This report identifies critical success factors influencing SME participation in the greenhouse gas (GHG) emissions trading market. Proper identification of critical factors is needed to facilitate SMEs investments in projects resulting in GHG credits.
Sustained investments by enterprises of all sizes, including large final emitters (LFEs) are required from all sectors to put Canada on the path to enduring GHG emission reductions. However, a number of factors are currently deterring many enterprises from becoming active participants in the GHG emissions trading market. As a result, Canada’s GHG emissions profile continued to deteriorate in 2003. Overall emissions rose by 3% compared to 2002 levels. Canada’s Kyoto gap, under a business as usual projection, is now expected to exceed 270 million tonnes of CO2 equivalent per year by 2010. A significant proportion of the GHG emission increases identified in Canada’s national inventory1 can be attributed to SMEs.
The objectives for this study are to:
- Describe various GHG emissions trading markets with which Canadian SMEs might engage;
- Outline the steps for an SME to create credits and engage a GHG market;
- Identify and assess issues and barriers to SME engagement; and
- Uncover success factors, strategic considerations and actions for government, industry and others to encourage and sustain SME market-based contributions to climate change mitigation.
There is understandable uncertainty at this time regarding Canadian GHG mitigation policy. For this reason, the paper’s success factors and strategic considerations are not anchored to any specific programs. Rather, they have been developed as potential inputs as the Government re-assesses major GHG mitigation instruments, such as the large final emitters (LFEs) framework or the offsets system for GHGs. They could also be relevant as the Government considers other levers, such as “a policy framework that takes the issue to the retail level, which has not been done before” in terms of trading […] in small and medium size enterprises as well as households”2. The process mapping for SMEs to engage in the GHG market and create GHG credits is based on the recently released ISO 14064 series of standards and remains consistent with the steps outlined in the August 2005 Domestic Offset System paper.