The Scottish Government

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3. NEW BUSINESS OPPORTUNITIES

"Small opportunities are often the beginning of great enterprises."
Demosthenes

The Scottish Executive's commitment to sustainable development presents real opportunities for existing businesses to diversify or expand their operations, and for new businesses to emerge. And growing businesses can support or create jobs. Our consultation paper 'Towards a Green Jobs Strategy - Opportunities for Business' ⁸ highlighted a number of sectors, particularly renewable energy, waste management, recycling and use of recyclates. Responses to our consultation confirmed that these sectors present considerable opportunities, and that other areas such as biofuels, construction and sustainable design, organic farming, tourism and cleaner technologies also have a lot of potential.

3.1 Renewable energy

Scotland has a long and successful history of supporting renewable technologies, from the large-scale hydro schemes constructed in the 1950s, to the development of innovative marine technologies from Salters Duck to Ocean Power Delivery's Pelamis device. Add to that the skills strengths from our traditional industries of engineering and oil and gas, our long coastline and major forestry resources, and the potential is clear for Scotland, and the Highlands and Islands in particular, to be a centre of excellence for the manufacture of renewable technologies.

Newton Dee Solar Thermal and Wind Turbine project

Newton Dee village, part of the Camphill Village Trust, is a community of 200 people. It includes 100 people with learning difficulties who take a full and active part in the life, work and management of the community. Last year, we got £64,669 from the Scottish Community and Householder Renewables Initiative ( SCHRI) towards our Solar Thermal and Wind Turbine project. The total cost of the project was £109,257. We employed local companies to install five solar water heating systems (38m ² solar collector area in total) and to undertake civil works in preparation for a 15kW grid connected wind turbine. This development will provide us with electricity and hot water from renewable sources. We estimate that the solar system and wind turbine combined will produce 72,000kWh of energy per year, saving us £4,500 and reducing annual carbon emissions by 27 tonnes.

W Radysh, Camphill Village Trust

Looking to the future, there is an increasing amount of business in wind energy - onshore, offshore and micro-generation. Marine energy (both wave and tidal) and biomass, together with hydrogen, will also become increasingly important.

Developing a thriving renewables sector in Scotland requires a partnership between government and the renewables industry. To help in this, we established the Forum for Renewable Energy Development in Scotland ( FREDS). This is a high-level forum which, under the chairmanship of the Deputy First Minister and Minister for Enterprise and Lifelong Learning, brings together representatives from the renewables industry, the established energy industry, academia and other stakeholders.

FREDS has considered in depth the potential of marine ⁹ and biomass ¹⁰ in Scotland, and made a number of recommendations for action. The work of FREDS will be supported by the Scottish Executive's new green jobs fund of £22 million over three years. FREDS is also considering the potential for developing hydrogen energy and fuel cells technology in Scotland, and a report is due later in 2005.

Developing woodfuel supplies

We are a small sawmill (13 employees) and have recently purchased a Laimet cone chipper enabling us to produce quality wood chip biofuel. We have both diversified our product range and developed new markets, and are now supplying wood chips to local woodfuel users such as Scottish Natural Heritage in Aviemore and the Mains Care Home in Newtonmore. We have also installed a woodfuel boiler in our own workshop. This system will improve our energy efficiency as a business and reduce our heating costs by an estimated £800 per year. The boiler has sufficient output to allow us to run a timber drying kiln in the near future.

The installation of a fast turnaround kiln results in an extra job being created.

Both these investments were made with assistance from Forestry Commission Scotland's Woodfuel Development Programme for the Highlands and Islands, and Moray, Badenoch and Strathspey Enterprise, which we consider key to creating a cluster that uses and supplies biofuel in our region.

John Russell, Owner/Manager, Russwood Ltd, Newtonmore

Waste can be another source of renewable energy, as illustrated by the Scottish Executive-funded biogas pilot projects on farms in North Ayrshire and Dumfries and Galloway. These projects involve removing the harmful bacteria from animal waste (slurry) before the resulting liquid is spread on the land.

This improves bathing water quality by reducing diffuse agricultural pollution. Furthermore, the methane gas produced is used to heat water and run central heating systems.

3.2 Waste management and recycling

"To invent, you need a good imagination and a pile of junk."
Thomas A Edison

There are major opportunities for businesses in the expanding waste management and recycling market which, for the UK alone, has been forecast to be worth over £9 billion by 2010, almost double its size in 2000. ¹¹ In a number of areas, such as scrap metal, recycling is a long-established business. Recycling generates economic activity not just in the collection and sorting of recyclate, but also in its reprocessing and final use. Scotland has a strong reprocessing sector in areas such as glass, paper, wood and some types of plastic and is increasing its use of recyclate. But there is scope for Scottish companies to expand further and to capture and maintain competitive advantage. Opportunities in this area extend to both the private sector and the social economy: the social economy often uses recycling and related activities to lead people furthest from the labour market into employment or training.

Reusing waste paper

We are Europe's largest integrated manufacturer, supplier and recycler of paper, paper packaging and stationery products. We source and process over 2,000 tonnes of waste paper a week, supplying 95 per cent of our paper mill's needs. More and more of this paper comes from the local area as recycling facilities for domestic consumers improve, and householders' awareness of our reprocessing capacity is increased through the Waste Aware Scotland campaign.

Stephen Hutt, Commercial Director, Smith Anderson, Fife

The supply of recyclate is increasing as recycling facilities for householders are improved by local authorities using their awards from the Strategic Waste Fund. The increasing supply of recyclate from households complements the existing supply from commercial and industrial sources. We are funding work by the Waste & Resources Action Programme ( WRAP) and Remade Scotland which will help further develop markets for recycled products. And, together with the Scottish Environment Protection Agency ( SEPA), we are funding the Scottish Waste Awareness Group to deliver Waste Aware Scotland, a campaign to change public attitudes towards waste and promote the 'three Rs' - reduce, reuse and recycle.

We have also established strategic groups of local authorities to consider their needs for new infrastructure to meet the targets on diverting biodegradable municipal waste from landfill. This will lead to significant opportunities for the private sector in providing facilities and services to local authorities.

Our range of existing and emerging action plans in waste provides drivers for action, reflecting the opportunities and challenges we face. We recognise the importance of creating favourable conditions for the growth of the waste and recycling sectors. That is why we try to design policies that will both encourage the greening of the economy and help create new opportunities for businesses developing sustainable products and services. For example, our planned framework for business waste in Scotland will look at opportunities for more sustainable waste management, reducing costs and benefiting the environment.

At UK level, the cost of sending waste to landfill is increasing, making alternatives to landfill more attractive. Landfill gate fees are increasing due to higher environmental standards and legislative provisions for the closure and aftercare of landfill sites. In addition, the standard rate of Landfill Tax for active waste (that is, waste that is not inert ¹²) will increase by £3 a year from its current level of £18 a tonne to reach a medium to longer term figure of £35 a tonne.

At European level, producer responsibility directives such as the Waste Electrical and Electronic Equipment Directive ( WEEE) and the End of Life Vehicles Directive ( ELV) will create incentives to reduce waste at source. They will also create opportunities for companies that collect and sort waste; for those involved in activities that reuse waste material; and for those developing technologies to recycle waste.

More broadly, the European Commission's Environmental Technologies Action Plan ( ETAP) acts as a further driver since its overarching aim is to harness the full potential of environmental technologies to reduce pressures on our natural resources and stimulate economic growth.

3.3 Other business opportunities

The Scottish Executive does not want to limit ambitions to the obvious opportunities, although these will yield some earlier results. Rather, we want to implant the notion of sustainable economic development throughout the economy. It was clear from the responses to our consultation that this approach is the way forward. There are real business opportunities arising from almost every area of activity including areas as diverse as:

• biofuels
• construction and sustainable design
• organic farming
• eco-tourism and outdoor recreation
• cleaner technologies, including carbon sequestration
• consultancy and energy audits

Biodiesel from renewable, reusable and recyclable products

Argent Energy was established in 2001 to investigate and develop innovative methods for adding value to animal by-products. In December 2003, we received a £1.2 million offer of RSA to help with our development of a £15 million highly specialised plant to produce biodiesel from used cooking oil and tallow (animal fats).

Biodiesel is a renewable, sustainable and environmentally friendly fuel source and can be used as a blend with mineral diesel. The new plant will be able to produce 50 million litres of biodiesel annually and is expected to meet 5 per cent of Scotland's renewable fuels target. The construction of the biodiesel plant near Motherwell is now complete and operating at full capacity. We expect to create 16 new jobs, and safeguard a further 67, as a result of the project.

Hamish Curran, Chief Operating Officer, Argent Energy, Newarthill

In addition, there is significant scope for sectors involved in supplying environmental industries. For example Scottish biomass, specifically woodfuel, is uniquely placed within the UK to contribute to both Scottish and UK renewable targets. This is because Scotland has a substantial, expanding source of woodfuel from managed woodlands and sawmill products. Stimulating demand for biomass also offers the potential for new income streams for farmers and the forestry industries. In addition, using local sources of biomass retains earnings in the local community, reduces transport costs and reduces dependence on external fossil fuel markets.

There are also expanding opportunities for many businesses, including component manufacturers. Although such businesses may not view themselves as operating in the environmental sector they form a vital part of the supply chain to such industries as wind turbine manufacturers and others.

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