The decarbonisation dilemma: navigating the energy crisis

This piece was originally published in Energy Manager Magazine, March 2025

Author: Matthew Everett, Energy and Carbon Analyst, Salix

In an increasingly volatile world, energy markets are facing relentless pressure. Geopolitical tensions, economic uncertainty, and shifting regulatory landscapes are driving price fluctuations and supply chain disruptions. The ongoing war in Ukraine continues to impact global gas markets, while conflicts in the Middle East threaten oil and liquefied natural gas supply chains, particularly through key maritime routes. Meanwhile, political shifts in major economies, including the US and EU, are reshaping energy policies.

For organisations across all sectors, these challenges translate into rising operational costs and increased exposure to energy market volatility. 

Among those most affected by the many external factors, are public sector bodies which must not only absorb rising energy costs but also work towards ambitious decarbonisation targets. In the UK, we have a legally binding target to achieve net-zero greenhouse gas emissions by 2050. The clock is ticking.

The UK public sector manages the largest property portfolio in the country with more than 300,000 individual properties. However, most public sector buildings still rely on burning fossil fuels for heating, contributing to approximately 2% of the UK’s total greenhouse gas emissions. Meeting these targets is no small task, but dedicated funding mechanisms exist to support the transition. 

We support the public sector in securing government funding to deliver ambitious decarbonisation projects, ensuring that financial barriers do not stand in the way of meaningful progress. We’re proud of the strides we’ve made in our mission to help save the planet, working across the public sector and housing. Yet, the scale of the challenge remains vast, and the need for coordinated action is greater than ever.

The government aims to cut greenhouse gas emissions from public sector buildings by 75% by 2037 compared to 2017 levels. Achieving this requires significant investment in energy efficiency upgrades, low-carbon heating, and renewable technologies – all while operating within severe financial constraints. 

Inflation has exacerbated these demands, with 76% of councils expressing concern over the impact of rising costs on project deliverability within the restrictions of national schemes, according to a 2024 report by the Local Government Association. 

With the energy market prone to uncertainty, it is critical for public sector bodies to have effective procurement strategies to achieve their decarbonisation goals. Well-structured procurement approaches may ensure energy is secured at favourable rates while also facilitating the adoption of low-carbon technologies, energy efficiency and fabric improvements, consultant support services and contractor implementation.

However, procurement may be another hurdle that the public sector must face. Unlike private businesses, and with good reason, public sector organisations operate within rigid procurement frameworks. While these frameworks promote transparency, fairness, and accountability, there can also be challenges such as complex compliance requirements, lengthy approval processes and restricted supplier options. Procurement policy is often price-driven; for instance, public sector procurement requires a value-for-money approach, which could, some argue, compromise on quality. 

Decarbonisation adds further complexity due to the evolving technology landscape, market uncertainties, limited expertise within procurement teams, and the need for integrated solutions that take a whole building approach. Sustainability teams, where they exist, at times may be under-resourced and lack the expertise to navigate complex decarbonisation projects.

This challenge is reflected in a 2024 Local Government Association survey, which found that 60% of councils have been deterred from applying for government grants due to the substantial time and resources required for applications. Decarbonisation efforts remain fragmented, with nine in ten councils stating they lack a sufficient financing plan to reach net zero by 2050. The longer these projects are delayed, the more emissions continue to accumulate rather than decline.

We believe that targeted funding mechanisms like the Public Sector Decarbonisation Scheme play a crucial role in supporting the public sector, ensuring they have the financial resources required to deliver their decarbonisation projects. The scheme provides grant funding for heat decarbonisation and energy efficiency measures for public sector buildings and has already allocated £2.5 billion in grant funding, excluding the current Phase 4 of the scheme.

The ongoing energy crisis, combined with a lack of expertise, limited resources, rigid procurement frameworks, and unpredictable funding, makes decarbonisation an even greater challenge for the public sector. 

Initiatives like the Public Sector Decarbonisation Scheme provide crucial financial support in meeting the net zero targets. The high demand for Public Sector Decarbonisation Scheme funding highlights its necessity, with applications often exceeding available resources. 

Beyond enabling immediate carbon reductions, the Public Sector Decarbonisation Scheme funding drives long-term impact – stimulating demand for contractors, consultants, and technical expertise while strengthening the low-carbon economy. By investing in decarbonisation today, the public sector can drive immediate carbon reductions while building the skills and supply chains essential for a more resilient energy future – leading by example in the transition to net zero.