New Grant Funding To Decarbonise Public Sector Buildings

10th July 2023

A new funding scheme has been launched offering up to £20 million in grants to support local authorities, universities and arm's-length external organisations decarbonise their buildings.

Scotland’s Public Sector Heat Decarbonisation Fund will replace the existing Scottish Energy Efficiency Loan Scheme, which has been running since 2006 and offered zero interest loans for energy efficiency improvement projects.

The new scheme is intended to increase the number of public sector organisations taking forward heat decarbonisation measures in their buildings.

The funding forms part of the £200 million already committed to the public sector for energy efficiency and renewable heating over the next five years - part of the wider plan to spend £1.8 billion in this current parliamentary session on decarbonising Scotland’s buildings.

Zero Carbon Buildings Minister Patrick Harvie said, ""Scotland’s buildings account for approximately a fifth of all our emissions and our aim is to ensure that, by 2045, our buildings no longer contribute to climate change. This means that our schools, offices, hospitals, libraries and homes will all need to improve their energy efficiency and install zero emissions heating.

“Public sector bodies have already achieved a lot, but we need to go further. The design of the new scheme reflects the changing needs of the sector, allowing public sector organisations to invest in projects with higher capital costs and which cannot always be invested in on a spend to save basis.

“Moving from a loan scheme to direct grant awards for the first time represents a very significant commitment from the Scottish Government to support the delivery of these challenging targets."

As per the criteria for the previous scheme, only public sector bodies with borrowing powers can apply to the new fund. Applicants will be required to provide 20% match funding for projects.

Scotland’s Public Sector Heat Decarbonisation Fund is being delivered on behalf of the Scottish Government by Salix Finance, which operates the existing Scottish Energy Efficiency Loan Scheme. More than £75 million has so far been invested in energy efficiency projects in Scotland through the existing scheme, which is forecast to save the public sector more than £202 million over the lifetime of the projects.

Applications will open via the Salix Finance website later this summer.

Announcements regarding future funding will be made in due course.