The brutal fact is that some small businesses will disappear by the end of this decade as new regulatory and market legislation will come into force over the next few years. Most of this legislation will ban the manufacture and installation of various products we use daily and take for granted without thinking of their impact on the environment. The UK government’s announcement in 2019 that it intended to ban the installation of gas boilers in new houses by 2023 is the latest example. Unsurprisingly it caused quite a stir.
For the time being the 2023 deadline has disappeared from “The Ten Point Plan for a Green Industrial Revolution” and some of you might think that it is good news for the sector. However, the plan does contain other tough targets and demanding deadlines, and they are closer than you may think. The upcoming Future Homes Standard will ensure that all homes built from 2025 must produce 75-80% fewer carbon emissions than those built under current regulations.
Why now? The UK is the first major global economy to commit to a legal obligation to achieve net zero carbon emissions by 2050. This legislation will set targets that will alter our perception of a slow moving government and that is accommodating to businesses.
The current advice on achieving net zero from the Council for Science and Technology (CST), a public body which advises the UK government, envisages the involvement of community groups and individual citizens in a ‘whole systems approach’. Therefore, small businesses need to empower themselves by learning and understanding what net zero policies are on the horizon.
All businesses will benefit by looking into the future, especially by anticipating changes to taxation. According the CST, government decisions made at a national level should include ‘green’ taxes that will impact sectors such as construction and buildings with new VAT and business rates, as well as affecting transport with net zero tax incentives, such as fuel duty, grants or loans for electric vehicles.
Further advice from CST confirms that regulators such as the Competition and Markets Authority (CMA), the Office of Gas and Electricity Markets (OFGEM), and the Financial Conduct Authority (FCA) should align their regulatory frameworks with net zero in order to achieve the 2050 targets.
While this is advice to the government, it clearly shows the direction of future development. The existing timeframe also affirms the urgency of these decisions and actions. So we can see that all businesses should familiarise themselves with the current developments in net zero policy and practise if they want to stay viable.
Decarbonising existing building stock is just one example of a imminent requirement that will definitely create opportunities for many businesses, or those that are ready to embrace the upcoming changes, according to the Net Zero Review released by HM Treasury in 2020. The success and survival of small businesses depends on how they’re prepared for these regulatory and market changes. Don’t assume you are immune.
References
Architecture (2021) ‘The Future Homes Standard explained’ [online] Available at: https://www.architecture.com/knowledge-and-resources/knowledge-landing-page/the-future-homes-standard-explained#
CST (2020) A Systems Approach To Delivering Net Zero: Recommendations From The Prime Minister’s Council For Science And Technology [online] Available at: https://www.gov.uk/government/publications/achieving-net-zero-carbon-emissions-through-a-whole-systems-approach
DBEI (2020) The Ten Point Plan for a Green Industrial Revolution [online] Available at: https://www.gov.uk/government/publications/the-ten-point-plan-for-a-green-industrial-revolution
EA (2021) The Environment Agency: Reaching net zero by 2030 [online] Available at: https://www.gov.uk/government/publications/environment-agency-reaching-net-zero-by-2030
HMTreasury (2020) Net Zero Review: Interim Report [online] Available at: https://www.gov.uk/government/publications/net-zero-review-interim-report