The government’s Clean Heat Market Mechanism (CHMM) places a mandatory obligation on manufacturers supplying gas and oil boilers to the UK market. Under the scheme, these businesses must meet increasing targets for the installation of heat pumps in existing properties, proportional to their continued sales of fossil fuel boilers.
If a manufacturer fails to meet its target, it will face financial penalties. The target set for year one was 6%. Following a consultation and feedback from industry, the government has confirmed it will proceed with its plan to increase the target to 8% for year two.
In response to this announcement, Malcolm Farrow, Director of Marketing and External Affairs from OFTEC, commented:
“We are disappointed by the government's decision to increase the Clean Heat Market Mechanism target so early in the scheme’s life. OFTEC remains fully committed to working constructively with the government and the wider industry to deliver the UK’s Net Zero targets, and we absolutely recognise the role low carbon heating must play.
“However, we firmly believe this policy, in its current structure, undermines the very British businesses the government needs to make the make net zero possible and overlooks wider challenges consumers face, particularly upfront costs, in the deployment of heat pumps.
“Imposing mandatory targets, with fines for non-compliance, penalises manufacturers simply for continuing to supply the fossil fuel boilers that millions of UK homeowners currently rely on. This directly impacts their profitability, reducing their capacity to invest in the research and development required for wider future low carbon technologies.
“More fundamentally, the CHMM operates as a supply-side measure, yet the market for heating appliances is entirely dictated by consumer demand. Boiler manufacturers have no direct relationship with the end user, and therefore cannot influence purchasing decisions, which are overwhelmingly driven by factors like upfront cost, expected performance, and the amount of disruption required for installation – often in unplanned distress purchase situations. The CHMM only officially launched in April 2025. It is simply too early to draw any credible conclusions regarding its success or failure to drive the necessary demand to justify this increase.
“This policy is particularly concerning for the UK’s 1.7 million homes who rely on oil heating. For these off-grid properties, switching to a heat pump often requires extensive and costly retrofitting to ensure the technology works effectively.
“Our analysis of the government’s own online heat pump calculator tool before it was withdrawn, showed that the average total cost for necessary upgrades would be £24,000 per household. This includes the heat pump, installation, and removal of the original appliance and fuel storage tank. This immense cost barrier in the current cost of living crisis cannot be overcome by simply pressuring manufacturers through targets.
“A successful path to net zero requires a pragmatic, multi-technology approach that focuses on solutions appropriate for all types of housing including those off-grid. That’s why we’re urging the government to support renewable liquid fuels, such as Hydrotreated Vegetable Oil. Starting with an initial blend, there is no upfront cost or disruption for consumers. The switch could deliver the equivalent carbon savings of 347,000 heat pump installations.
“By penalising businesses trying to support the transition to low carbon heating, instead of focusing on lowering consumer costs and identifying other technologies for harder to treat homes, we risk slowing down our shared objective to transition to net zero.”