The Clean Heat Market Mechanism Regulations 2025

These Regulations are made under Chapter 1 of Part 4 of the Energy Act 2023 (c. 52) and establish a low-carbon heat scheme known as the Clean Heat Market Mechanism. The scheme operates during the period from 1st April 2025 to 31st March 2029, is divided into four “scheme years” and applies to the whole of the United Kingdom. Participants in the scheme (identified in regulation 9) are those undertakings, or groups of undertakings, which are the supplier (as defined in regulation 2(1)) of a number of fossil fuel boilers above the relevant threshold which are sold during a scheme year. Scheme participants have a low-carbon heat target for each scheme year. This target (regulation 12) is expressed in units and is based on the number of the scheme participant’s fossil fuel boiler sales on the UK market above the thresholds, unless the boiler is for export or for installation in a new build property. Participants must meet their low-carbon heat target by acquiring and surrendering to the scheme administrator (the Environment Agency) a number of certificates corresponding to the number of units in their target (regulation 25). There is provision for part of a low-carbon heat target to be carried forward to the following scheme year in regulation 27. A scheme participant which has insufficient certificates to meet its low-carbon heat target for a scheme year must make a payment to the scheme administrator in accordance with regulation 28.