23 February 2023

Decarbonisation and cost-saving go hand in hand for rural businesses

Evidence submission

Decarbonising the UK’s rural economy is crucial to achieving the UK’s national net zero target. The cost-of-living crisis and the high cost of energy highlight the importance of engaging businesses with the decarbonisation agenda and the ‘grand challenge’ of climate change, writes Dr Matilda Fitzmaurice, Research Associate at Newcastle University Business School.

Cost-saving and decarbonisation are complementary, not competing

As part of NICRE’s submission to the All-Party Parliamentary Group on Rural Business and the Rural Powerhouse’s Inquiry into the cost of living in rural areas, I interviewed 13 small rural businesses in England about how it and the cost of doing business were affecting them. Importantly, I found that small rural businesses see decarbonisation and cost of living not as separate, but as closely-related, challenges.

Many small rural firms I engaged with were taking energy cost-saving measures that were also decarbonisation measures. These included switching to LED light bulbs, installing timers for the lights, and fitting cavity wall insulation. Some spoke of how they would like to do more, but did not have the necessary resources, or did not have sufficient control over their premises (for example, due to being a tenant). As one interviewee in the skills and education sector, based in Yorkshire, put it: “In order to make big green savings, you have to be in control of your space.”

One business, a social enterprise in Yorkshire, moved to being home-based in order to save on energy costs, and this meant that they had more control over their premises. They told me how this allowed them to ‘not only deal with the cost-of-living crisis, but also to be greener than [we] were’. Therefore, they installed insulation and said they would fit solar panels if they could get a grant to do so. While increased domestic energy bills may encourage some back to the office, more home- or hybrid working means a reduction in transport costs and associated emissions.

For some businesses, this was a pandemic-related change that became permanent, while others had kept using virtual meeting technologies in order to cut transport costs. Hybrid- and home-working, then, can also play a role in helping small rural businesses advance their own decarbonisation goals, as well as the national net zero target. However, high-quality digital connectivity for rural businesses will be vital for this. The energy crisis, therefore, further underlines how important digital connectivity is for small business resilience as NICRE found in its survey of rural firms in 2021.

Another business, a broadband and telecoms company in the North East, told me they were trying to ‘streamline everything’ and be ‘more proactive and aware’: making efficiencies in their usage of vehicles as well as reducing energy consumption in their offices. While the cost of living is curtailing investment in decarbonisation for some (one business told me they wanted to install electric vehicle charging but that this was currently a ‘nice-to-do’), the interviews strongly suggest that businesses do not see cost-saving and emissions reduction as separate, or competing, priorities.

It’s also important to point out that the businesses interviewed saw decarbonisation as desirable for its own sake, not just for cost-cutting purposes. This desire to decarbonise supports earlier NICRE evidence which found that businesses in rural areas appear to be more strongly focused on environmental issues, than urban firms.

This is an opportunity for decarbonisation – but businesses need support

Businesses need support to reduce their energy consumption, but it is important to remember that some are less able to do so than others, such as those providing in-person services to the general public. These businesses need specialist support to reduce their energy consumption. The businesses that reported having received advice and support for decarbonisation reported that support could consist of financial resources or expertise, or both.

For example, a farm, wool product and tourism business in the South East received support and advice on energy-saving and decarbonisation through a local authority-run scheme, which also facilitated linkages with other local businesses through peer-to-peer support. Another interviewee, a community development trust in the North East, had successfully commissioned an energy review of their main premises via a local community support charity.

Additionally, businesses I interviewed reported a lack of electric vehicle charging facilities in rural areas or suitable affordable electric vehicles, especially vans. The North East-based broadband and telecoms company told me they were considering replacing their vans with electric vehicles, but that they were not suitable for driving long distances due to a lack of charging facilities.

There was also a perception that it is difficult to find information about contractors to carry out insulation work which suggests a need to create a resource, such as a list of local contractors.

To sum up, by making energy efficiencies in their business premises and everyday operations, as well as investing in solar power and other low-carbon methods of energy generation, small businesses are already engaging with the decarbonisation agenda, and their efforts must be recognised. However, with the right support, they could be helped to do much more and play their part in addressing the ‘grand challenge’ of climate change.