Net Zero & PFI

As featured in The MJ

Seven years ago, climate change lacked the prominence it holds today. Many councils were active before 2018, but with nearly all now committed to net zero, its status has never been higher.

However, following a wave of ambitious net zero commitments, councils are now confronting the reality of their promises. Questions echo in council offices: Did we really say net zero by 2030? What does that include? How much will it cost?

Did we really say net zero by 2030? What does that include? How much will it cost?

With council budgets under pressure, funding net zero efforts has never been harder. This includes decarbonising council services – both in-house and outsourced – and investing in enabling measures like EV charging, domestic retrofit, and zero-carbon heat networks. Government grants, though welcome, are often complex and insufficient.

So, where will the investment come from, if not the public purse?

Thirty to forty years ago, the answer might have been the Private Finance Initiative (PFI), which facilitated hundreds of public sector projects. However, PFI has a mixed reputation; the Treasury Select Committee in 2011 deemed it poor value for taxpayers. PF2 aimed to improve the model, though its limited use leaves it largely untested.

Despite criticism, PFI delivered £60bn in projects, with the National Audit Office reporting 69% on time and 65% on budget – figures the public sector would welcome. So, could the private sector play a role in funding and delivering net zero projects, learning from past experiences?

There is potential, albeit with caution. A major concern is that existing PFI buildings lag in net zero efforts. While some good work is happening, many find PFI contracts restrictive, with energy upgrades like LED lighting being considered significant rather than basic improvements.

Given today’s climate priorities, it is disappointing that PFI arrangements often hinder rather than accelerate progress. Millions are spent on facilities management, yet key stakeholders – often major corporations – should be leading, not lagging.

Given today’s climate priorities, it is disappointing that PFI arrangements often hinder rather than accelerate progress.

The public sector has ambitious net zero commitments but lacks funding and capacity. Meanwhile, private finance has the capability and long-term funding but needs the right framework to drive change.

If PFIs are to contribute meaningfully to decarbonisation, there must be a step change in ambition. This cannot be about incremental improvements; it must transform the speed and scale of delivery. Without such a shift, we risk still celebrating LED upgrades in 10 years, an outcome that would mark failure. 

Without such a shift, we risk still celebrating LED upgrades in 10 years.

At Local Partnerships, we tackle the challenge of making the public and private sectors work together more effectively and advise our public sector clients on how best to engage and make the most of these opportunities.