A significant funding scheme that has supported thousands of schools and public institutions in making energy-efficient upgrades will not continue beyond its current commitments, marking the end of a major chapter in the UK’s public sector decarbonisation efforts.
Launched in 2020, the Public Sector Decarbonisation Scheme (PSDS) has channelled more than ÂŁ3.8 billion into reducing emissions across schools, academies, colleges, councils, and other public sector buildings. However, following the latest government spending review, it has been confirmed that no further investment will be made under the scheme beyond the projects already awarded.
The PSDS, administered by Salix Finance on behalf of the Department for Energy Security and Net Zero (DESNZ), aimed to cut carbon emissions from public sector buildings by 75% by 2037, based on 2017 levels. The initiative funded a wide range of sustainability measures including air-source heat pumps, solar panel installations, and insulation upgrades.
Final Round of Funding Already Awarded
The fourth and final phase of the PSDS was rolled out last month, distributing ÂŁ940 million across various public bodies. Of that, ÂŁ41.8 million went to 36 academy trusts, with tens of millions more granted to local authorities to help decarbonise council-run schools.
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Among the recipients, the Harris Federation secured just over ÂŁ5 million to fund energy-efficiency projects at five academies in London. These upgrades include the installation of heat pumps and energy-saving enhancements to existing and new facilities.
Similarly, Together Learning Trust in West Yorkshire received nearly £5 million to decarbonise four schools—one of which will be connected to a centralised heating network, while the others will benefit from air-source heat pump installations.
While some details have been disclosed, it’s still unclear how much of the PSDS funding has gone specifically to maintained schools. Leeds City Council, for example, was awarded ÂŁ5 million for decarbonisation projects covering a leisure centre, two nurseries, and two primary schools. Essex County Council received ÂŁ820,000 for improvements across multiple public buildings, including three schools, though allocations per site were not individually listed.
Support Scheme for Bids Also Terminated
The closure of the PSDS follows the May 2024 termination of the Low Carbon Skills Fund (LCSF), a parallel scheme that offered ÂŁ80 million to help schools and public institutions prepare decarbonisation strategies. The fund had enabled recipients to engage specialists who could develop heat decarbonisation plans required to access PSDS funding.
Together, the PSDS and LCSF provided a critical financial and advisory lifeline for public sector bodies seeking to reduce their environmental footprint.
Future Plans Remain Vague
A spokesperson for DESNZ confirmed the decision to end future rounds of PSDS funding, but stated that ÂŁ1 billion in existing commitments will still be delivered through to 2028. They added that future public sector decarbonisation strategies may involve repayable finance and further investment via Great British Energy, which supports renewable energy initiatives such as rooftop solar installations for schools and hospitals.
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The department said, “We want to build on progress so far by encouraging the public sector to continue decarbonising—lowering bills and emissions through shared learning and innovative funding approaches.”
Uncertain Road Ahead for Schools
As the education sector grapples with rising energy costs and the pressing need to meet climate targets, the end of both the PSDS and LCSF raises questions about the future of sustainable investment in schools. With many institutions still reliant on outdated and inefficient heating systems, stakeholders are urging the government to clarify its long-term plans for supporting green upgrades in the public sector.
The Department for Education (DfE) has yet to issue a formal response to the announcement.
