Phase 3b Public Sector Decarbonisation Scheme

Sector soft caps

One significant new feature in the Phase 3b Public Sector Decarbonisation Scheme is the piloting of sector soft caps to support the fair allocation of funding across the public sector according to the distribution of carbon emissions across sub-sectors of the public sector.

Organisations have been grouped into three sectors: health, education, and other. These are defined further below.

Following stakeholder engagement and detailed data analysis, an upper limit to all sector caps has been set at 35% of total scheme funding. Under this approach, and in line with the scheme’s first come first served principle, the maximum funding a sector can be allocated could be as high as 35% and no sector’s allocated funding should be lower than 30% of total Phase 3b Public Sector Decarbonisation Scheme funding.

These sector caps are ‘soft’, meaning that if insufficient eligible and complete applications within a particular sector result in that sector cap not being filled, any unallocated funding from within that sector cap will be allocated to other sectors – even if by doing so those other sectors exceed their sector caps.

This publication below describes how The Department for Energy Security and Net Zero (formerly the Department for Business, Energy and Industrial Strategy) has estimated the sector emission shares of the public sector and will be an input to the decision on where to set the Phase 3b Public Sector Decarbonisation Scheme sector soft caps. 

Applications were assigned to one of the three sector categories:

• Education - includes but is not limited to state primary schools, state secondary schools and universities and local authorities applying on behalf of schools only.  
• Health - includes but is not limited to hospitals and health centres.  
• Other - includes but is not limited to emergency services, clubs and community centres, law courts and prisons, Ministry of Defence buildings, museums and theatres. Applications which are mixed (e.g. a local authority application which covers a school and a leisure centre) will fall under the ‘other’ sector cap.  

Applications were allocated on a first-come-first-served basis to the appropriate sector pot until a sector cap is reached.  

Upon the point a sector cap is reached, funding allocation for that sector will be paused until all applications for other sectors have been allocated up to their own sector cap.  

If insufficient eligible and complete applications for any sector cap means that some funding remains unallocated, applications which were initially paused will then be revisited to allocate the remaining funding on a first-come-first-serve basis to these projects, irrespective of their sector. 

The Phase 3b Public Sector Decarbonisation Scheme Technical Annex publication describes how The Department for Energy Security and Net Zero (formerly the Department for Business, Energy and Industrial Strategy) estimated the sector emission shares of the public sector, and how decisions are made on where to set the Phase 3b Public Sector Decarbonisation Scheme sector soft caps.