The UK’s 2025 Spending Review marks a pivotal moment in the country’s progress towards net zero. At a time of rising global temperatures and increasing pressure to reduce emissions, the government’s investment decisions carry strategic opportunities and challenges for the construction and building services sectors.
With more than £80bn earmarked for climate-related investment across energy, housing and transport, the Spending Review lays out an ambitious, but uneven, road map. For CIBSE members and the wider building industry, the implications are far-reaching, and span low carbon technology deployment, energy efficiency, and the challenge of reducing operational and embodied carbon.
Infrastructure and clean heat
Perhaps the most headline-grabbing measures are in the energy sector, with:
- £14.2bn for Sizewell C nuclear power station and a further £2.5bn for small modular reactors
- £9.4bn for carbon capture and storage (CCS), including £200m for the Acorn CCS cluster in Scotland
- £8.3bn in equity and capital support for Great British Energy, a new public vehicle to accelerate renewable generation.
These investments underscore a strong government focus on decarbonising electricity, a crucial enabler for the electrification of heat, transport and industrial processes. For building services engineers, this expanded low carbon Grid provides a long-term foundation for heat pumps, electric vehicles and smart Grid integration. However, questions remain about how quickly this clean power will be delivered and whether energy infrastructure planning can keep pace with demand.
Warm Homes Plan: a step change in retrofit funding
One of the most welcome developments for the industry was the government’s announcement of £13.2bn for the Warm Homes Plan (for 2025/26 to 2029/30), doubling previous commitments to energy efficiency. This includes grants for home-insulation upgrades, low carbon heating systems, especially heat pumps, and smart controls and digital energy management.
The plan aims to target fuel poverty and carbon savings, aligning with recommendations from CIBSE and others that a fabric-first approach must underpin any decarbonisation strategy.
This investment is a chance to embed whole-house retrofit practices, scale up supply chains, and deliver heat decarbonisation at pace. Yet successful delivery will depend on skills, standards and oversight. CIBSE members will play a critical role in retrofit design, ventilation integration, and ensuring that systems perform in practice, not just on paper.
What’s missing?
The review has notable omissions. There is no new support for industrial energy users, risking a slowdown in materials decarbonisation and building product innovation. Embodied carbon, now accounting for more than 50% of total life-cycle emissions in many buildings, is not yet addressed in regulation or funding criteria.
CIBSE’s TM65 series highlights the significant carbon locked into building services equipment, materials and MEP systems. A national strategy to regulate or incentivise embodied carbon reduction remains a critical policy gap.
Skills and sector readiness
The review increases capital budgets for the Department for Energy Security and Net Zero by 16%, signalling intent to build delivery capacity – but this must be matched by workforce investment. Without scaling up designers, installers, heat pump engineers, energy modellers and commissioning experts, the building sector will struggle to deliver on the review’s promise. CIBSE’s ongoing work on competence and training, particularly for low carbon and retrofit design, will be crucial here.
Implications for the sector
For the first time, government funding is approaching the level required to drive a mass transition in the housing and energy sectors. But funding will not achieve net zero unless it is paired with clear regulatory direction, whole life carbon standards for all buildings – such as the UK Net Zero Carbon Buildings Standard – and support for professional scaling up and upskilling.
CIBSE members have a key role to play in ensuring integration of systems, delivering high-performing buildings that meet user needs, and embedding whole life thinking in every project.
The 2025 Spending Review sets the direction of travel for the next decade. However, real progress will depend on delivery – on turning capital into competence, carbon savings and climate resilience.
CIBSE members are well positioned to lead that transition, ensuring that every pound spent contributes not only to cleaner energy, but also to better-performing, healthier and more sustainable buildings.
About the author:
Dr Anastasia Mylona, CIBSE technical director
