It's feared that oil-heated homes could be left behind by the government's renewable heating policy.

That's according to a liquid fuels industry group, which says the upcoming Renewable Heating Obligation scheme isn't ambitious enough.

The Alliance for Zero Carbon Heating says the 1 point 5 per cent mandate on blended renewable heating fuel should be closer to 20 per cent.

CEO Philip Hannon believes a smarter approach would benefit everyone: