UK Decarbonisation Funding

There is more public money available for business decarbonisation than most UK companies realise, but the landscape is fragmented, it changed sharply in 2025–26, and much of what aggregator sites still list as “open” has closed. This guide maps the full picture in June 2026: grants, loans, tax and levy reliefs, revenue-support mechanisms and large-scale finance, who qualifies, what each is worth, and where the deadlines fall.

Key findings

• The funding climate tightened in 2025–26: the IETF will not be extended (“no successor fund is planned”, per GOV.UK), the PSDS has no investment beyond current awards, UKSPF grants wind down by autumn 2026 and the Farming Equipment and Technology Fund has run its final round in its current form.
• Tax reliefs and levy discounts are the most universal layer: full expensing is permanent, a new 40% first-year allowance arrived in January 2026, and Climate Change Agreements cut the Climate Change Levy by up to 92%, with a new six-year scheme live and a new-entrant window open to 31 August 2026.
• Revenue support is the dominant model for energy projects: Contracts for Difference (Allocation Round 8 applications 20 July – 7 August 2026), the Smart Export Guarantee, green gas tariffs to 2028, and the new cap-and-floor regime for long-duration storage.
• The biggest open capital pots are activity-specific: the £170m Depot Charging Scheme for fleets, the £1bn Great British Energy Local Power Plan, the Boiler Upgrade Scheme and heat-network funds, a £225m Defra Capital Grants round (July 2026), and the multi-billion CCUS/hydrogen cluster programmes, with the £27.8bn National Wealth Fund for projects too large for grants.
• Devolved nations offer the most accessible direct capital for SMEs: Scotland's interest-free SME Loan with up to £30,000 cashback, Wales's Green Business Loan Scheme (funded to 2028), and Northern Ireland's Energy Efficiency Capital Grant of up to £150,000.
• Innovation funding remains active through Innovate UK, Horizon Europe association and Knowledge Transfer Partnerships, plus Innovation Loans of £100,000–£5m for late-stage green R&D by SMEs.

1. Key deadlines at a glance

Budgets exhaust and windows close with little notice. These are the dates that should drive your sequencing from June 2026:

2. The 2026 funding landscape

A large but fragmented system of support exists, and it has narrowed. Knowing what closed matters as much as knowing what's open.

Following the June 2025 Spending Review, the two flagship capital grant schemes closed to new applicants. For the Industrial Energy Transformation Fund (IETF), GOV.UK states that the fund “will not be further extended and the planned second competition window of IETF phase 3 will not take place… No successor fund is planned.” The Public Sector Decarbonisation Scheme (PSDS) similarly has no further investment beyond currently awarded projects. The UK Shared Prosperity Fund (UKSPF), which financed most local-authority business decarbonisation grants, ran a final 2025–26 transition year (£902m UK-wide); local delivery must finish by 30 September 2026, and from April 2026 it is succeeded by the Local Growth Fund and Pride in Place programme, so the money continues under new names even as many council grant pots close.

What remains breaks into seven practical channels:

• Tax reliefs and levy discounts: permanent, UK-wide, claimed through tax and levy administration (section 4);
• Activity-specific grants: EVs and charging, heat pumps and heat networks, farming capital works (sections 5, 7 and 10);
• Revenue-support mechanisms: CfDs, export payments and green gas tariffs that pay per unit rather than upfront (section 6);
• Cluster, business-model and large-scale finance for heavy industry: CCUS, hydrogen, the National Wealth Fund (section 8);
• Innovation competitions: for genuinely novel technology (section 9);
• Devolved-nation, regional and local schemes: the most generous SME routes (section 11);
• Guaranteed and commercial finance: for everything the grants don't cover (section 12).

3. Every scheme at a glance

4. Tax reliefs & levy discounts: the universal layer (UK-wide)

No competition, no application window, no assessor: these apply automatically or via tax and levy administration. For most businesses they should be the first line of any decarbonisation capital plan, and for energy-intensive sectors, the levy discounts alone can be worth more than any grant on this page.

Capital allowances and R&D relief

The smaller reliefs that get missed

• Business rates: in England, eligible plant and machinery used in onsite renewable generation and storage (solar panels, batteries) is exempt from business rates until 2035, and low-carbon heat networks get 100% relief, frequently overlooked in solar payback calculations.
• VAT zero-rating on energy-saving materials (insulation, solar, heat pumps) runs to 31 March 2027, but only for residential accommodation and buildings used for relevant charitable purposes, so it mainly helps property businesses with housing stock and charities.
• Company-car Benefit-in-Kind on pure EVs is 4% for 2026/27, rising one point a year to 9% by 2029/30, the maths that underpins salary-sacrifice EV schemes, a low-cost lever for employers of any size.
• Freeports and Investment Zones offer 100% enhanced capital allowances plus SDLT and NICs reliefs within designated special tax sites.

Climate Change Levy & Climate Change Agreements

The Climate Change Levy (CCL) is an environmental tax on energy supplied to non-domestic users, charged automatically as a line on the bill. From 1 April 2026 the main rate on both electricity and gas rose 3.4% to 0.801p/kWh (from 0.775p), with a further confirmed rise to 0.827p/kWh from April 2027; LPG remains frozen at 2.175p/kg. Businesses using under 33 kWh of electricity or 145 kWh of gas per day are exempt (de minimis), as is non-business charitable use and certain mineralogical and metallurgical processes.

Holding a Climate Change Agreement (CCA), a voluntary agreement with the Environment Agency to meet energy-efficiency or carbon targets, entitles a facility to large CCL reductions:

Illustration: a business using 200,000 kWh of electricity a year pays roughly £1,600 in CCL at the full rate, but about £128 with a CCA. For genuinely energy-intensive sites, annual savings commonly run to tens or hundreds of thousands of pounds.

A new six-year CCA scheme (2026–2030) is now live, with reduced rates certifiable through to 31 March 2033. The key features:

• New entrants can apply between 1 January and 31 August every year from 2026 to 2029 via their sector association, and the current window closes 31 August 2026. Around 53 energy-intensive sectors are eligible (chemicals, food and drink, paper, ceramics, glass, plastics, metals and more).
• Targets are now set per facility (not per operator group), the performance baseline moved from 2018 to 2022, and light-touch annual reporting applies at the end of year one of each two-year target period.
• Existing participants were not automatically migrated. Each facility had to reconfirm eligibility, and a proportion will be audited.
• The buy-out fee for missing targets rises from about £25/tCO₂ to £36–37/tCO₂. Underperformance now costs real money.

British Industry Supercharger (energy-intensive industries)

A package for eligible EIIs (steel, chemicals, paper, cement, glass and similar): exemption from the costs of certain renewable-energy levies (CfD, Renewables Obligation and small-scale FiT, increased to 100% from April 2024) plus a Network Charging Compensation scheme paying back 90% of eligible network charges for claims from 1 April 2026 (up from 60%, which applied from April 2025). Eligibility runs through DESNZ EII certificates. For qualifying heavy energy users this is worth a substantial slice of the electricity bill and materially improves electrification business cases.

5. Electric vehicles, fleets & charging (OZEV, UK-wide)

Workplace Charging Scheme (WCS): final year

The WCS has been extended for a final year, to 31 March 2027. From 1 April 2026 the voucher is worth up to £500 per socket (up from £350), covering up to 75% of purchase and installation costs, for up to 40 sockets across all your sites. It is open to businesses, charities and public authorities UK-wide. Vouchers are valid for 180 days and the work must be done by an OZEV-authorised installer. A separate strand for state-funded education institutions pays up to £2,000 per socket.

Depot Charging Scheme (DCS): the big new fleet pot

New for 2026, the DCS is a £170m multi-year programme (April 2026 to 2030) administered by DfT/OZEV, with £66m available across two application windows this year: £28m in Window 1 and £38m in Window 2. It funds 70% of chargepoint and civil engineering costs, up to £1m per organisation.

