed each year.

This mechanism will work alongside a range of subsidy-based and regulatory policy approaches, targeted where most appropriate, to establish an overall policy framework capable of supporting a transformation of the market.

According to the consultation document, under the lead option that the government is most likely to pursue, this mechanism would create an obligation on the manufacturers of fossil fuel heating appliances (gas and oil boilers) to achieve the sale of a certain level of heat pumps proportional to their fossil fuel boiler sales in a given period.

In this consultation, BEIS is seeking views on a range of design features of the proposed mechanism, including:

  • the proposed scope of technologies and installations
  • the choice of core target for the mechanism
  • options for trading within the mechanism
  • options for scheme administration, penalties and enforcement

BEIS would welcome views from a wide range of stakeholders on the proposals set out here and anticipates consulting further in due course on more detailed policy design proposals, informed by responses to this first consultation.

This consultation closes at

More information about this consultation and how to take part is available on the UK Government website.