Heat pump manufacturer NIBE has responded to the recent decision by The European Court of Justice (ECJ) to outlaw reduced VAT rates on domestic energy-saving products in the UK, which threatens to drive up the cost of renewables for UK consumers.
Phil Hurley, managing director at NIBE, warns the decision could prove to be a significant setback for the heat pump market – and urges industry figures to pull together against it.
Phil says, “At NIBE, we find the EU’s decision to outlaw the current reduced VAT rate on energy-saving products very concerning. The heat pump market has been making real progress in recent months and years, and growth since the domestic RHI came into force in 2014 has been particularly strong. Despite the scheme’s slow start, it is now flourishing and applications are steadily on the rise – so this proposed change in legislation is particularly disappointing as it has the potential to slow uptake going forward.
“As the nation strives to clean up its energy supply and achieve the carbon reduction targets set out by both the EU and the UK government, now is certainly not the time to abolish a policy that is in place to encourage people to make their homes more efficient. Upping the VAT rate on energy-saving products from the current 5% to a potential 20% could have a knock-on effect on consumers – causing the upfront costs associated with investing in heat pump systems to rise. Not only this, but given that DECC has based its RHI tariff system on the current 5% VAT rate, it could also have a major impact on RHI returns.
“As a leading renewables manufacturer, at NIBE we implore other industry stakeholders to join us in making our collective voice heard to UK policymakers. The message is loud and clear: opposing the EU’s decision needs to be top of the agenda if we are to reduce the UK’s carbon footprint for the long term.”
The ECJ ruling means British homeowners and householders, will pay more for energy-saving measures, including not just heat pumps, but insulation and solar panels too – a move labelled ‘hypocritical’ by the Sustainable Energy Association. For so lone as the UK remains a member of the European Union (EU), the ruling also threatens to derail campaigns to lower VAT on housing repairs, renovations and heating system replacements.