• Window 1: 25 March – 30 June 2026, with works complete by 31 March 2027. First-come, first-served.
• Window 2: opens 28 October 2026.
• Eligibility: UK fleet operators (logistics firms, coach operators, the NHS, councils and similar) trading for 12+ months, owning or leasing UK depots, with at least one battery-electric van, HGV or coach in the fleet or on order.
• Not covered: the grid connection itself, or the vehicles. Applications go through GOV.UK's Find a Grant service.

Zero-emission van & truck grant: automatic at purchase

A point-of-sale discount: the dealer includes it in the price, with no customer application. Funding is committed until at least 2027. Vehicles must emit 0g CO₂/km at the tailpipe and travel at least 96km (60 miles) emission-free.

Electric Car Grant (ECG)

Launched 16 July 2025, and topped up with £1.3bn at Autumn Budget 2025 to run to 31 March 2030 (though it may close earlier without notice if the funding is exhausted). It is an automatic point-of-sale discount on new EVs priced under £37,000: £3,750 (Band 1) or £1,500 (Band 2), available to businesses and consumers alike. By January 2026 over 50,000 drivers had used it, across 40-plus eligible models (the list changes regularly; check GOV.UK). Manufacturers must hold verified Science Based Targets to qualify, which is why some brands are absent from the eligible list.

6. Renewable generation & energy revenue support

These mechanisms pay revenue rather than capital grants, the dominant model for funding energy projects in the UK. If you are building generation, storage or green gas, this is your section.

Contracts for Difference (CfD): AR8 window in July

The UK's principal mechanism for renewable generation: a government-backed contract guaranteeing a fixed strike price per MWh, now typically 20 years for offshore and onshore wind and solar (15 years for some other technologies), removing wholesale price risk. Allocation Round 7 concluded with results on 14 January 2026, a record auction awarding 8.4GW of offshore wind, followed by AR7a results (onshore wind and solar pots) on 10 February 2026.

A reformed Clean Industry Bonus runs alongside AR8: supplementary payments for offshore wind developers investing in UK supply chains and cleaner manufacturing.

Smart Export Guarantee (SEG)

Licensed suppliers must pay businesses and households for renewable electricity exported to the grid (installations up to 5MW). Rates are supplier-set and vary widely, so shop around. The SEG pairs with the solar capital allowances and the business-rates exemption (section 4) to strengthen rooftop-solar paybacks.

Green Gas Support Scheme (GGSS)

Tariff payments for biomethane injected into the gas grid via anaerobic digestion, funded by the Green Gas Levy. Open to new registrations until 31 March 2028, relevant to agri-food, waste and energy businesses with feedstock.

Long Duration Energy Storage (LDES) cap-and-floor

An Ofgem-administered regime giving storage projects (pumped hydro, liquid air, flow batteries and similar, 8-hour-plus duration) a guaranteed minimum revenue floor with a consumer-protecting cap. Window 1 projects (April–June 2025) are due first approvals around Q2 2026, and Ofgem signalled Window 2 timing decisions from Q1 2026. Developers should watch for the second window.

Sustainable aviation fuel & renewable fuels

The SAF Mandate (from January 2025) creates tradeable certificate revenue for SAF producers; a revenue certainty mechanism is being stood up; and the Advanced Fuels Fund has provided plant development grants (check current round status). The Renewable Transport Fuel Obligation similarly rewards renewable fuel producers via certificates.

Great British Energy: Local Power Plan

Up to £1bn (announced February 2026) for locally owned clean energy (solar on community buildings, onshore wind, hydro and battery storage) delivered through grants for local authorities and community groups plus loans, project finance and a new Local Investment Fund, targeting 1,000 projects by 2030. The full product portfolio is expected autumn 2026; an important route for community-energy partnerships and local developers.

7. Low-carbon heat, buildings & energy efficiency

Boiler Upgrade Scheme (BUS): England & Wales

Administered by Ofgem, the BUS is open to small non-domestic properties as well as homes (Scotland and NI run separate schemes). It is installer-led: you apply through an MCS-certified installer, who claims on your behalf. Grants are:

• £7,500 towards an air-source or ground-source heat pump;
• £5,000 for biomass boilers (rural, off-gas-grid properties);
• £2,500 for air-to-air heat pumps, newly eligible, but for residential properties only (non-domestic buildings can claim air- or ground-source or biomass, not air-to-air).

