DECEMBER 03, 2025 by Oliver Riley
The future of decarbonisation won’t be built on grants. So what will it be built on?
We’ve spent years running on booster rockets. Now we need an engine that actually works.
- We cut carbon fast because grants gave us wings. But wings are not a flight plan.
- Now we need something more long-term.
- Our buildings are getting older, our heat needs are growing and the money is not.
- The biggest wins come from systems that link up, not buildings that struggle alone.
- A resilient heat future needs new models so whole places thrive, not just parts of them.
We cut carbon fast because grants gave us wings. But wings are not a flight plan.
Britain has spent the last few years decarbonising the public estate in roughly the same way a teenager revises for exams: last-minute, powered by panic and almost entirely dependent on emergency caffeine or, in our case, grants.
The Public Sector Decarbonisation Scheme (PSDS) was brilliant at what it was meant to be: a post-Covid national firehose of capital to build a domestic decarbonisation industry and let councils, universities and hospital trusts finally rip out ancient boilers and get heat pumps in the ground, before the money vanished again.
But here’s the part everyone inside the sector knows: Grants are excellent at getting us started, and terrible at getting us finished. Because grants don’t fix the reasons decarbonisation is hard in the first place.
They don’t rebalance the gas–electricity price ratio. Heat pumps still run on electricity priced like saffron while gas is priced like rice.
They don’t change risk appetite in stretched public estates. Post-grant business cases collapse when the subsidy leaves the room.
They don’t correct decades of under-investment, or repair buildings. Many estates still have multiple points of failure and no joined-up thermal strategy.
What grants do is create momentum and then disappear, leaving organisations clutching feasibility studies that only worked when government was paying for half the bill. PSDS has left behind hundreds of half-complete decarb journeys with no ‘Phase Two’ in sight.
And now here we are.
The money has slowed. The carbon hasn’t. The pressure really hasn’t. Local authorities are still expected to decarbonise ageing estates. Hospitals still need to cut emissions while growing capacity. Social housing providers still face thousands of cold, mould-ridden homes. Universities still need heat that doesn’t break the budget or the boiler.
Meanwhile:
- Carbon and energy pricing still contradicts the actual value of clean heat.
- The spark spread, underpinning the essential economics of heat pumps, is among the highest in Europe and has barely shifted since 2021.
- Electricity has risen to typically 5x the price of gas, despite gas prices still sitting above pre-crisis levels. It needs to be less than 3x to incentivise switch from gas to heat pumps.
- Local flexibility initiatives are emerging but inconsistent. We’re turning off windfarms at night, yet ramping up fossil-fired generation in the day.
- Electricity market reform, which could help flexibility and pricing, is still in consultation.
- We still lack mechanisms to value the system-level benefits. Consider the NHS costs avoided when cold, damp homes are finally fixed. Or when air quality is improved by banishing boilers for good. The national security benefits of reducing our reliance on imported gas. I could go on…
The point is: we are still trying to build a low-carbon future using tools designed for short-term fixes. We have treated a decarbonisation a bit like a charity drive rather than national infrastructure.
The future won’t be built on emergency cash injections. It will be built on something sturdier, smarter and far more grown-up.
What The Public Sector Decarbonisation Scheme (PSDS) funding solved and what it never could
The Public Sector Decarbonisation Scheme was, in many ways, government at its best: simple, generous, practical and aimed directly at a problem everyone agreed was urgent.
It gave hospitals and councils the modern heat they desperately needed.
It helped a fledgling industry find its feet.
It got boilers out of buildings that should have been in museums.
But it also did something less visible. It shifted the national Overton window. Heat pumps went from being new, complicated and slightly frightening to the comfortable fodder of Estate managers’ coffee breaks.
PSDS proved something important: when people experience clean heat, they like it. When organisations are supported to install it, they do it.
But here’s the honest part, said out loud: PSDS was never designed to finish the job. It was never mathematically capable of doing so. It was a push, not a plan. Grants are great at stimulating action. They are terrible at building systems that survive their absence.
