UK Government’s Push for Heat Pumps Could Cost Taxpayers £115 Billion: Study

Undated photo of a heat pump. (Octopus Energy/Handout via PA)

The UK government’s push for British households to replace their gas boilers with low-carbon heat pumps would cost taxpayers £115 billion ($150 billion), a new study has warned.

The government’s three-year Boiler Upgrade Scheme came into force on April 1, which pays households £5,000 ($6,509) towards the roughly £18,000 ($23,400) bill of purchasing and installing a heat pump.

The government has allocated £450 million ($586 million) to the scheme, which will cover around 90,000 households. But environmental activists have called for the scheme to be extended.

If it is extended to cover all 23 million homes currently using a gas boiler, the scheme could cost £115 billion, according to a new study conducted by the TaxPayers’ Alliance (TPA), a UK pressure group campaigning for a low-tax society.

The TPA called on the government to “come clean on the cost of green measures” at a time when the tax burden is at a 70-year high and the rising cost of living is affecting household budgets.

TPA chief executive John O’Connell said, “The cost of living crisis is already being made worse by tax rises and green levies, so taxpayers cannot afford more unexpected demands on their cash.”

According to the TPA analysis, the UK government raised £2.7 billion ($3.5 billion) in 2020–21 through four taxes with explicit environmental objectives.

When combined with other taxes which have a partial environmental objective, the total green tax revenue came to £33.7 billion ($44 billion) in 2020–21, said the study, adding that the figure is due to rise to at least £52.6 billion ($68.5 billion) in 2025–26.

The UK’s Climate Change Committee (CCC) projects that by 2050 all heating in British homes will be provided by low-carbon sources, of which 52 percent will be heat pumps, which run on electricity and work like a fridge in reverse to extract energy from the air or ground.

In November 2020, Prime Minister Boris Johnson announced plans to install 600,000 heat pumps every year by 2028.

But the Business, Energy, and Industrial Strategy (BEIS) Committee of the House of Commons admitted in February that heat pumps may not be able to “heat homes adequately” if the homes are not sufficiently insulated.

The committee said failing to address the concerns could lead to “scheme failure.”

“If people are encouraged to switch to low carbon heating sources without the knowledge or incentive for energy efficiency upgrades, then there are risks of scheme failure and loss of public trust if the new low carbon heating sources are not heating homes to the desired temperature and insulation,” the report said.

Lily Zhou contributed to this report.