Clean Heat Market Mechanism: fossil fuel boiler sales, targets and credits
How to monitor and report on the sales of fossil fuel boilers. How the low carbon target affects you, when you get credits and how to use them. How to pay for a credit shortfall.
You must must report your fossil fuel boiler sales if you’re classed as a ‘scheme participant’ or ‘near-threshold supplier’ in the CHMM.
Check if the CHMM applies to you and the timelines for action.
Scheme participants and near-threshold suppliers must:
- monitor their sales of fossil fuel boilers between April and March of each year (2025 to 2028)
- send quarterly reports on their fossil fuel boiler sales
Scheme participants must also send an annual report of their fossil fuel boiler sales and a third party verifier’s assurance report.
Check how to register and report using the Manage the Clean Market Mechanism (M-CHMM service).
When recording and excluding fossil fuel boiler sales, you should consider the definitions of a fossil fuel boiler sale and an excluded sale in the CHMM Regulations (Reg 2(1)).
The annual report should include evidence supporting the exclusions of any fossil fuel boilers. Exclusions include boilers exported outside the UK. It also includes boilers installed in new buildings that were not used or occupied before the installation took place.
Quarterly sales data
Scheme participants and near-threshold suppliers must send quarterly data on the number of:
- qualifying sales of gas boilers and oil boilers
- excluded sales of gas and oil boilers
Send this data through the M-CHMM service within 28 days of the end of the quarter.
You do not need to send a verifier’s assurance report with the quarterly data.
Email chmm@environment-agency.gov.uk to request a copy of a boiler reporting template. This template will help you gather all the required fossil fuel boiler sales data. This reduces the need for the Environment Agency to contact you to request more information.
You must keep records if you’re a scheme participants or near-threshold supplier. This is so you can prove that you have fulfilled your CHMM obligations (see ‘Maintenance of records’ section). The Environment Agency may request these records at any time.
Make sure you keep records of:
- the data
- the evidence on which the data is based, including evidence of any excluded fossil fuel boiler sales
Annual sales data
Scheme participants must send their annual fossil fuel boiler sales data and the documents that go with this through the M-CHMM service. You must do this by 30 June after the end of the scheme year.
The annual fossil fuel boiler sales data must include the number of:
- qualifying sales of gas boilers and oil boilers in the sales year
- excluded sales of gas boilers or oil boilers in the sales year
You can use the same boiler reporting template for both the annual and quarterly fossil fuel boiler sales data. You must send the annual fossil fuel boiler sales report with:
- a verifier’s assurance report
- evidence to prove the excluded fossil fuel boilers were either exported outside the UK, or installed in buildings that were not first used or occupied before the installation took place
You should prepare for the annual report in the final quarter of the sales year to give enough time to:
- appoint an accredited verifier
- allow your verifier to complete the verification
- correct any errors or misstatements
Supporting evidence
Scheme participants must send supporting evidence confirming their annual fossil fuel boiler sales data submission. You will need to upload this supporting evidence alongside the annual boiler sales data as one or more attachments.
The supporting evidence can be in any format that the Environment Agency can use. However, it must be comprehensive and correct to show thorough reporting. The data should show how it was gathered and checked for accuracy. It should also allow the Environment Agency to trace excluded fossil fuel boiler sales.
As part of the third party verification process, your verifier will ask you to give evidence to confirm the accuracy of your fossil fuel boiler sales data. They will also ask for any exclusions you have applied to your fossil fuel boiler sales. Your verifier must decide what evidence is enough to support verification.
You will need to send this evidence of accuracy with your annual fossil fuel boiler sales data. The Environment Agency will decide if you have given enough evidence.
Verifier’s assurance report
Scheme participants must appoint an independent verifier to verify their annual fossil fuel boiler sales report. The verifier must meet all these criteria:
- be a member of an ‘appropriate body’ as defined within the CHMM Regulations
- be independent to the scheme participant
- be independent to any person connected to the scheme participant
- meet the requirements for ‘reasonable assurance engagements’ prescribed in ISAE 3000 (R), or an equivalent standard
The verifiers must give their views on if the:
- methods used to collate and report the information for the annual fossil fuel boiler sales data are “capable of producing relevant data which is free from material misstatement” (in line with ISAE 3000 (R))
- annual fossil fuel sales data and supporting evidence comply, “in all material respects, with the requirements of that Regulation”
You must give your verifier the information they need to complete their work. You’re responsible for sending the verifier’s assurance and sending your annual fossil fuel boiler sales to the Environment Agency as CHMM scheme administrator. You must also send the supporting evidence for any excluded sales.
The Environment Agency will publish guidance on third party assurance later in 2025.
Power to estimate boiler sales data
The Environment Agency may work out (determine) your qualifying and excluded fossil fuel boiler sales if:
- you did not give an annual fossil fuel boiler sales data report
- they believe your fossil fuel boiler sales report is incorrect
- they believe the supporting evidence for excluded fossil fuel boiler sales is insufficient
They will use this when recording your low-carbon heat target.
If you become aware of an error after submitting your data, you must tell the Environment Agency. They will review the data and, if needed, update the M-CHMM service. If the error is important and relates to the annual sales data, they may request another verification report.
Maintain records and audits
You must:
- keep records of all data and information relevant to your CHMM obligations
- store data relating to each scheme year for at least 7 years after it ends
- keep other records relevant to CHMM, such as company changes
The Environment Agency may ask to check this data at any time.
Low-carbon heat targets
Scheme participants will have a low-carbon heat target. These are based on a percentage of their fossil fuel boiler sales which exceed the threshold.