Which leaves the real question hanging: if grants were the starter motor, what is the engine?
The moment we’re in now: rising demand, shrinking budgets and no safety net
Doing nothing is not neutral. Doing nothing is a decision. And here’s what “nothing” looks like in the real world:
- Thousands of public buildings limping into another decade of inefficiency.
- Social housing providers stuck in retrofit paralysis.
- NHS estates spending more on avoidable energy costs than on some frontline services.
- A rash of new data centres spewing heat to nowhere.
- Anchor loads left unpaired with the communities that would benefit most.
The danger is not doing the wrong thing. The danger is doing nothing at all and hoping another grant scheme will rescue us, because it won’t.
So how do we decarbonise when the money stops?
The post-PSDS world is not a funding cliff. It is a design test. If cheap capital is no longer the lever, the lever becomes the system itself — whether we can structure it so decarbonisation becomes inevitable, not miraculous.
Here’s the grown-up, actually-doable path forward
Let’s be honest: some grants propped up mediocre solutions: rip out a boiler, stick in a heat pump. Never mind the coefficient of performance. With a cash injection it looks ok (if you stand back and squint).
Every estate has opportunities to do better than this. Unused heat sources, mismatched loads, un-optimised controls, wasted value and cheap wins hiding behind missing intelligence.
You don’t need a grant to design with what you already have. You just need the right pair of eyes. And sharper tools. We have them — thermal storage, heat recovery, hydraulic optimisation — lets use them.
If the first 10 percent was achieved with subsidy, the next 90 percent will be delivered by systems designed to make sense without it.
We need to recognise the value stack, not single line item. If the business case collapses the moment the spark spread shifts, it isn’t a business case, it’s a wish. The real value comes from the whole-system outcomes:
- predictable indoor comfort
- longer asset life, fewer emergency callouts from unplanned maintenance
- fewer mould complaints
- fewer GP visits from cold-related illness
- better attendance in schools
- less pressure on social care
- better lives for fuel-poor households
Why shouldn’t we put numbers on these? Everyone already pays for bad heat, it just shows up in different budgets. This is not “creative accounting”. It is real-life accounting. Whole-system economics is how decarbonisation becomes financially rational, not just morally obvious.
So your FD needs some persuading? Well lets at least start by making sure people are hearing the “indirect” benefits of decarbonisation loud and clear.
Retrofits done one building at a time need to sink or swim. But networks turn decarbonisation into something efficient and flexible.
Networks let us centralise heat production and dream big — take a bespoke innovation like Glasgow’s Queens Quay river heat pump, that just wouldn’t make sense on a per-building basis.
Networks let us flex, whether its sharing heat between buildings or switching energy sources for what makes sense at the time.
There are different network types to underpin any strategic ambition. Heat transmission spines, microgrids or ambient loops — they all have one thing in common.
Buildings stop behaving like isolated problems. They start behaving like a system. And that’s when costs drop.
PSDS has taught us more about decarbonisation in 5 years than we learned in the last 20.
More than £3Bn was spent in the last 5 years, on publicly accountable decarbonisation. Humour me and say that aloud: Three. Billion. Pounds.
Any probably every mistake you can think of has been made along the way — along with some amazing creative solutions and innovations.
People can understandably be reluctant to talk about such things. But let’s be kind to each other. Let’s acknowledge that these pathfinder projects were delivered to crazy timelines and pressure.
Let’s not sweep it under the carpet — let’s sing the praises of what worked, be open about what didn’t and give the most valuable gift we can: experience.
This is the grown-up version of decarbonisation:
- design networks that share heat, not waste it
- design strategies that create a system-level value stack, not a one-trick pony
- design estates that behave like communities, not disconnected assets
The post-grant era: designing heat that works for life
We don’t need a miracle. We just need to stop designing heat as though one is required.
That is how Britain builds a low-carbon future that survives politics, budgets, winters and whatever else reality throws at it. A future that finally treats heat not as a cost to minimise but as the essential part of life it is.