The CHMM AKA ‘Boiler Tax’ What it is and will it happen?

The Clean Heat Market Mechanism (CHMM), also known as the “boiler tax,” was scheduled to be launched by the government in April of this year. Under this scheme, quotas would be imposed on heat pump sales for both heat pump and boiler manufacturers. Specifically, manufacturers would be required to substitute 4% of their annual boiler sales for heat pump sales or face fines of £3,000 for each unit not sold.

The announcement of the CHMM led many manufacturers to preemptively raise the prices of their boilers in anticipation of future fines. Companies like Worcester Bosch expressed concerns about meeting the government quotas, with Worcester Bosch even planning to introduce a £2,500 heat pump grant to stimulate sales, though this plan might be abandoned along with the boiler tax.

In response to the backlash, Energy Secretary Claire Coutinho is reportedly considering scrapping the CHMM scheme to prevent consumers from facing increased boiler prices. While the scheme has not been officially cancelled yet, it appears likely to be, as indicated by a government spokesperson’s statement to The Times criticizing manufacturers for raising prices.

Scrapping the boiler tax could potentially lower boiler prices, but it might also keep heat pump costs high as manufacturers would no longer have an incentive to reduce prices to meet quotas. Additionally, schemes aimed at making heat pumps more affordable, such as Worcester-Bosch’s planned cashback program, would likely be discontinued.

This reversal raises doubts about the government’s ability to achieve its Net Zero strategy, particularly in light of previous backtracking on the gas boiler ban. The government’s target of 600,000 heat pump installations per year by 2028 seems challenging, especially considering that current annual installations in the UK stand at around 40,000.

While the government believes that other schemes and incentives, such as the Boiler Upgrade Scheme, will suffice, there are limitations to these programs. For example, the grant is only available to homeowners in England and Wales, excluding Scotland where heat pump installation rates are slower.

Encouraging heat pump adoption also requires addressing misconceptions and educating the public about the technology, including debunking common myths about its effectiveness and noise levels. Overall, the uncertainty surrounding the CHMM and related policies underscores the challenges of transitioning to low-carbon heating solutions in the UK.