A major overhaul took effect on 28 April 2026 (SI 2026/390): the EPC requirement was removed, the grant is now deducted upfront from the installer's invoice, and the scheme was extended to 2030. From 21 July 2026 the grant rises to£9,000 for off-gas-grid oil and LPG homes replacing with an air- or ground-source heat pump (no published end date; it does not apply to air-to-air, biomass, or businesses on mains gas).

Green Heat Network Fund (GHNF): new networks

Capital grants for the commercialisation and construction of new low- and zero-carbon heat (and cooling) networks, open to public, private and third-sector organisations, running across 2022/23–2029/30 and delivered by Triple Point for DESNZ. Round 11 closed 1 May 2026 and Round 12 is now open (closing 25 September 2026), and the fund extends to Welsh projects from Round 12 (previously England-only). Apply via the GHNF portal during live rounds.

Heat Network Efficiency Scheme (HNES): existing networks

Grant funding for existing district heating and communal systems: revenue grants for optimisation studies and capital part-funding for performance-improvement measures (it cannot fund replacing the main heat source: that's GHNF territory). Runs in regular rounds (Round 12 closed 22 May 2026; check the current round status), and is open to private and public operators, including housing providers.

Public Sector Decarbonisation Scheme: closed to new applicants

PSDS Phase 4 (delivered by Salix for DESNZ) continues to fund existing awards to 31 March 2028, but no new funding was committed after the 2025 Spending Review. Scotland runs its own Public Sector Heat Decarbonisation Fund, also via Salix.

Local authority & UKSPF grants: closing fast

Many councils ran SME energy-efficiency grants of £1,000–£25,000 covering 50–80% of costs, for example Nottingham City Council's Business Decarbonisation Grant (up to £10,000 at 50%), Bolsover's Net Zero Growth Grant (up to £25,000) and Bassetlaw's scheme (up to £7,500). These are UKSPF-funded and winding down, with most required to complete by autumn 2026. Check your local growth hub or combined authority for residual rounds now (see section 11).

8. Heavy industry, CCUS, hydrogen & large-scale finance

For energy-intensive industry, the grant era has shifted to cluster and business-model support, and for projects too large for any grant scheme, public finance has scaled up.

IETF: closed

Phases 1–3 supported energy-intensive industry in England, Wales and NI. Following the Spending Review, the planned second window of Phase 3 was cancelled and no successor is planned; £163m (committed at Autumn Budget 2024) completes current projects through to early 2028. Scotland's separate SIETF closed its final call in March 2025.

CCUS cluster programme

The government confirmed £21.7bn over 25 years in October 2024 for the East Coast Cluster (Teesside/Humber) and HyNet (Merseyside/North Wales), expected to capture around 8.5Mt CO₂ a year and attract roughly £8bn of private investment. The June 2025 Spending Review added further capital plus development funding for the Track-2 Acorn (Scotland) and Viking clusters. Heavy industry within the clusters (cement, chemicals, energy-from-waste, power) is supported via business models such as Industrial Carbon Capture and the transport-and-storage regulated-asset-base model. Engage with your cluster body and DESNZ early.

Hydrogen & clean supply chains

The Net Zero Hydrogen Fund provides CAPEX/DEVEX support and the Hydrogen Allocation Rounds provide revenue support for low-carbon hydrogen production: HAR1 contracts were awarded in December 2023, HAR2 is targeting up to 875MW, and HARs 3 and 4 follow through 2025/2026. The Green Industries Growth Accelerator (GIGA, £960m) supports clean-energy manufacturing supply chains across hydrogen, CCUS, electricity networks, nuclear and offshore wind.

