Reports: Ministers threatened to resign over proposed weakening of heat pump ambitions

Pictured: A home fitted with a heat pump

It was reported earlier this month that Prime Minister Rishi Sunak is pushing the Department for Energy Security and Net-Zero (DESNZ) to scrap the Clean Heat Market Mechanism (CHMM), which will mandate heating manufacturers to ensure that heat pumps account for an ever-increasing proportion of their output.

In tandem, the Government could do away with a target for 600,000 heat pump installations annually from 2028, up from 55,000 in 2021.

edie has learned from sister title Utility Week that Lord Callanan, who has served as a Minister in energy-related positions for four consecutive years, threatened to resign if these changes go ahead.

Callanan holds a high level of responsibility for the Government’s clean heat workstreams, for both domestic heating and industrial processes.

Additionally, The Times has reported that Stuart, a Minister with energy portfolios since late 2022, made the same threats to DESNZ Secretary Claire Coutinho.

The reported threats come after a coalition of businesses and trade bodies representing heating, energy and finance urged the Government to keep existing heat pump policies in place.

What is the CHMM?

Under the CHMM, heating system manufacturers are set to be required to ensure that heat pumps account for at least 4% of sales made in 2024. If they fail to do so, they will face a £3,000 fine per unit.

Percentage targets will increase annually going forward.

Coutinho has stated that most firms already meet the initial target and as such will avoid fines. As such, she described heating manufacturers hiking  boiler prices in recent months as “price gouging – plain and simple”, rather than acting to bank cash to pay off future fines. She ordered the Competition and Markets Authority to look into reports of price hikes of up to £300 per unit.

Manufacturers including Daikin and Kensa have supported the CHMM. Nonetheless, the CHMM has been opposed by some other manufacturers and sparked fears at 10 Downing Street.

Sunak is forging ahead with tweaks to the UK’s green policy framework under the guise of delivering a “more pragmatic” transition to net-zero which avoids burdening working-class homes with high upfront costs for things like heat pumps or electric vehicles (EVs).

He is reportedly concerned that the CHMM will be viewed as an additional cost to consumers.

The Energy and Climate Intelligence Unit (ECIU) claims that the average British household could have saved £245 on its energy bills in 2023 through switching from a gas boiler to a heat pump. A further £235 could have been saved through home insulation upgrades.

The upfront cost of a heat pump does remain a barrier for many homes, though. The UK Government recently increased the maximum grant a home can claim for making the switch from a fossil fuel boiler to a heat pump from £5,000 to £7,500 and expanded its overall funding pot for the grant scheme more than threefold.

DESNZ is also in the process of rebalancing gas and electricity costs to bring down the running costs of electrified technologies such as heat pumps.

“We are looking at a range of options for longer term energy market reform, including the rebalancing of gas and electricity prices, with the impact on consumers at the heart of our approach,” a Department spokesperson said in response to a recent joint letter on the issue coordinated by think-tank E3G.

Supporters of accelerated moves to rebalance prices include E.ON, EDF, Nationwide Building Society, GlenDimplex, Valliant and Kensa Group.