A rise in the cost of energy has had a severe impact on the transition of small and medium enterprises (SMEs) in their pursuits of lowering carbon emissions and adopting green technologies.
In order to support SMEs in their pursuit of lower emissions, a push which has been seriously impacted by the rise in the cost of energy, NatWest has partnered with the Federation of Small Businesses to analyse the impact and provide measures to alleviate the impact.
From October, NatWest will lower the threshold for green loan applications to £25,000, to help qualifying SMEs invest in sustainable energy solutions such as solar panels, electric vehicles, improved insulation or heat pumps.
Alongside this, the firm will provide £100 billion of Climate and Sustainable Funding and Financing to customers by the end of 2025.
“We are at a critical moment in our response to the climate crisis. The current economic environment is such that many SMEs who are ready and willing to invest in green initiatives still feel unable to do so as rising energy costs shift their focus to the short-term,” said Andrew Harrison, head of business banking at NatWest said.
“The long-term impact is that our nation’s small businesses are left behind the curve on green innovation, less efficient than competitors, more exposed to future supply-side shocks and unable to make their crucial contribution to UK climate targets.
“We must support long term investment into new, clean technology that will lead to lower energy prices for longer and a much more resilient UK energy infrastructure. As the largest supporter of UK business, it is our duty to help guide SMEs through the current challenges and build a sustainable future.”
The UK Government recently announced the Energy Bill Relief Scheme which would almost half the predicted MWh price for electricity and gas for businesses this winter, to £211/MWh and £75/MWh respectively.
The scheme was first announced by newly appointed Prime Minister Liz Truss on 8 September as she addressed the House of Commons. It came alongside the Energy Price Guarantee, a support scheme that freezes the average domestic energy bill at £2,500 and is expected to cost upwards of £100 billion.
While the Energy Bill Relief Scheme offers key support for the day-to-day operation of business, it will not help in their transition away from fossil fuel reliance.
This transition is of particular importance with the latest data from NatWest’s Sustainability PMI report having revealed that more than half of UK SMEs (51%) reported investing in green energy as a high priority for the year ahead, the largest percentage in the survey history.
“We are enormously relieved that the Government has recognised the urgency of the energy pricing problem and we welcome the most recent support measures introduced,” said Martin McTague, chair of the Federation of Small Businesses.
“However, there is still a great degree of uncertainty in the market with many of our network of small businesses facing a cliff edge beyond the next six months. This is reducing their ability to focus on the long term and achieve the sustainable growth that is critical to the success of the UK economy.”