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Public Sector Funding for Decarbonisation

The government has launched its latest phase of public sector funding for decarbonisation, dedicating up to £635m for building upgrades to improve energy efficiency and install a range of clean technologies through schools, hospitals, and other public buildings.

Forming part of a wider £2.5bn programme, Phase 3 of the Public Sector Decarbonisation Scheme is providing £1.425 billion of grant funding over the financial years 2022-2023 to 2024-2025. The funding aims to support the government’s goal of reducing emissions from public sector buildings by 75 per cent by 2037, compared to 2017 levels, as set out in the Net Zero and Heat and Buildings strategies.

As the government looks to tackle soaring energy costs, it is intended that the funding will support a wider reduction in energy bills, to the tune of up to £650m a year over the next 15 years. As we have outlined, reducing emissions and energy costs do not necessarily go hand in hand, especially if working with heat pumps to supply hot water.

According to The Department for Business, Energy, and Industrial Strategy (BEIS) 734 grants had been awarded to public sector organisations across England to date, with phase one of the scheme supporting up to 30,000 jobs in the clean heating and energy efficiency sectors.

Applications for public sector funding for decarbonisation open from September and the government has issued guidance on how public bodies can apply for the latest wave of funding to be delivered on behalf of the government by Salix Finance, which also provides financing packages to help public sector bodies undertake energy-saving projects.

Salix Finance chief executive, Annie Shepperd, has urged public sector organisations across the country to move quickly to curb their energy use ahead of the significant increases in energy costs that are widely expected this winter.

“There is no time like the present to push forward with the decarbonisation agenda as our country must meet its ambitious targets to reduce our carbon footprint and reduce our consumption of very costly energy,” she said. “This vital work is driving down our carbon footprint and making these buildings better places for people to work in and for the public to use.”

Business and Energy Minister Lord Callanan said, “By helping even more public sector bodies ditch costly fossil fuels, we are taking an important step towards a more sustainable future while driving economic growth across the country and continuing to support tens of thousands of jobs.”  He also claimed that the scheme was already delivering upgrades to “hundreds of public buildings across England, making them cheaper to run and saving taxpayers millions of pounds each year”.

While such claims relating to public sector funding for decarbonisation should be appropriate to new build structures, upgrading existing buildings is a far more complex activity than these statements suggest. The focus on decarbonisation to address climate change is the only clear guaranteed deliverable at this time with the technology being promoted, which is predominantly heat pumps. Further work needs to be done by the government to push other technology opportunities, such as solar systems and especially solar thermal for water heating which has become an increasingly cost-effective and proven approach and hydrogen blend in the grid if cost savings are to be factored into the argument for embracing green initiatives at a commercial grade.


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