OFTEC’s Malcolm Farrow brings us up to date with heat policy developments

In the last issue of Oil Installer, we noted that the Government’s Warm Homes Plan was expected soon. This was too optimistic because the plan has been delayed until the autumn. The policy makers in DESNZ couldn’t be sure how much money would be available until the spending review was completed in June, pushing everything back.

The spending review was positive for DESNZ, but financial pressures have increased significantly since then, and it remains uncertain whether the full long-term funding will be available for its decarbonisation plans. No doubt the autumn budget will provide more certainty.

The centrepiece remains the Warm Homes Plan, with support expected for insulation and further funding for the Boiler Upgrade Scheme. Rumours suggest one plan being considered is to partly support the running costs of heat pump owners as well as the £7500 capital grant already available under BUS. I’ll leave it to you to decide whether this is good use of taxpayer’s money, but it’s a clear indication of how desperate the government is to grow the heat pump market.

The DESNZ Minister, Miatta Fahnbulleh, has made it clear that the Warm Homes Plan will also include off-gas grid buildings, and heat pumps remain their technology preference.

To secure the future for liquid fuel heating, we must ACT NOW!

If you’ve supported the Future Ready Fuels campaign previously, we urgently need your help again. If you haven’t, and you want liquid fuel heating to have a future, now is the time to add your voice to the campaign. It’s vital that as many people support the campaign as possible.

The delay in the full announcement of the Warm Homes Plan has given our industry a golden opportunity to push for the inclusion of renewable liquid fuels in the plan. With backbench Labour MPs much more powerful now following their successful rebellion over welfare cuts, we have the best possible chance to convince them to push the DESNZ Minister for the inclusion of renewable liquid fuels. Even if you live somewhere not represented by a Labour Party MP, it’s still important to join the campaign – the more noise we can make the better and opposition MPs are very likely to support our work, particularly if they receive letters from local residents and businesses.

What we want the Government to do

Our proposal is straightforward. We are asking for the Government to enable a renewable liquid heating fuel obligation – a similar idea to the plans just unveiled in Ireland (see page 17) – by implementing Section 159 of the Energy Act 2023. We also want them to equalise the duty with that of kerosene when they are used for home heating. This will lower the costs for consumers, and enable the introduction of an initial HVO/kerosene blend for all oil heating users at a similar cost to pure kerosene.

Please support the campaign – act now

You will probably have already read our E-news updates about the new phase of campaign. We’ve prepared two letter versions for technicians and householders to send. Just visit the Future Ready Fuel website and it only takes a few seconds to complete your details, but the impact could be huge! The default is the consumer version, so make sure you click on the right one. Please encourage your customers to support the campaign too – we can supply free flyers on request if you need them.

Clean Heat Market Mechanism – revisions ahead of scheme year 2 (2026/27)

A consultation on year two of the Clean Heat Market Mechanism (CHMM) was issued by the Department of Energy Security and Net Zero in Westminster in May. In simple terms, the CHMM requires boiler manufacturers to produce and sell a certain percentage of heat pumps, relative to their overall boiler production.

If qualifying sales targets are not met, they can either buy credits from pump manufacturers or pay a fine relative to the shortfall. The scheme is controversial partly because boiler manufacturers do not supply direct to customers, so have little control over what they buy. There is also a discrepancy between what counts as a heat pump installation, and what DESNZ supports through its funding schemes. This effectively places boiler manufacturers at a further disadvantage and the overall effect may have the unintended consequence of making heating products more expensive – not ideal for consumers.

The consultation contains only five questions. In the main it proposes to increase the target for Year 2 from 6% to between 8-10% of relevant boiler sales, anticipated to be equivalent to around 90,000-130,000 heat pump credits, depending on the size of the fossil fuel boiler market during the same period.

OFTEC responded to the consultation on behalf of liquid fuel appliance manufacturers.

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