The CHMM Regulations give the relevant percentages as:
- 6% of the number of qualifying gas boiler sales greater than 19,999
- 6% of the number of qualifying oil boilers sales greater than of 999
The percentages for scheme years 2 and beyond are set by the Secretary of State.
The Environment Agency will calculate your low-carbon heat target after they:
- review your annual fossil fuel boiler sales report
- review your supporting evidence
- review the verifier’s assurance report
- resolve any queries
There will be a low-carbon heat target for each scheme year. This will be based on combined annual fossil fuel boilers sales above the threshold of 19,999 gas boilers and 999 oil boilers. This figure will be multiplied by the percentage. This is the number of CHMM credits that you will need to meet your low-carbon heat target.
Example
A scheme participant with qualifying sales of gas boilers of 30,000 and with qualifying sales of oil boilers of 2,000, would have a CHMM target for that year of:
((30,000 − 19,999) + (2,000-999)) × 6%
(10,001 + 1,001) × 6% = 660.12
= CHMM target of 660
Where the target is not a whole number, the Environment Agency will round this up or down to the nearest whole number.
Carry forward a low-carbon heat target
At the end of a scheme year (apart from 2028), a scheme participant that does not have enough CHMM credits can carry forward part of its target to the next scheme year.
This must be up to the greater of:
- 35% of the number of units in the scheme participant’s low-carbon heat target for that scheme year
- 300, where 20,000 or more relevant gas boilers were sold in that sales year
- 50, where 1,000 or more relevant oil boilers were sold in that sales year
Example
A scheme participant whose qualifying sales were 30,000 gas boilers and 2,000 oil boilers and has a CHMM target of 660 (as shown above). The carry forward available based on each of the previous bullet points is the greatest of:
- (660 × 35%) = 231
- 300 (as sales of gas boilers were over 20,000)
- 50 (as sales of oil boilers were over 1,000)
The maximum permitted carry forward for this scheme participant is 300.
If this scheme participant got 600 credits from heat pump installations and credit transfers, this would result in a target shortfall of 60 credits. As the shortfall is less than 300, the scheme participant can carry forward the whole target shortfall (60) to meet in the next scheme year. The shortfall will be added to the next year’s target.
You can only carry a shortfall forward by one scheme year.
The Environment Agency will apply the maximum carry forward. That is unless you contact them by 1 October after the relevant scheme year to:
- ask to carry forward a lower number
- confirm that you want to pay for what’s left
Credits and payments
The M-CHMM service gives credits for certified retrofit installations of heat pumps. To lead to a CHMM credit, the installation must be recorded on a registry of an approved certification scheme.
It is anticipated that from 1 April 2025, the Microgeneration Certification Scheme (MCS) will be approved as a certification scheme for the CHMM. MCS will issue certificates, and these will appear in your CHMM account as CHMM credit.
The Environment Agency matches data on the MCS installation database of certified installs with M-CHMM accounts. You need to keep the Environment Agency up to date with the brand names that apply to your heat pumps.
You can view your credits in the M-CHMM service.
Getting a CHMM credit
You can get CHMM credits if you’re the manufacturer of a heat pump which is notified under an approved certification scheme as having been installed.
The installation of one standalone heat pump will lead to one CHMM credit.
The installation of a hybrid heat pump will lead to half a CHMM credit.
Credit holders that want to trade CHMM credits must first register on the M-CHMM service.
Transferring credits
Scheme participants may not have enough CHMM credits to meet their low-carbon heat target. Other scheme participants or credit holders who are not participants may have a surplus of credits, and so may want to transfer credits to other participants.
Only scheme participants can get CHMM credits through a credit transfer.
The M-CHMM service has a list of parties who have shown an interest in transferring CHMM credits. This list is not exclusive, and they don’t have to be on the list to transfer credits. The list is to help connect people.
You must complete the financial and contractual aspects of credit transfers outside of the M-CHMM service. The Environment Agency will not be involved in this process. You must only transfer credits in the M-CHMM service after agreeing terms between the 2 parties.
The M-CHMM service gives guidance on how to transfer CHMM credits.
The CHMM credit transfer period is 1 October of the scheme year to 30 September of the year after.
Surrendering credits
Scheme participants must surrender credits by 1 October after each scheme year. There should be enough surrendered CHMM credits to meet your low-carbon heat target. One CHMM credit is equal to one unit of the low-carbon heat target.
Carrying over credits
At the end of each scheme year, you can carry over some surplus CHMM credits (those not surrendered or transferred) to the next scheme year.
A scheme participant can carry over up to 10% of its CHMM credits before surrender.
A credit holder can carry over up to 10% of its CHMM credits for the year.
Example
If a scheme participant has 460 credits, but a CHMM obligation in year 1 of 440 credits, they can carry over their full surplus of credits (20 credits) to year 2. This is because the amount (20) is less than their allowed maximum of 46 credits (460 x 10%) that you can carry over to year 2.
If the same scheme participant got 600 credits in year 1, they would only be able to carry over 60 credits (600 x 10%) to year 2.
The Environment Agency will apply the maximum carry over, unless you contact them by 1 October after the relevant scheme year.
Credit expiry
On 1 October after the scheme year, CHMM credits will expire if you have not:
- used them to meet a low-carbon heat target
- carried them over to the next scheme year
Payments
If you do not have enough CHMM credits, including after applying any target carry forward, you will need to pay to cover the difference. You need to pay £500 for each CHMM credit.
The Environment Agency will send you a notice showing the amount to pay, with instructions.
You will need to pay the Environment Agency (as scheme administrator) by 30 November after the end of the scheme year.
How to register
Register and report your data using the M-CHMM service.
How you’ll be regulated
Check how compliance, enforcement, and appeals work.
For help
Contact chmm@environment-agency.gov.uk if you’re unsure if the CHMM applies to you.