An Executive investment of £20 million in energy efficiency will help save up to £70 million over the next five years for spending on schools, health and other public services across Scotland.
Announcing the revolutionary new scheme at Morgan Academy in Dundee, Deputy First Minister Jim Wallace said:
"Hundreds of public buildings across Scotland will become more energy efficient as a result of this initiative - the first of its kind and scale in the UK.
"This is classic spend to save scenario. By spending a significant sum up front the Executive will enable the public sector to save much more and to re-invest that money in front-line services.
"It will free up tens of millions of pounds of public money that can be re-invested in schools, in hospitals and other priority areas.
"It is also an excellent way of enabling the public sector to lead by example - demonstrating to the public and businesses that energy efficiency policies are practical and deliver quick tangible benefits."
The 'revolving' fund is worth £20 million over two years and is available to all 32 local authorities, all Scottish health boards and Scottish Water from this summer onwards.
It will provide the upfront investment needed for the public sector to implement energy efficient initiatives in schools, hospitals, offices and other public buildings.
Investments in these measures can have a significant early payback and saving potential. In total, savings of up to £70 million could be generated over the next five years and £30 million a year thereafter.
Mr Wallace continued:
"The major part of the money saved will be available to be ploughed back into front line services, while some will be recycled to fund future energy efficiency projects. This fund will build on existing good practice, accelerating the pace of change. Within five years of operation, we expect these measures to save the public sector £30 million annually.
"This is a win win situation. There are real cash savings to be made, but equally important, energy efficiency is playing a major part in helping us meet our ambitious environmental targets.
"We pledged in our partnership agreement to bring forward significant measures to improve energy efficiency in the public sector - this £20 million fund is doing exactly that."
There are a wide range of simple proven cost-effective measures local authorities, health boards and Scottish Water can take to improve energy efficiency and make savings using the new fund, including:
The public sector uses five per cent of the energy in the UK. It is estimated that local authorities and Scottish Water could cut their energy consumption by 20 per cent over five years, and health boards by 15 per cent, if they implement the proposals outlined by Mr Wallace today.
Carbon emissions would also be reduced by around 100,000 tonnes per year.
Energy efficiency measures incorporated into the re-build of Morgan Academy include sun-pipe skylights which provide all the lighting for the upper corridors of the school, and heat pumps which require 25 - 50 per cent less electricity consumption than conventional installations.
£15 million of the cash will go to the 32 local authorities, with £4 million for the health boards and £1 million for Scottish Water.
The funding will be provided in 2 tranches over 2 financial years. Each body will be provided with its own local "revolving" fund for energy efficiency measures. There will no bidding process as such - but each body will have to satisfy criteria set by the Executive in order to qualify for funding (e.g. having an energy management strategy in place). Bodies will also have to provide the Executive with information to enable us to monitor the scheme's impact. Each body will take decisions at a local level about which energy efficiency projects it wishes to fund (subject to guidance supplied by the Executive).
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