Phase 4 Public Sector Decarbonisation Scheme

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Details regarding Phase 4 of the Public Sector Decarbonisation Scheme (PSDS) were released at the end of February 2024 by the Department for Energy Security and Net Zero (DESNZ). This scheme will be delivered by Salix Finance, a non-departmental public body, owned wholly by the UK government.

The aim of the PSDS is to reduce direct emissions from the public sector to align with UK net zero goals, which include achieving carbon neutrality by 2050.

Phase 1 of this initiative was launched in September 2020, with £1bn worth of grants for public sector bodies to fund decarbonisation and energy efficiency measures.

Phase 2 begun in April 2021. For beneficiaries of the grant, the installation of a low carbon heating solution, along with heat reduction and energy efficiency measures, was mandatory.

Phase 3 provides £1.425bn worth of funding over the financial years of 2022-2023 to 2025-2026, aiming to significantly cut emissions. Applicants for this phase had the option to decide whether to apply for funding across a single or multiple financial years to execute their projects. The same will apply for phase 4.

Phase 4 of this scheme will build upon the three previous phases to progress the goal of decreasing direct emissions from public sector buildings by 75% by 2037, compared to a baseline set in 2017, as outlined in the Heat and Buildings Strategy and the Net Zero Strategy in October 2021.

In addition, Phase 4 aligns with the Government’s target of achieving a 15% reduction in energy demand, as disclosed in the Autumn Statement 2022.

The grants available allow public sector organisations to transition to clean energy.

On December 18th, 2023, it was announced that £6bn in capital funding would be allocated for households, businesses, and the public sector, to implement energy efficiency upgrades and to adopt cleaner heating systems.

Whilst most of the remaining funds for the PSDS will be dedicated to Phase 4, a select portion will be set aside for the trailblazer deeper devolution deals with Greater Manchester Combined Authority and the West Midlands Combined Authority.

A targeted allocation process will be used for Phase 4, ensuring that funding is directed towards the highest quality projects that will make the biggest contribution to the scheme’s goal of reducing carbon emissions.

The PSDS, backed by the Low Carbon Skills Fund (LCSF) and delivered by Salix, enables the public sector to develop decarbonisation strategies for their buildings, which therefore contribute to sustainable initiatives.

Salix are expected to release additional guidance notes regarding Phase 4 later this year. This will outline terms and conditions, instructional videos on how to apply, and additional resources to aid organisations in navigating Phase 4 of this scheme. Follow us on our social platforms to keep up to date with the latest news on PSDS initiatives.

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