Where £325 comes from
The threshold is set by Salix Finance on behalf of DESNZ as the Grant Carbon Cost cap on lifetime emissions reduction [Salix]. It is the operational expression of HM Treasury value-for-money guidance: a public-sector spending decision should not pay more per tonne of CO2e abated than the appraised social cost of carbon would justify.
How it is calculated
£/tCO2e = grant capital cost / lifetime tCO2e displaced. The lifetime convention used by Salix in award lists is 20 years for heat-pump and fabric measures. Fossil-fuel kWh × grid carbon factor × proportion displaced × asset life = lifetime kgCO2e [DESNZ].
What passes and what fails
| Measure | Lifetime kgCO2e | Capital £ | £ / tCO2e | vs £325 |
|---|---|---|---|---|
| Loft and cavity insulation | 850,000 | £140,000 | £165 | PASS |
| LED relamp (bundled) | 320,000 | £85,000 | £266 | PASS |
| Fabric-first package | 1,100,000 | £310,000 | £282 | PASS |
| ASHP with fabric | 1,500,000 | £480,000 | £320 | PASS |
| ASHP without fabric | 900,000 | £420,000 | £467 | FAIL |
| GSHP small site | 720,000 | £430,000 | £597 | FAIL |
Has the threshold changed across phases?
The £325 lifetime GCC ceiling became the binding test in Phase 4 [DESNZ]. Earlier phases used different mechanics (first-come-first-served queue in 3c, before the targeted-allocation model in 3d). No public confirmation exists of the Phase 5 ceiling; assume £325 until DESNZ states otherwise [DESNZ].
See: GCC threshold, grant-size estimator, fabric-first, case awards.