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Decarbonising Higher Education – The Investment Challenge

  • 21 June 2024
  • By Toby Horne
  • This HEPI blog was kindly authored by Toby Horne, Smart Infrastructure Financing Partner at Siemens Financial Services UK.

The carbon cost of higher education

Universities and higher education (HE) institutions have an important role to play in meeting carbon reduction targets. In 2021, over one thousand universities and HE colleges worldwide pledged to become completely carbon neutral by 2050, with some institutions aiming to decarbonise as quickly as 2030. This list includes 168 UK institutions. While this ambition is laudable, it nonetheless represents a series of logistical and financial hurdles in a sector that continues to struggle for financial solvency.

The UK government’s sustainability and climate change strategy acknowledges that school and university buildings account for 36% of total UK public sector building emissions. Data from the Higher Education Statistics Agency demonstrates that 133 UK universities accounted for 1.4 million tonnes of carbon dioxide emissions between 2021 and 2022. While two-thirds of those managed to decrease their emissions over the past year, experts warn of “patchy” progress within the HE sector that is failing to keep pace with current targets and the greater climate emergency.

Financing decarbonisation

Accounting specialist Grant Thornton calculates the cost of decarbonising the UK’s HE sector at £37.1 billion. While universities may bid for a share of a £230 million fund to facilitate low-carbon energy upgrades for public sector buildings, this still leaves a significant shortfall. At a time when almost half of all UK universities anticipate a financial deficit, it is easy to see why HE institutions may baulk at the cost of decarbonisation.

Specialist financiers are poised to bridge the gap, with financing solutions that can be tailored to the specific needs of an organisation. Buildings-efficiency-as-a-service (BEaaS), for instance, is a finance arrangement that can be leveraged either at the component or larger building level to facilitate investment in infrastructure without endangering cash flow. This arrangement aligns the cost of the technology with the expected rate of benefit.

This means that institutions will not need to make large upfront payments, instead spreading the cost of investment over a flexible period. The operational savings facilitated by this green investment can further help to offset the cost of investment, in some cases paying for zero-carbon renovations in their entirety. As well as ameliorating upfront costs, these agreements often include guarantees based on expected energy efficiency outcomes. In an era defined by inflated fuel prices, investment in green infrastructure can not only drive down carbon emissions but also drastically reduce operational spending, reducing energy use by up to 40%.

Smart building initiatives and their impact on emissions

There are already some very impressive examples of HE institutions that have embraced new technologies. The University of Birmingham partnered with Siemens in 2021 to become the first university to implement a large-scale Internet of Things (IoT) rollout, installing 23,000 IoT sensors across its Edgbaston campus. This measure will provide invaluable insights into building occupancy, so that the university can manage power and heating more effectively. This is projected to reduce emissions across all campuses by nearly 3,000 tonnes of CO2 per annum.

An opportunity to lead the way

With the right financial arrangements in place, HE institutions can afford to be much more proactive in meeting their most ambitious targets for carbon neutrality. Retrofitting university buildings into smart buildings can yield phenomenal carbon and operational cost savings, ultimately providing future generations of students and faculties with the gift of more efficient and sustainable operations.

To learn more about the topic, visit Siemens at Transform on 17th-18th July at Manchester Central. Transform 2024 is a free two-day conference and exhibition focusing on the challenges organisations are facing in the UK & Ireland and how they can accelerate digital and sustainable transformation. Find out more here:

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1 comment

  1. Karel Thomas says:

    Great to see this issue highlighted as yet another financial pressure facing universities who should be at the heart of solutions to decarbonise the world. Just to clarify though, it was Energise Ltd rather than Grant Thornton who calculated the cost of decarbonising the UK’s HE sector at £37.1 billion in a report commissioned by AUDE, BUFDG and EAUC that accompanied a calculator to help start budget and priorities in HE providers

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