Industry reacts to PM's Net Zero policy changes


21 September 2023
Charlotte Lee of the Heat Pump Association

Policy changes announced by Prime Minister Rishi Sunak have drawn a wide response from across the industry.

While many welcomed the 50% increase in cash grants under the Boiler Upgrade Scheme, there was concern over delays in the deadlines for phasing out new fossil fuel boilers.

Charlotte Lee, Chief Executive of the Heat Pump Association: “The Government has once again moved the goalposts for heat decarbonisation in the UK, and this risks damaging investor, installer and consumer confidence in this space unless this re-confirmed end date for fossil fuel boilers is strengthened from being an “ambition” to being a firm commitment.  

"The delay is yet another blow to the heating industry’s confidence in Government policy as Industry – including boiler manufacturers, has invested in good faith in manufacturing facilities, training and innovation to support heat pump deployment in keeping with the Government’s election manifesto and Heat and Buildings Strategy Commitments – particularly in line with the now abandoned end-date of 2026 for fossil fuel boilers off the gas grid.  

"Moreover, introducing and justifying possible exemptions by suggesting that many homes are not suitable for a heat pump is not supported by the most recent findings of Government-funded heat pump field trials. Consumers and installers may now adopt a damaging “wait and see” approach based on incorrect information, thereby delaying the inevitable transition to decarbonising heat. 

"Whilst we are pleased that the Boiler Upgrade Scheme grant has been increased, the current budget will now only support 20,000 heat pumps per year, just 3% of the 600,000 ambition for 2028. We urge the Government to take steps to increase this budget to allow all those who wish to install a heat pump to benefit from the grant.  

"We call upon the government to take swift action to reassure the heat pump market – by making the 2035 end date for fossil fuel boilers a firm commitment, by introducing the Future Homes and Buildings Standards in 2025 for new build, by increasing the budget available for the Boiler Upgrade Scheme and to take urgent action to reduce the price of electricity relative to fossil fuels.”

Ken Gordon, CEO of the Ground Source Heat Pump Association: "The GSHPA wishes to express our deep concern on behalf of our members regarding the delay to the phasing-out of fossil fuel boilers. This decision poses significant challenges to the UK’s 2050 climate targets and the growing but fragile heat pump industry.

"Postponing the phase-out effectively shortens the window to retrofit and replace millions of heating systems. A delay now will only compress the timeline later, making the challenge exponentially greater. Rapid transformation will be required closer to 2050, putting undue strain on industry resources, supply chains, and skilled labour. Achieving the 2050 targets becomes riskier and potentially more expensive for both homeowners and the government. This does not safeguard ordinary families; it means they will have to expect even more disruption in the future. Government should provide the funding required for transition, not families.

"The ground source heat pump sector, along with other heat pump industries, has been steadily growing in response to previous government guidelines and commitments. The industry has heavily invested in research, development, and workforce training to meet anticipated demands. A delay in policy would destabilise this growth, causing uncertainty and potentially lead to job losses, and reinforce consumers’ reluctance to join an industry that is volatile to such sudden policy changes. This affects many families who are now even more confused about the way to do something about climate change.

"The recent decision will undoubtedly lead housing developers to reconsider or cancel existing contracts for eco-friendly heating solutions, in favour of traditional fossil fuel boilers. Not only does this put existing contracts and investments at risk, but it also contradicts the broader vision of a sustainable, low-carbon future for the UK's housing sector.

"A delay would signal a grave lack of commitment to addressing the most urgent crisis facing the world today and would break faith with all concerned stakeholders including younger voters.

"We at the GSHPA understand the complex considerations involved in such policy decisions. However, it is crucial to acknowledge that short-term leniencies might lead to long-term consequences that could be both environmentally and economically costly.

"We urge the government to reassess the implications of the delay and to continue its support for the renewable energy sector. The GSHPA remains committed to assisting the government in achieving its 2050 climate goals and ensuring a sustainable future for all.''

Ian Rippin, CEO, MCS: “MCS welcomes the Government announcement that Boiler Upgrade Scheme grant values will be increased to £7,500. Making it easier and more affordable for the average UK consumer to transition to low-carbon heating is vital if we are to reach our national decarbonisation goals.

“More people will now have the confidence and ability to invest in low-carbon heating and this is an important step forward towards net zero.

“However, it is disappointing to see a delay in the deadline to phase out new gas boilers by 2035. The most important element of helping consumers make the right, informed, green choice is clarity and moving the goalposts now risks confusing home and business owners about what the right thing to do is.” 

Henrik Hansen, Managing Director at Vaillant Group UK & Ireland: “As the leading supplier of home heating systems, we recognise the importance of giving homeowners choice when it comes to heating their homes. For almost 150 years we’ve been committed to providing efficient heating solutions for our customers’ homes and, as a manufacturer of both gas boilers and heat pumps, we are technology agnostic. Our aim is to provide unbiased guidance for homeowners on both technologies to make the right decision for their property and heating requirements.

“We understand from customer feedback that the cost and complexity of transitioning to a heat pump is a major barrier for homeowners keen to install low carbon technology. Our experience from some European countries with more established heat pump markets has shown that stronger subsidies and the benefit of lower running costs can speed up the consumer adoption of the technology. The announcement of the increase of the Boiler Upgrade Scheme to £7,500 will be welcome news to homeowners in England and Wales considering making the switch.

