Report published to unlock financing to decarbonise school estates

Working collaboratively with governments to catalyse private finance into the UK’s 32,149 schools can close the £16.3Bn investment gap.

The Green Finance Institute (GFI) in partnership with Ashden’s Let’s Go Zero campaign, the national campaign for all schools, colleges and nurseries to be zero carbon by 2030, has launched Financing Decarbonisation of Schools Report, outlining the barriers and potential solutions that could significantly reduce the £16.3Bn^[1] investment gap to decarbonise the UK’s 32,149^[2] schools.

Current government funding available to schools through grant schemes and Local Authorities is insufficient to meet the £16.3Bn investment challenge. Used more strategically, public funds could catalyse private investment. However, deploying private capital into the school estate is hindered by restrictive policies designed to prevent schools from incurring unmanageable debt.

In the report, the GFI and Ashden have co-designed new financial mechanisms to mobilise capital toward decarbonising England’s schools and reach the Department for Education’s (DfE) goal to reduce schools’ carbon emissions by 75%, by 2037^[3]. The report analyses existing solutions, potential new financing mechanisms, and provides recommendations for moving forward to support the decarbonisation of schools.

Educational buildings in the UK represent 37%^[4] of total public sector buildings emissions. The DfE estimates over £1.7 billion in energy expenditures associated with education buildings this financial year^[5]. A decarbonisation plan for education estates can reduce emissions and provide valuable learning opportunities while alleviating financial pressures and facilitating reinvestment into education.

Scaling existing solutions and exploring innovative solutions by utilising public funds strategically to catalyse private finance will help to drive school decarbonisation at-scale. Current solutions to assist with decarbonisation of schools, such as delivery via private organisations and community energy groups, could be scaled through removing barriers to accessing funding. Innovative mechanisms discussed in the report include designing a loan scheme for schools, and securitising energy savings from retrofit to raise funds from the private capital markets, amongst other innovative solutions aimed at addressing current funding barriers.

Decarbonising schools requires a range of retrofit interventions, such as installing LEDs, building management systems, solar panels, battery storage, fabric improvements and heat pumps. Schools’ underutilised roof spaces present an opportunity to increase energy security for local communities, in line with the Local Power Plan and the Government’s 2030 clean power commitment targeting to increase solar capacity from 15GW up to 47MW by 2030^[6]. A review of existing public funds, along with an assessment of National Wealth Fund (NWF) potential, reveals opportunities to attract private capital to support the necessary scale of investment.

The report also identified several barriers to decarbonisation for schools, including high upfront capital costs, limited public budgets and varying payback periods. It outlines that a refreshed government strategy on school decarbonisation will provide financial institutions and the private sector with the certainty required for widespread decarbonisation measures.

Kitty Byrne, Senior Associate at the Green Finance Institute, said: “By unlocking investment into the energy efficiency of our school estates across the country, we can make significant strides toward achieving our net-zero targets, cut energy costs for the public sector, and provide a greenprint for wider public sector decarbonisation. Unlocking private investment, which hinges on the right enabling policies to scale billions of pounds, not only offers a chance to create a more sustainable future but also to improve the learning environment for generations to come.

For schools, reducing energy bills eases financial strain and opens the door to a healthier learning environment. Retrofitting our buildings is not just about energy savings; it’s an opportunity to integrate with broader condition improvement efforts, amplifying the positive impact and creating more inspiring spaces for learning. This is an investment in our children’s future—one that will create a lasting legacy for their environment and education.”

Alex Green, Head of Let’s Go Zero at Ashden, said: “Long term investment in decarbonising the school estate presents an opportunity to lead public sector decarbonisation by example and free up funds for reinvestment. A coordinated approach could mobilise the finance industry and supply chain, while delivering resilient schools for our children and contributing to the Government’s targets to reduce emissions and generate clean power.”

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