Cleaner-heating grants wound down

17:00, Sep 11 2012

Government subsidies for heat pumps have been quietly scrapped after a study found no clear economic benefits.

Grants of $500 towards heat pumps and other types of efficient heating were part of the Warm Up New Zealand scheme, which will continue to give subsidies for floor and ceiling insulation for another year or more.

But "clean heating" will no longer be part of the scheme, except for people replacing dirty heating, such as open fires, in the most polluted suburbs.

While there has been no formal public announcement, the Energy Efficiency and Conservation Authority has already stopped giving grants to heating installers, meaning homeowners in larger centres will struggle to get them unless they find a company with allocation left.

The last of the grants was expected to be gone by the end of the month, EECA chief executive Mike Underhill said.

Comments on internet message boards suggest people have been struggling to access the $500 clean heating grants in Wellington since at least the middle of the year, and that Auckland is also running low.


The decision to wind down the heating grants was made after an Economic Development Ministry report found insulating houses provided much greater benefits than subsidising clean heating, particularly in low-income households.

The report found the $330 million cost of the scheme had delivered $1.2 billion in benefits, mostly in health savings from warmer, insulated houses.

It found no clear economic benefits associated with grants for clean heating, which it said might be because clean heating improved health only if people were able and willing to pay the ongoing energy bills.

Any positive or negative effect was likely to be small compared with the insulation subsidy, it said.

Government grants for efficient water heating and biodiesel have already been dropped.

In May the Government announced an additional 41,000 homes would be insulated using funding already allocated to Warm Up New Zealand, thanks to savings made in the administration of the insulating and heating scheme in 2011-12.

People living in places with high air pollution such as some parts of Auckland and Canterbury may be able to access a different subsidy of $1000 to replace open fires or inefficient wood burners with cleaner heating.

Warm Up New Zealand was first announced in 2009 and is now in its fourth year, with a new target of 230,000 insulated houses, up from the 190,000 originally planned.

The scheme gives grants of up to $1300 to insulate floors and ceilings in homes built before 2000, and had been giving $500 towards a heat pump or other energy-efficient home heating.

Community Service Card homeowners were eligible for a $1200 grant.


Wellington Sustainability Trust chief executive Phil Squire says it is disappointing that heating subsidies are drying up as they have been instrumental in keeping low-income families warm during winter.

The trust targets household energy efficiency across the Wellington region and helps low-income households reduce energy costs and eliminate cold and damp homes.

Insulation was the key component of any warm, dry home, Mr Squire said, but heating was also critical in order to reach temperatures needed to ensure good health.

"The cost benefit of the Warm Up New Zealand scheme is undeniable - recent studies have shown $5 of savings for every $1 spent. We strongly advocate for the scheme to continue beyond 2014 and would like to see funding for both insulation and heating."

However, he understood the Government needed to reprioritise spending towards insulation for the time being.


Insulation retrofits to date (end of August): 179,936

Heating retrofits to date (end of August): 36,975

Total retrofits to date (insulation or heating or both, end of August): 203,256

Fairfax Media