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“We await more detail on the overall budget for the Boiler Upgrade Scheme. If the overall budget is not increased, the number of homeowners able to access the grant will be limited to 20,000 per annum which represents less than 0.1% of the housing stock in the UK, potentially slowing down the transition to heat pumps. We believe that significant investment into consumer education is needed together with a rebalancing of gas and electricity prices to make the potential benefits of installing and running a heat pump more attractive to the homeowner. 

“With the number of installers able to competently install a heat pump under the MCS scheme still at a relatively low level compared to gas safe registered installers, more needs to be done to upskill existing installers while attracting new skilled labour to the industry.”

Dr Matthew Trewhella, CEO of The Kensa Group: “This is extremely concerning news, at a time when we should be scaling up to reach our Net Zero commitments by injecting investment and stability into green businesses and proven sustainable solutions, our planet's future is being cynically used as a political bargaining tool.

“British businesses have been innovating, investing, building supply chains and creating green jobs based on the UK’s net zero transition strategy. As recently as May 2023 the Kensa Group announced a £70 million investment into ground source heat pumps by Octopus Energy and Legal and General and we are already scaling up our business development, operations and R&D efforts to help drive the transition to low carbon heating and cooling. We are stimulating the economy and improving the UK’s energy sovereignty using the energy that is right under our feet.

“We are making excellent progress towards our vision of a subsidy-free, low carbon heating and cooling future that is greener, cheaper and safer than fossil fuel heating. Stalling this progress would be shortsighted, regressive and deprive the British economy of the billions of pounds of benefits that transitioning to net zero would bring. It will negatively affect consumers by keeping bills higher and homes less efficient. Delaying our transition to net zero in 2050 means future measures will need to be quicker and more drastic.” 

Griff Thomas, from renewables training provider GTEC: "When the Prime Minister expressed a desire to roll-back carbon reduction targets I was alarmed. I stated that the UK needs to ‘hold its nerve when it comes to Net Zero', and it still does.

"Now the reality of his position has been communicated, it seems that his proposals are bumps in the road, which, if navigated properly could still see Britain leading the way when it comes to combatting climate change.

"I am saddened that we are here… historic failures in the green policy of both parties have led us to this point, and with better plans in place initially, we would not be in this position of backtracking. I do, however see that some of Mr. Sunak's suggestions have been put forward to avoid further failure.

"Green policy gone wrong creates distrust and serves only to damage the reputation of renewables and other sustainability initiatives, feeding into the hands of climate change deniers. Poorly executed policy also leads to disengaged voters, which may be more of the inspiration behind the Prime Minister's current management of expectations…

"We are at a crossroads as a country, we have a real opportunity to change the way we power and heat our homes and businesses. The technology is there and more than ever before, consumer support is there. Highlighting our relatively small contribution to climate change in percentage terms, as Mr. Sunak did last night, is not helpful, it makes people feel powerless, that there's no point. We should strive for excellence and take a position of leading on climate change action.

"We need open conversations and schemes that help smooth the way - the uplift the Boiler Upgrade Scheme funding was a welcome announcement - while protecting the most vulnerable in society who have been hit by rising fuel prices over recent years. Let's not forget the ultimately, greening our grid will lead to reduced energy bills.

"Right now, there are far simpler steps that will make the most inefficient of homes warmer and less costly. Insulation and draft proofing should be a priority - an area that GTEC is moving into to support our low carbon heating installation courses.

"We need a pragmatic and proportionate approach to Net Zero that doesn't abandon targets, but better considers and supports the people that these targets effect. Hopefully this is what our government is now focused on; the important bigger picture that should have nothing to do with winning elections."

Statement from NIBE Energy Systems: "We are exasperated by the Prime Minister's decision to delay the phase out of fossil fuel boilers in off grid homes and strongly disagree with the notion that the technology needed isn't ready. Heat pumps represent a viable solution that can help us achieve Net Zero - a target that should be a top priority without hesitation or delay.

"Additionally, while the increase in funding for the Boiler Upgrade Scheme aligns with our advocacy efforts, it is just one of many necessary steps. For example, ground source heat pumps are a logical solution in off-grid homes using high carbon fossil fuels, yet the scheme covers a lower percentage of their costs compared to other technologies. 

"Moreover, policy certainty is crucial not only to industry but installers who need confidence in the direction of the market. The decision to backtrack on targets sends all the wrong signals at a time when we need the green light to pave the way for a Net Zero future.''

Actuate UK: The Prime Minister’s announcement signals unpredictability and creates uncertainty for the many businesses in the engineering services sector investing, or looking to invest, in net zero transition. When it comes to plotting the route to a Net Zero 2050, industry needs certainties and targets that will incentivise such change, enable development of new skills, create new job opportunities and grow the green economy.

"We welcome the Prime Minister’s acknowledgment that much of the progress to come will be technology driven. However, technology needs design, installation, maintenance and optimisation, and all these need skills, an essential part and challenge to the Net Zero strategy. Engineering services businesses also support the need for consensus on Net Zero targets, allowing the UK’s national Parliaments and Assemblies to work together, and with industry and other stakeholders, to develop the policies, technologies and skills we need to reach net zero. 

"We wholeheartedly welcome the very specific increase in the Boiler Upgrade Scheme, to £7500, which should help to drive the further introduction and development of heat pumps in the short term.''

Nick Coad, Director of Innovation, Wolseley Group: "While the enhancement to the Boiler Upgrade Scheme is a welcome development, the Government needs to ensure that the policy changes announced do not end up creating uncertainty over potential subsidies for homeowners and for trade professionals, and ensure uptake of insulation is encouraged to help reduce bills while keeping homes well heated.”