Large-scale public finance

• National Wealth Fund: the rebranded UK Infrastructure Bank, with £27.8bn capacity providing debt, equity and guarantees for clean energy infrastructure, gigafactories, green steel, CCS, hydrogen and ports. For projects too large for grant schemes this is the principal public-finance route. It works alongside private lenders and can crowd them in.
• Scottish National Investment Bank: mission-led debt and equity for Scottish businesses and projects, with net zero a core mission.
• UK Export Finance: green guarantees, export development loans and favourable cover for companies in clean-tech supply chains selling overseas.

9. Innovation & R&D funding

If you are developing genuinely new technology, rather than installing proven kit, innovation funding is one of the most active parts of the landscape. Multiple net-zero-relevant competitions run concurrently:

• Clean Maritime Demonstration Competition 7: up to £121m, closes 15 July 2026;
• Zero Emission Vessels & Infrastructure 2: £150m across strands;
• DRIVE35 (automotive electrification): up to £2.5bn over a decade; the Demonstrate competition alone is £33m;
• Ofgem Strategic Innovation Fund Round 5: £30m Discovery phase, collaborative and network-led;
• Net Zero Living and other themed programmes.

Grants run from roughly £25,000 for feasibility studies to £2m+ for collaborative R&D. Four standing routes are worth bookmarking:

• Smart Grants, Innovate UK's flagship open competition, has been paused since January 2025 while Innovate UK builds replacement support. Check Innovate UK's live competitions for the open calls.
• Innovation Loans: £100,000–£5m of patient capital for late-stage green R&D by SMEs. Interest accrues from the project start (a low rate payable during the project plus a deferred portion, with the full rate on the outstanding balance in repayment); exact terms are set per competition.
• Horizon Europe: the UK is associated, so UK companies can win EU climate and clean-tech R&D funding, including the EIC Accelerator's grant component for deep-tech SMEs.
• Knowledge Transfer Partnerships: part-funded collaborations embedding a graduate or researcher in your business with university backing; SMEs typically contribute around a third of project costs. A practical route for process-decarbonisation innovation.

10. Agriculture & land

Capital Grants (England): reopening July 2026

Defra's Capital Grants reopen in July 2026 with the budget increased from £150m to £225m, covering one-off works from hedgerow and tree planting through to air- and water-quality measures. Defra expects demand to exceed funding and will publish updates as 25/50/75% of the pot is committed. Prepare mapping and Catchment Sensitive Farming approvals in advance.

Sustainable Farming Incentive (SFI 26)

Relaunched in streamlined form with a £100,000 annual agreement cap and a 3-hectare minimum, paying for environmental land-management actions, many with carbon benefits. Application windows are staged, so check the Rural Payments service.

Farming Equipment and Technology Fund: closed for 2026

The 2026 round (17 March – 12 May 2026, after extension) offered £1,000–£25,000 per theme across productivity, slurry management and animal health (maximum £75,000 across all three), with a £50m budget. Defra has confirmed this was the final round in its current form, with a revamped grants offer coming for 2027. Watch for the new structure.

Other routes

• Farming Innovation Programme: Defra/Innovate UK R&D grants for agri-tech, including emissions-reduction projects.
• Carbon codes: the Woodland Carbon Code (with the Woodland Carbon Guarantee auction) and the Peatland Code let landowners generate verified carbon units for sale, a revenue stream rather than a grant.
• Green Gas Support Scheme (section 6): for anaerobic-digestion projects with farm feedstock, open to March 2028.
• Devolved: Wales's Sustainable Farming Scheme begins in 2026; Scotland's support is transitioning under its Agricultural Reform Programme (Preparing for Sustainable Farming payments, AECS). Check Rural Payments Wales / Scottish Government rural payments for current windows.

11. Nations, regions & local support

The devolved nations currently offer the most accessible direct capital support for SMEs anywhere in the UK. If you are based there, start here.

