Among the hundreds of files piling up on Chris Huhne's desk is a nice fat one marked "Renewable Heat Incentive" (RHI). He could easily sign
it off, but let's hope he doesn't. For lurking in there is a potential £35bn boondoggle that threatens to worsen energy supply problems and increase greenhouse-gas emissions.

Launched last winter by the then energy and climate change secretary, Ed Miliband, the RHI is intended to encourage people to heat their houses and water using solar panels, woodchip boilers and . . . heat pumps. These work on the same principle as a fridge, but in reverse, pumping heat from the outside to the inside. That way you get three or four times more heat in your house than you would by way of ordinary electric heating as used by toasters and immersion heaters.

The idea is that homeowners will be paid 7.5p per kilowatt-hour (kWh) of heat produced by air-source heat pumps (which pump heat from the air) and 7p for ground-source heat pumps, for a 20-year period, financed by a levy on everybody's energy bills. Payments will be based on a typical domestic heat requirement of 15,000kWh per year. So that's rather more than £1,000 per year, per installation, for 20 years.

But there's a problem. According to the Energy Saving Trust, carbon emissions are not actually reduced if air-source heat pumps replace gas or oil boilers, but only existing electric heating and coal-fired systems. Ground-source heat pumps are only slightly better. Yet the proposed guidelines do not specify where heat pumps should be installed to qualify for the subsidy. So the danger is that thousands of heat pumps will be drawing a subsidy of more than £1,000 a year, while delivering no emissions benefit.

Then it gets worse. Almost all the heat pumps on the market use HFC gases as a refrigerant - global warming gases about 2,000 times more powerful than CO2. So, the 2.5kg gas charge in a typical heat pump is equivalent to five tonnes of CO2. And what with routine leaks, discharges during repair, servicing and decommissioning at the end of a typical 20-year lifetime, the entire original charge and as much again could easily be lost to the atmosphere - pushing the purported greenhouse-gas benefit from small to negative.

What's more, demand for heat is greatest when temperatures are low. So if enough people switch from oil and gas to heat pumps, demand for electricity will soar during cold weather, when supplies are most stretched. Heat pumps also get less efficient in cold weather, so they will need even more electricity to keep homes warm.

The problem will be even more severe if we succeed in building thousands of new wind turbines. This is because the UK is smaller than typical weather systems, so from time to time high pressure can cover most of the country - and that means little wind to keep the turbines turning. When this happens in winter, low windpower output will coincide with high demand for electricity. The last thing we need is to increase demand further at such times, when we will need every megawatt of back-up power available.

According to a 2009 report, Scenarios for Renewable Heat Supply Capacity Growth to 2020, the UK is likely to have between 600,000 and 1.6 million heat pumps by 2020.

So the planned heat pump subsidy under the RHI could cost consumers between £13bn and £35bn, increase the UK's greenhouse-gas emissions and stretch electricity supplies at the worst time of year. The RHI file deserves Huhne's closest scrutiny, and a lot of red ink.