Government fires up £635m Public Sector Decarbonisation Scheme

The government has today launched the latest phase of its Public Sector Decarbonisation Scheme, promising to provide up to £635m of funding to help schools, hospitals, and other public buildings improve their energy efficiency and install a range of clean technologies.

The latest tranche of funding forms part of a £2.5bn programme, which aims to support the government’s goal of reducing emissions from public sector buildings by 75 per cent, compared to 2017 levels, by 2037.

The government today also issued guidance on how public bodies can apply for the latest wave of funding, which is expected to deliver upgrades that can help taxpayers and public organizations save an average of £650m per year on energy bills over the next 15 years.

Business and Energy Minister Lord Callanan said 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”.

“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 added.

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

Projects that have already received funding include Nottingham University Hospitals NHS Trust, which received more than £70m to install water source heat pumps at Queens Medical Centre, while Birmingham Women’s and Children’s NHS Foundation Trust was awarded more than £50m to install clean heating and energy efficiency measures in their hospitals and the Royal Botanic Gardens, Kew was awarded over £4.4m to decarbonise the Grade II listed Nash Conservatory and Jodrell Laboratory.

The latest wave of funding is 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, urged public sector organizations 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. “Salix are proud to work delivering projects which transform public sector buildings. 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, as well as saving money for the taxpayer. “

The news was welcomed by Greenpeace UK’s policy director, Doug Parr, but he also reiterated calls for the government to do more to improve the efficiency of the millions of homes that are expected to be plunged into fuel poverty in the coming months.

“As energy prices continue to spiral, it’s great that more public buildings will be insulated and kitted out with heat pumps,” he said. “This will save cash-strapped councils and hospitals significant sums of money, while also cutting climate-wrecking emissions. It’s just a shame that the government hasn’t had the foresight to offer the same green upgrades to the homes of the millions of people that will be forced into poverty this winter, when they can no longer afford to pay their bills.

“In fact, this announcement comes just days after the government chose not to progress £1bn per year in funding to help some of the country’s poorest households curb their energy use. Any money for insulation and low carbon heating is welcome but much more is required , and directed to the people that need it most.”

Reports over the weekend from Bloomberg revealed that the government had paused plans to increase its flagship Energy Company Obligation domestic efficiency scheme and reallocate underspend from local authority-led schemes as a result of the on-going Conservative efficiency leadership race.

The latest phase of the Public Sector Decarbonisation Scheme also comes just weeks after reports suggested that Prime Minister Boris Johnson was planning to raid the budget for the scheme to increase funding for domestic energy efficiency programmes. The proposal was roundly condemned by environmental and business groups as a case of ‘robbing Peter to pay Paul’ that would do little to improve the UK’s overall energy security. But recent reports indicated that leadership hopeful Rishi Sunak was considering adopting the policy if he makes it to Number 10.

The latest news comes a day after the government also launched a new online ‘home energy MOT’, which aims to provide them with advice on how that could save hundreds of pounds a year on their energy bills ahead of this autumn’s anticipated increase in the energy price cap.

But environmental and fuel poverty groups have continued to loudly warn that the government’s plans to curb energy use and soaring energy bills remain badly underpowered given millions of households are expected to be pushed into fuel poverty by the end of the year and the Kremlin is threatening to completely halt gas exports to Europe.


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