The Cancellation of the Low Carbon Skills Fund and the Decarbonisation of the Education Estate
The Department for Energy Security and Net Zero (DESNZ) has recently announced the cancellation of the Low Carbon Skills Fund (LCSF), which previously provided grants to help public sector organisations access expert advice and develop heat decarbonisation plans for their estates. This year, the government concluded that the fund is no longer necessary, pointing to the availability of alternative sources of support, including Local Net Zero Hubs.
While this announcement may disappoint many already planning their applications, it is not entirely unexpected given the current spending pressures facing the new government, which also has its own distinct answer to decarbonisation in Great British Energy (GBE). Adjustments to funding levels and distribution methods are perhaps inevitable following a change in government and could present new opportunities.
As we await the June Spending Review for greater clarity on the government’s priorities for the next three years, the following analysis explores the implications of the LCSF's cancellation and its broader impact on the path to net zero in the education sector.
What is the significance of the cancellation?
In 2019, the government legally committed the UK to reach net zero by 2050, with a supporting target to reduce emissions from public sector buildings by 75% by 2037. Launched in 2020 by DESNZ and administered by Salix Finance, the LCSF, alongside the Public Sector Decarbonisation Scheme (PSDS), represented key initiatives under the previous Conservative administration to support these goals.
Recognising that decarbonising the heating of buildings is one of the greatest challenges to reaching net zero, the LCSF focused on helping organisations develop heat decarbonisation plans. Meanwhile, the PSDS provided capital funding to implement energy-saving and carbon-reducing technologies.
Although the cancellation of the LCSF may hinder planning efforts and access to low carbon expertise, the fund's reach was limited—in its final phase, £15 million was allocated to 118 organisations across the entire public sector. This is relatively small compared to the total number of public buildings needing to be decarbonised.
Could there be wider changes to the funding of net zero ahead?
While the LCSF represented a relatively small annual investment, the PSDS constitutes a much larger commitment, with Phase 4 expected to total approximately £940 million through to 2027/2028. Successful applications for Phase 4 were announced on the same day as the LCSF's cancellation. Whether further rounds of the PSDS will be announced remains uncertain.
In April, Salix released its Three-Year Strategic Plan (2025–2028), which acknowledged a "dynamic funding perspective." No new schemes were included in its plan, with the LCSF ending in 2025 and the PSDS set to run until 2028. This lack of new information is expected, as all departments await the Chancellor’s Spending Review in June. However, Salix also referred to potential changes to the "machinery of government" that could affect the delivery of future decarbonisation initiatives.
Great British Energy and a shift in focus
A significant indicator of a shift in the government’s approach is the establishment of Great British Energy (GBE), a DESNZ-backed company with an £8.3 billion investment over this parliament. Its mission is to power Britain with clean, secure, home-grown energy and to position the UK as a global clean energy leader.
GBE’s first announced project involves fitting rooftop solar panels on 200 schools. According to Schools Week, GBE will provide £40 million in funding, matched by another £40 million from the Department for Education (DfE). LocatED, the agency leading the DfE's decarbonisation response, will oversee installations. The scheme could save participating schools up to £25,000 per year, with the potential to sell excess energy back to the grid. The first installations are expected by the end of summer 2025.
Although both GBE and the PSDS fall under DESNZ, it remains to be seen whether the PSDS will continue, especially in the context of tight public finances. Greater clarity is expected with the upcoming Spending Review on the 11th June.
What could this mean for sustainability efforts in the education estate?
According to a 2023 National Audit Office (NAO) report, the education sector is the largest public sector emitter of building-related carbon, responsible for 37% of total emissions. Primary schools contribute 13%, secondary schools 11%, and universities another 13%.
Yet, from the £630 million allocated in Phase 4 of the PSDS, only 7% went to schools and academies. The scheme aims to allocate around one-third of its funding to the education sector overall, a target likely met with universities receiving 16%, FE colleges 3%, and an undisclosed portion going to schools via local authority bids.
Schools often struggle to access PSDS funding due to the thermal inefficiency of their aging estates, which often needs to be improved before low-carbon heating systems can be effectively installed. Despite these challenges, the PSDS has been one of the few significant funding sources available for energy efficiency improvements in education. A change in direction by the new government could present new and improved opportunities for schools to access funding to decarbonise their estates, or if deprioritised in the Spending Review, could see their only potential source of funding removed.
Historical DfE climate ambitions are at odds with funding provided to date
In April 2022, the Department for Education (DfE) released its Sustainability and Climate Change Strategy, setting out an ambition for the UK to become the world-leading education sector in sustainability and climate action by 2030. However, in 2023, both the National Audit Office (NAO) and the Environmental Audit Committee highlighted a lack of capital investment and a clear delivery plan from the DfE to achieve the scale of decarbonisation necessary to meaningfully contribute to the government’s wider net-zero targets. In response, the previous government committed to publishing a detailed roadmap by autumn 2024 and to begin accelerating delivery by spring 2025—contingent on securing significant capital investment from the Treasury.
With a new government now in place, the future direction of sustainability policy within education remains uncertain, as we await further clarity on their commitment to existing strategies and targets. Nonetheless, at the recent Schools and Academies Show, Minister for Early Education Stephen Morgan reiterated the importance of schools developing Climate Action Plans and appointing sustainability leads, suggesting there may be continuity in some of the foundational work initiated by the previous administration.
In light of the LCSF's cancellation, the education sector faces both uncertainty and opportunity. While new funding routes like GBE emerge, the long-term direction of policy remains dependent on the outcome of the Spending Review.
Prepare for future opportunities
We hope the upcoming June Spending Review will provide much-needed clarity and guidance to support schools in continuing their decarbonisation journey. Whether current funding streams are extended or new ones introduced, schools, academies, and colleges can take proactive steps now to prepare for future opportunities. We recommend:
Develop a strategic understanding of your estate: Combine insights into building condition, thermal performance, and energy efficiency improvements. Many steps toward net zero—such as improving insulation —can be aligned with ongoing condition upgrades.
Assess space utilisation and future needs: Review current capacity and how space is used across your estate to ensure decarbonisation plans support long-term educational and operational goals.
Create a phased roadmap with costed actions: Establish a clear transition plan with estimated costs for each stage. While the ultimate goal may be low-carbon heating systems, significant progress can often be made through incremental measures like LED lighting upgrades or solar PV installations.
For the latest updates on funding and policy announcements, sign up to our newsletter here. If you’d like to discuss your current estate sustainability needs, our team of education estates and energy experts—including building surveyors, architects, mechanical and electrical engineers, and health and safety specialists—is ready to support you, no matter where you are on your decarbonisation journey.
For more information on how our team of education estate and energy experts can assist, please get in touch on 0116 5070130 or email enquire@s2e.org.uk.
