Why a Promising Climate Policy Was Cut: What It Means for Our Future

You may not have heard of the Public Sector Decarbonisation Scheme (PSDS), but it’s quietly played a crucial role in the UK’s fight against climate change. Now that it’s gone, the implications for the country’s path to net zero could be significant.

What Was the PSDS?

In essence, the PSDS was government funding aimed at helping schools, hospitals, and other public institutions transition away from fossil fuels. This money made it possible for these organizations to install low-carbon heating systems and improve energy efficiency in their buildings.

The PSDS, implemented by the previous Conservative government, was run by Salix, a government-owned body. Unfortunately, the government announced in June 2025 that future funding for the scheme would be cut.

Who Benefited from PSDS?

A wide range of public sector entities benefited. For example, local schools replaced outdated gas boilers with energy-efficient heat pumps. Hospitals upgraded insulation and switched to cleaner energy sources, while social housing developments transitioned to communal green heating systems. Essentially, many public buildings relied on this scheme to fund necessary upgrades.

Importance of Funding in a Tight Budget Environment

Funding for green upgrades is often hard to come by. Public services in the UK have been underfunded for years, struggling just to provide basic services. The upfront costs of transitioning to sustainable energy can be high: upgrading a school might cost a couple of million pounds, and decarbonising a hospital can exceed £70 million.

The PSDS stepped in where funding was scarce, allowing upgrades that would not have happened otherwise, thereby cutting emissions and improving public infrastructure.

Why Did PSDS Matter?

Though it didn’t make headlines, the PSDS was effective. Since its launch in 2020, it allocated over £3.5 billion in grants across nearly 1,400 projects aimed at reducing emissions from public buildings. Its goal was to cut emissions by 75% by 2037, based on 2017 levels. The program also contributed to job creation in green construction and technology.

Its ‘fabric-first’ approach prioritized building improvements over merely installing new technologies. By enhancing insulation and reducing heat loss, it ensured that any new heating systems operated more efficiently.

Why Was the PSDS Cut?

Despite its popularity, the government ended PSDS funding in a recent spending review. Although it was generating positive outcomes, it didn’t draw enough public attention or political visibility. In a financial crunch, it was an easy target to cut.

Isaac Beevor from Climate Emergency UK noted, “The closure of the PSDS has left councils high and dry… Lots of councils have 2030 net-zero targets that will be impossible without continued PSDS investment.”

What Are the Consequences?

Without PSDS funding, public sector organizations will likely delay or halt their decarbonisation projects. This may lead to:

• Continued use of outdated gas boilers
• Ongoing heat loss from poorly insulated buildings
• Rising energy costs for public services
• Slower progress toward the UK’s net-zero target

Additionally, it could slow the implementation of heat networks, which are vital for energy efficiency.

Why Should We Care?

This issue affects us all. Every penny spent on inefficient buildings takes away from essential public services like education and healthcare. Delaying the transition to greener infrastructure complicates the fight against climate change, making it costlier in the long run.

It’s disappointing that a government promoting a greener agenda would scrap a successful scheme like the PSDS. It reflects a broader issue: bold climate promises often remain just words unless backed by action.

The conversation around climate financing must continue. If citizens remain passive, essential programs may vanish without notice. Meaningful change requires commitment, engagement, and follow-through from both voters and leaders.

By understanding the implications of the PSDS’s disappearance, we can better advocate for climate initiatives that truly make a difference.

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