What is new about Phase 3b PSDS

What is new in Phase 3b – How sector soft caps work

Sector soft caps

One significant new feature in PSDS Phase 3b is the piloting of sector soft caps to ensure the funding is allocated fairly across the public sector according to the distribution of carbon emissions across sub-sectors of the public sector. 

You can download a copy of the Phase 3b PSDS Technical Annex here. This publication describes how BEIS has estimated the sectoral emission shares of the public sector and will be an input to the decision on where to set the Public Sector Decarbonisation Scheme Phase 3b sector soft caps.

How sector soft caps work

1. Applications will be allocated on a first-come-first-served basis until a sector cap is reached.

2. 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.

3. The amount of funding available under each sector cap is determined by the estimated share of public sector direct emissions from that sector. The proposed sector caps are below:

a. Education - includes but is not limited to state primary schools, state secondary schools and universities and Local Authorities applying on behalf of schools only.

b. Health - includes but is not limited to hospitals and health centres.

c. 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.

Confirmation of the proportion of funding available per sector cap will be published when the application window opens, or earlier if possible. 

4. If insufficient good quality demand 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. 

As well as piloting sector soft caps, there are other key new elements to PSDS Phase 3b. These changes will allow more projects to deliver the installation of carbon reduction measures across two financial years – giving more flexibility to Applicants. These new elements are also designed to strengthen the scheme’s focus on decarbonisation within a ‘whole building’ approach (see Section 4.3 for more details) which will improve carbon savings both for individual projects and for the scheme as a whole, whilst still ensuring access to the scheme.