Press Story

With 6,000 manufacturing jobs at risk in transition from building boilers shows need for new industrial strategy, report says

UK leads in boiler manufacturing, but falls behind other European nations in heat pump production

Government’s promised strategy should recognise that UK industry is uniquely well placed to capitalise on heat pump transition

A new industrial strategy for heat pump manufacturing in the UK is essential to achieving green economic growth according to a new report from the Institute for Public Policy Research released today.

Heat pumps will be needed to replace outgoing gas boilers, and the UK is well placed to produce these products and capture a share of much-needed jobs and investment.

Not starting this process now would put 6,000 thousand manufacturing jobs at risk, as the installation of boilers is phased out, while a just transition to heat pump manufacturing would reap huge economic rewards for UK workers.

The new Labour government is committed to a green industrial strategy, taking inspiration from the bold action of the US Inflation Reduction Act. The government’s industrial strategy could support UK-based manufacturers to seize the green growth opportunities of heat pump manufacturing.

Heat pumps are a crucial element of the UK’s just transition to decarbonise residential heating, moving away from gas boilers. They are more energy-efficient than gas boilers, can lower energy bills, and enhance energy security by reducing reliance on volatile gas markets in favour of domestic renewable power.

The 2035 ban on the sale of boilers is essential for the UK to reach its commitments to be carbon neutral by 2050, the report says. The country needs to install at least five million heat pumps over the course of the next parliament, and at least 19 million by 2050. But the UK is still disproportionately installing more boilers than heat pumps - for every heat pump sold in the UK, 29 gas boilers are being sold.

This creates huge market opportunities for British heat pump manufacturers. The UK is the leading European boiler manufacturer, but it fails to feature among the top 10 heat pump manufacturing nations in Europe.

As boiler and heat pump manufacturing share common skills and equipment, boiler manufacturers can diversify into heat pump production relatively easily and with low capital investment. Coupled with a large untapped domestic market, this makes the UK uniquely well placed to transition and specialise in heat pump manufacturing.

Research finds that regions like the Midlands, the Northeast and Scotland stand to benefit the most from the growth of heat pump manufacturing.

IPPR is calling for a more ambitious, consistent and long-term industrial strategy, with a comprehensive approach, focusing on:

Boosting domestic demand for heat pumps with more generous subsidies schemes and low-cost financing to reduce installation costs
Taking temporary measures like lower tariffs for heat pumps users to maximise the reduction of energy bills for heat pump adopters.
Using public financing instruments, such as the newly established National Wealth Fund, to support the transition of boiler manufacturers into producing heat pumps on a large scale.

Simone Gasperin, IPPR associate fellow, said:

“The UK stands out in Europe for its large gas boiler market and its related manufacturing base. However, with gas boilers being phased out to meet net zero targets, this dominance is nearing its end.

"Despite this, the huge potential of an untapped market for heat pumps, combined with existing capabilities in heating and cooling manufacturing, places the UK in a strategic position to achieve a just transition. This shift could drive economic growth, protect skilled jobs, and achieve climate goals – but only with a coherent industrial strategy that aligns demand pulls with targeted business support measures.”

Russell Dean, deputy divisional manager of living environment systems at Mitsubishi Electric, says:

“Encouraging the adoption of renewable alternatives such as heat pumps is a necessity if we are to get the UK to net zero by 2050. The universal uptake of heat pumps has the potential to drive economic benefits too – which this report details comprehensively.

“We’ve seen that prevailing myths around the cost of heat pumps as well as a fundamental lack of awareness about the benefits of the technology in the UK is stifling demand. A stable and long-term heat pump strategy – as laid out in the report – coupled with a campaign to overcome these barriers will offer the new government a golden opportunity to unlock the economic and environmental benefits of this technology.”

ENDS

Simone Gasperin, Pranesh Narayanan and Joshua Emden, the report’s authors, are available for interview

CONTACT

Georgia Horsfall, Digital and Media Officer: 07931 605 737 g.horsfall@ippr.org

David Wastell, Director of News and Communications: 07921 403651 d.wastell@ippr.org

NOTES TO EDITORS

The IPPR paper, The Heatwave: Unlocking the potential of heat pump manufacturing by Simone Gasperin, Pranesh Narayanan and Joshua Emden, will be published at 00:01 on 11 October 2024. It will be available for download at: https://www.ippr.org/articles/the-heatwave
IPPR (the Institute for Public Policy Research) is an independent charity working towards a fairer, greener, and more prosperous society. We are researchers, communicators, and policy experts creating tangible progressive change, and turning bold ideas into common sense realities. Working across the UK, IPPR, IPPR North, and IPPR Scotland are deeply connected to the people of our nations and regions, and the issues our communities face. We have helped shape national conversations and progressive policy change for more than 30 years. From making the early case for the minimum wage and tackling regional inequality, to proposing a windfall tax on energy companies, IPPR’s research and policy work has put forward practical solutions for the crises facing society. www.ippr.org