Carbon Trust and Energy Saving Trust will have to take part in competitive tenders for government projects from next year

The Department of Energy and Climate Change (DECC) has today quietly announced that the Carbon Trust and the Energy Saving Trust will no longer receive core grant funding from next April.

The two flagship government-backed green bodies will instead be required to bid for government funding through competitive tendering processes, as part of efforts to deliver better value for money and help tackle the deficit.

The announcement came as DECC published the results of its Delivery Review, which provides a series of recommendations on how to streamline the operations of the department.

The central recommendation states that “unless there is a clear case for placing delivery with a third party, delivery will be led by DECC to ensure accountability to ministers”.

Programmes and projects will then be contracted out to organisations such as the Carbon Trust and Energy Savings Trust only when it is “possible and appropriate” and maximum value for money can be assured.

The review cites the example of the government’s upcoming Green Deal energy efficiency programme, confirming that the services underpinning the green loan scheme will be contracted out through a competitive tendering process.

“Following the end of core grant funding for the Energy Saving Trust and Carbon Trust from 2012/13, DECC expects both organisations to compete for those services we put out to tender, and to continue to develop other commercial opportunities,” the department said in a statement.

The move marks the end to guaranteed funding for the two government-backed organisations, effectively completing their transition towards becoming standalone green consultancies.

Both agencies have been focused on developing alternative commercial revenue streams in recent years, particularly after being hit by budget cuts this year of around 40 per cent as a result of the government’s Comprehensive Spending Review.

Only this week the Carbon Trust issued a call for commercial partners to join the company in developing new energy efficiency services.

However, the end to core grant funding will again raise questions among green businesses and NGOs about the extent of the government’s commitment to communicating and promoting environmental and energy-saving best practices.

Energy and Climate Change Secretary Chris Huhne expressed confidence that both organisations will prosper without core government funding.

“We very much value the work done by the Carbon Trust and Energy Saving Trust in helping to deliver substantial carbon savings,” he said in a statement.

“They have both contributed to the government’s objectives and we expect them to develop their non-government funded activities still further, and in future compete to provide those new services the government puts out to tender.”

Tom Delay, chief executive at the Carbon Trust, said the company was well positioned to continue to work with DECC and the private sector.

“As the UK’s independent authority on carbon reduction we look forward to continuing to work with DECC given our expertise in low carbon innovation and our strong track record in helping business to reduce carbon emissions,” he said in a statement.

The DECC review also revealed plans for the government to set up a new Office of National Energy Efficiency within DECC that will develop a wider energy efficiency strategy and ensure that energy saving initiatives are being run effectively.