Scotland: SME Loan & Cashback

Funded by the Scottish Government and administered by Business Energy Scotland, the package combines an interest-free unsecured loan of up to £100,000 with a cashback grant of up to £30,000: 75% up to £20,000 for energy-efficiency measures and 75% up to £10,000 for renewable heat. Applications are rolling, with free advice and on-site energy assessments included. The scheme has lent over £55m across 1,500+ projects. (Older sources still quote a £20,000 cashback cap, but it has since been uplifted to £30,000.) Larger Scottish projects can also approach the Scottish National Investment Bank (section 8).

Wales: Green Business Loan Scheme

Run by the Development Bank of Wales for the Welsh Government: a £20m scheme funded to 2028, lending £1,000 to £1.5m at discounted fixed rates, structured as patient capital with upfront repayment holidays, plus fully or part-funded energy consultancy. Business Wales adds free resource-efficiency advice and grants covering up to 50% of energy audit costs (max £10,000), and Welsh heat-network projects join the GHNF from Round 12.

Northern Ireland: Invest NI

The Energy Efficiency Capital Grant is a £20m five-year programme: capital grants up to £150,000 for lighting, heating and cooling, motors and drives, compressed air and on-site renewables such as solar PV, paid as a reimbursement. Invest NI clients can also access the Resource Efficiency Capital Grant (up to £50,000), and NISEP supports some business energy measures. The Energy Efficiency Capital Grant is currently paused to new applications (paused after its first year for a performance review). Check Invest NI's live page before planning a project around one.

London: climate finance at scale

The London Climate Finance Facility's active funds are the Green Finance Fund (flexible low-rate debt of £1m–£75m, but limited to GLA bodies, boroughs, social housing providers, the NHS, universities and colleges) and the London EDGE Fund (bespoke public-private equity finance for large decarbonisation infrastructure, deploying capital in 2026 and open to private projects), with the Zero Carbon Accelerator providing development support for projects not yet finance-ready. Note that the Mayor of London's Energy Efficiency Fund's investment period ended in May 2025, and the Business Climate Challenge (free energy audits) has concluded its main programme.

Combined authorities & growth hubs (England)

Regional programmes persist in various forms (Liverpool City Region's Low Carbon Eco Innovatory, the West of England's Low Carbon Business Support, and the West Midlands and North East decarbonisation funds), but most UKSPF-funded grant pots close by autumn 2026. Contact your growth hub now if a capital grant would help.

12. Loans & green finance

British Business Bank: Growth Guarantee Scheme (GGS)

The GGS gives lenders a 70% government guarantee on facilities up to £2m (£1m for Northern Ireland Protocol borrowers), making lenders more willing to back investment they would otherwise decline. It covers term loans, asset finance, overdrafts and invoice finance, through more than 70 accredited lenders, for SMEs with turnover up to £45m, and has been extended to 31 March 2030. The borrower remains 100% liable for the debt. A “Green GGS” pilot supports investment in sustainable assets, for example Novuna's green asset-finance variant for green assets above £30,000. Facilities can be used for any legitimate purpose, including decarbonisation investment.

Commercial green finance

High-street and challenger banks offer green loans, green asset finance and sustainability-linked loans (where the rate flexes with ESG performance), and energy suppliers such as Drax and EDF run partnerships and discounts for low-carbon projects. Terms are commercial and vary. Compare against the guaranteed and devolved routes above before borrowing, and expect every lender to ask for credible energy and emissions data before pricing the deal.

13. Carbon costs: UK ETS & CBAM, the other side of the ledger

Two developments aren't funding, but they change the investment maths in decarbonisation's favour:

• UK ETS free-allocation reform: free allocations for industry are being reformed. Energy-intensive participants should model reduced free allocation into abatement appraisals. (Carbon Price Support, relevant to on-site generation business cases, stays at the equivalent of £18/tCO₂ for 2026-27 in Great Britain.)
• UK CBAM from 1 January 2027: a carbon levy on the embodied emissions of imported iron and steel, cement, fertiliser, aluminium and hydrogen. For UK producers in these sectors it levels the field against high-carbon imports; for importers it adds cost. Either way it strengthens the business case for decarbonising now.

14. Priority actions by business type

Most businesses don't need the whole map. They need the right two or three routes. Find yourself below: