The world's first financial incentive of its kind to revolutionise the way heat is generated and used in buildings has been launched by Energy Secretary Chris Huhne.

The Renewable Heat Incentive (RHI) will support emerging technologies and businesses in the UK, strengthening security of supply by reducing dependence on fossil fuel heating and emissions.

• Currently around half of the UK's carbon emissions come from the energy used to produce heat – more than from generating electricity. The RHI will reduce emissions by 44 million tonnes of carbon to 2020, equivalent to the annual carbon emitted by 20 typical new gas power stations
• Over 95% of heat in the UK is currently produced by burning fossil fuel but with North Sea supplies now in decline leading to an increase in imports, low carbon alternatives are needed
• The new financial incentive will encourage installation of equipment like renewable heat pumps, biomass boilers and solar thermal panels to reduce emissions and support the existing 150,000 jobs in the heating industry.

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"This incentive is the first of its kind in the world. It'll help the UK shift away from fossil fuel, reducing carbon emissions and encouraging innovation, jobs and growth in new advanced technologies."

Which? Chief Executive, Peter Vicary-Smith, said: "With energy prices such a concern for consumers, many thousands of households will be eager to take advantage of the RHI and start generating their own energy.

"However, it's vital that people are sold the right renewable heating system to suit their home. If horror stories start to emerge of people spending thousands of pounds on equipment that’s either unsuitable or isn’t installed properly, then confidence in the scheme will be severely undermined.

"We've already uncovered problems with mis-selling of solar thermal heating systems** so it’s vital that the authorities keep a close eye on the market and come down hard on rogue firms."