Hospitals, leisure centres, local authorities - and even central government departments - will be able to save money and reduce their carbon emissions by taking up new energy efficiency loans.

The Government, in partnership with Salix Finance and the Carbon Trust will provide £51.5 million in interest free loans to help public sector organisations take advantage of energy efficiency technology.

Minister for Energy and Climate Change, Joan Ruddock said: "We estimate this fund could help public sector bodies save around £14 million per year in fuel bills. Following the announcement of our ambitious carbon budgets, all public sector organisations should lead by example by pioneering ways to reduce carbon emissions. I hope that schools, hospitals, and fire stations will look into projects they can undertake, and use this funding opportunity."

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Announced by the Chancellor in the Budget, this money is an addition to £30m million announced last year for the scheme in 2008-20012 and will be available through Salix Finance. Loans will be available for around 80 different energy efficiency technologies, including building insulation, boiler and lighting upgrades, improved cooling systems and IT energy efficiency improvements.

This support will play an important part in the build up to the Carbon Reduction Commitment (CRC), which begins in April 2010. The CRC is a mandatory scheme which targets carbon dioxide emissions from large public and private sector organisations, which use more than 6,000MWh of electricity per year. It will provide incentives for these organisations to record and reduce their energy use, and improve energy efficiency, saving an estimated 4 million tonnes of CO2 a year by 2020.

(CD/JM)