There’s work to be done to achieve net zero by 2045 – but the potential rewards could outweigh the obstacles
Gary Hughes, Business Gateway Manager for Aberdeen City and Shire
Thursday, March 19, 2020
The drive for energy businesses to de-carbonise and reach the 2045 net zero carbon emissions target in line with the Scottish Government is demanding.
However, it’s a challenge that must be faced in order to benefit future generations. What’s more, it presents a huge opportunity for innovative businesses leading the way to achieving carbon neutral.
Of course, the main benefits are universal, as we all act to reduce the damaging effects of climate change.
It’s not just big businesses who stand to benefit from the drive to de-carbonise. There significant benefits on offer to SMEs too.
When Tesla released its first car in 2008, few predicted its growth and influence, becoming the second largest car company in the world by stock value within 12 years. Analysts forecast that the low emission vehicle sector will grow by 25-30% to 2030, and it is not just the global giants like Tesla that will benefit. UK SMEs are well integrated into current supply chains and there is no reason why businesses cannot profit from the supply of parts to new transport systems.
A massive increase in the charging infrastructure will also provide opportunities for SMEs. Business Gateway has recently supported Aberdeenshire start-up Trojan Energy who have designed a fantastic EV charging point that moves underground when not in use. SMEs and start-ups have the advantage of being able to act quickly and respond to market changes.
There is work to be done to achieve the 2045 target. The Scottish energy industry needs to adapt to meet an estimated doubling in electricity demand by 2050. This could, for example, require 75 GW of offshore wind compared to the current UK capacity of 8 GW.
Hydrogen offers an alternative for some industrial processes and energy dense requirements, but significant investment will be required to develop this capability. Within the UK, Aberdeen has been an early pioneer of hydrogen, launching a fleet of ten hydrogen buses five years ago and now with a growing fleet of hydrogen vehicles.
Although we need to move away from carbon, oil and gas is so embedded in our global systems that we will still require these products in 2045. Carbon capture and storage is a necessity in order to meet the net zero target. There is potential to use current offshore assets to store carbon.
All of this change has to be policy driven, and that means politicians will have to deliver significant change whilst maintaining public support. Decarbonisation policies need to be embedded across all departments. Change must be made in a way that doesn’t just export emissions to other parts of the world and hinder domestic businesses.
Private enterprise will respond and provide what consumers want within the legal standards so, by changing those standards in a planned and stable way, significant change can occur.
Of course, there are significant obstacles facing businesses committed to decarbonising. Businesses have to balance the needs of shareholders, customers and a changing legal framework. If they move too early, they may be uncompetitive. If they move too late, they may be left behind.
The oil and gas industry is in an unusual situation where some demonise it for supplying a product that remains vital for our country to function. Many producers are now looking at their operations to see how they can reduce emissions. For example, Shell recently launched a fuel carbon offsetting scheme.
Another obstacle can be the high initial investment in low carbon technology. Until we reach a tipping point where low carbon is cheaper than the traditional equivalent, businesses may struggle to make the change, especially those in competitive sectors where margins are low.
On the flip side, there are often benefits to reducing carbon. Anyone who has insulated their home will see the difference in heating bills. Businesses are no different and often an initial investment brings long term benefits and savings.
Customers now expect businesses to be playing their part in the net zero transition and there is a clear benefit over competitors if a business can demonstrate and communicate better environmental credentials.
By changing early, before legislation comes into force, a business can get ahead of the competition and be established in either new markets or new ways of working before others catch up.
Aberdeen and the surrounding area have a strong tradition of energy and energy innovation. Although traditionally this has been in the oil and gas sector, the city has a high number of skilled workers with a track record of finding solutions and improvements to energy problems.
Subsea and inspection companies have recognised opportunities in the offshore wind sector. Similar technologies can be deployed and, as offshore wind moves to more difficult locations, Aberdeen engineers will be well placed to ensure they are efficient and safe. Sir Ian Wood also recognises this potential and recently announced plans for an Energy Transition Zone, with the aim of capitalising on business opportunities as the UK moves towards net zero carbon emissions.
There is support out there for businesses who want to reduce their emissions. As Business Gateway Manager for the North East of course I am going to recommend contacting Business Gateway. This should be the first point of call for any SME looking for free, impartial advice for their business. The landscape of support and grants is constantly changing, and Business Gateway advisers keep up to date on available support and what is best suited to individual businesses. We work closely with the Scottish Government and organisations like Zero Waste Scotland to ensure businesses get the best support available to meet their needs.
To find out how Business Gateway can help your business, visit www.bgateway.com.