Funding gaps threaten local authorities' net-zero ambitions despite rapid energy upgrades

Research by Schneider Electric indicates that while English local authorities have accelerated measures such as building retrofits, renewable installations and the electrification of infrastructure, a lack of sustained funding threatens their ability to reach net-zero by 2050. The company’s Freedom of Information analysis of 199 councils found two-thirds are uncertain they will meet the statutory target, with 79% citing budget constraints as a major impediment.

The FOI returns show wide adoption of energy measures: almost all authorities surveyed have upgraded existing buildings to cut energy use, more than four in five have deployed renewables and electrified assets such as EV chargers and heating systems, and around three in five now monitor energy use in real time to drive efficiencies. Yet financing, skills and technology gaps persist, with 37% flagging technological barriers and 33% naming shortages of expertise or knowledge.

Alice Williams, Schneider Electric’s VP Digital Energy, UK&I, told FM Magazine: “Local authorities have a vital part to play in meeting our national net-zero targets and our research shows they are making significant progress. But they cannot do it alone – There is an urgent need for continued investment and support to ensure they can hit their targets, delivering a sustainable future for their communities whilst at the same time reaping the financial rewards that energy efficiency brings at a time when budgets are tight.”

Independent surveys and public-sector analyses amplify the picture of systemic constraint. According to a Local Government Association study reported by UK100, roughly two-thirds of councils lack confidence in meeting net-zero deadlines and 90% judge existing national funding schemes insufficient to underpin local strategies. The LGA has also warned that burdensome bidding processes deter many councils from pursuing available grants, with some estimates suggesting 60% have been put off applying because of the time and resources required.

Government oversight bodies have reached similar conclusions. The National Audit Office found that central government has offered limited clarity on local roles for net-zero delivery and characterised its funding approach as fragmented. The NAO urged a comprehensive assessment of the funding available to councils to inform future spending reviews, noting widespread local commitments to decarbonisation but uneven capacity to deliver.

Academic and professional institutions have recommended structural reforms. The Institution of Civil Engineers has argued that local authorities lack defined powers and consistent long-term funding, and has proposed a Net Zero Local Powers Bill together with a co-designed delivery framework to resolve overlap and policy gaps. London Councils, working with economists from Hertfordshire Business School, set out a policy paper on financing local net zero which highlighted long-term austerity, unclear responsibilities and supply chain bottlenecks, including shortages of skilled trades needed to scale retrofit and infrastructure programmes.

For facility managers and corporate real estate professionals advising or partnering with local government, the implications are twofold. First, demand signals for retrofit, grid-connected renewables and smart energy systems are real and growing, creating commercial opportunities across design, installation and ongoing energy services. Second, procurement strategies and partnership models must account for constrained public budgets and the administrative complexity of accessing short-term competitive grants.

Commercial responses that can help bridge the gap include bundled financing and performance-based contracting, which convert capital expenditure into predictable operational costs and align incentives for long-term energy savings. Industry data and recent policy papers point to the importance of multi-year funding certainty and simplified application processes to unlock larger-scale projects and build workforce capacity.

Central and local government engagement will remain decisive. While councils have demonstrated substantial progress on practical measures, the consensus across government reviews, sector surveys and industry research is that without clearer roles, streamlined fund administration and reliable financing mechanisms, many local net-zero commitments risk remaining aspirational rather than deliverable.

Ultimately, the transition at local level will depend on aligning technical capability, sustained capital and simplified governance. For companies operating in the decarbonisation value chain, the near-term priority is to shape repeatable, financeable project models that reduce the administrative burden on authorities while delivering measurable energy and carbon outcomes.