If you’re running a small business, it’s likely that most of your priorities are in the short-term, very-short-term, immediate-term and should-have-been-done-yesterday-term categories.
Sales need to be made, wages need to be paid, invoices need chased, regulations complied with. Little wonder, then, that someone trying to flag up a change that’s coming in 20 years might struggle to get your attention.
But I’ll try anyway.
Under the 2019 Climate Change (Emissions Reductions Targets) Act - the one that requires Scotland to reach net zero by 2045 - we need to achieve a 75% reduction in emissions by 2030. This moves to a 90% reduction by 2040.
The Scottish Government states that the third-largest cause of our greenhouse gas emissions is the way we heat our homes, workplaces and other buildings. So, to meet their legal obligations, ministers propose to introduce legislation which will require all homeowners and - crucially - businesses to make their main heating system zero emissions by 2045.
Not only that, if you purchase a home or business premises, you will be obliged to replace any old fossil-fuel heating system within a fixed period.
It’s difficult to put into words how huge a challenge this is.
For example, the Scottish Government’s heat networks delivery plan states that the aim is to supply 3% of current heat demand from heat networks by 2027, rising to 8% by 2030. Last August, however, Consumer Scotland stated that “around 1.5% of Scotland’s heat is supplied from heat networks”, describing the 8% by 2030 target as “ambitious” and requiring around 650,000 additional homes to be switched over.
Further, last year, almost two-fifths of small firms told our big small business survey that they had a limited or no understanding of how their business will be impacted by the shift to net zero. Three-fifths said there wasn’t enough support available to cushion the impact of the transition to net zero on their business.
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So, there’s quite a way to travel and lots of questions about how we actually get there. Not least, how are we paying for all this? I scarcely need to point out that small businesses are not exactly awash with spare cash at the moment and FSB figures from last year showed that more than 80% of Scotland’s small businesses had not engaged with government net-zero support initiatives. Thus, the financial support on offer needs to be clear and practical before any more obligations are enshrined in law.
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It's clear that there will also need to be exemptions or extensions for those who can’t practically meet the new standards. This might extend to certain types of premises that are particularly difficult to modify, due to particular characteristics, or the owner’s own circumstances. However, businesses will need to know exactly what these exemptions mean and how they’ll work before making any financial commitments.
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But, of course, it’s not all about costs. There are also, if we do it correctly, significant business opportunities in all this work. The question, though, is whether the supply chain is ready. How do we ensure the availability of the proposed clean heating systems, such as heat pumps, modern efficient storage heaters and heat networks?
Will small businesses be encouraged to design, build and supply the components for use in Scotland? How can these massive programmes be designed so that they can be delivered by smaller, local firms - not just huge multinational contractors?
Also, how do we link up schemes to get domestic properties up to the new standards with those looking at commercial premises? If, say, tenement flats in a town centre are being upgraded, how do we make sure the shop units at street level are also retrofitted at the same time?
All these points, and more, will need to be addressed in the forthcoming Heat in Buildings Bill, on which the Scottish Government is currently seeking views.
I don’t imagine that the consultations section of the Scottish Government’s website is your most visited internet bookmark, but if you do any business from a commercial premises, it’s worth having a look before the consultation closes a week on Friday. It might not be a “now” problem, but it’s coming over the horizon and we can’t ignore it.
Colin Borland is director of devolved nations for the Federation of Small Businesses
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