NET ZERO

The role of private finance on the road towards net zero

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.

© Stunning Art/Shutterstock

© Stunning Art/Shutterstock

However, following a wave of 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?

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 investment come from, if not the public purse?

Thirty to 40 years ago, the answer might have been in Private Finance Initiatives (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 concern is that existing PFI buildings lag in net zero efforts. While 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 PFIs often hinder rather than accelerate progress. Millions are spent on facilities management, yet key stakeholders – often major corporations – should be leading, not lagging.

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 this, we risk still celebrating LED upgrades in 10 years, an outcome that would mark failure.

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.

 

Ed Barlow is director of Local Partnerships

NET ZERO

London remade

By Jonathan Werran | 04 July 2025

London has a golden opportunity to reset and reform the relationship between its boroughs and the mayoralty. Just how bold and radical this reform will be de...

NET ZERO

Proud to serve the sector

By Louise Gittins | 03 July 2025

Writing in LGA Conference week, newly re-elected chair Cllr Louise Gittins reflects on the Government’s key announcements and says council leaders must have ...

NET ZERO

Common sense Reform

By Paul Marinko | 03 July 2025

Reform UK is taking a measured approach to implementing change as the party takes charge of Durham Council, the authority’s new leader tells Paul Marinko.

NET ZERO

Central and local government will transform the country for the better

By Georgia Gould | 03 July 2025

Writing in the week of the LGA Conference, Jim McMahon and Georgia Gould say this government was elected to deliver a decade of national renewal, and this si...

Popular articles by Ed Barlow