SMEs' needs for a net zero transition

Governments, businesses and other organizations worldwide are committing to reduce greenhouse gas emissions to net-zero by 2050. The Government of Canada and all four Atlantic provinces have made net-zero commitments. Net-zero emissions means offsetting any emissions that are produced by actions that remove the same amount of emissions from the atmosphere.

Achieving net-zero emissions will require major changes in how we work, travel, produce and consume. At the Atlantic Economic Council, we are researching the opportunities, challenges and risks this transition poses for the Atlantic economy. You can explore all our net-zero reports on our website.

Businesses of all sizes need to decarbonize for the net-zero goal to be possible. Small and medium-sized enterprises (SMEs) represent over 99% of businesses in Atlantic Canada. Over a quarter of all emissions in the region come from businesses that are not labelled as large emitters. Many SMEs will have to invest in reducing emissions from heating, transportation and production processes.

In one of our net-zero reports, we explain that SMEs face unique challenges in making green investments due to a lack of resources such as cash flow and knowledge of investment opportunities. Another key barrier to green investments is uncertainty surrounding government climate policies.

Businesses we’ve engaged with express concern over mixed and unclear messages about the transition from different levels of government. Some question the continuation of federal climate policies if a change in government occurs while others wonder what will happen to carbon pricing beyond 2030.

Federal and provincial government plans to reach net-zero targets often lack clarity. Certain aspects of these plans are still under development, as we explained in another net-zero report. Larger firms are unlikely to invest millions or billions in long-term assets without confidence in the expected returns. Similarly, many SMEs hesitate to invest in clean technologies if significant regulatory uncertainty or risk exists.

Clear, certain and consistent climate regulations are essential to achieving net-zero by 2050. Governments must finalize regulatory frameworks as soon as possible. They need to ensure that these frameworks will not significantly change mid-way through the transition. Federal and provincial regulations should complement each other, rather than conflict or duplicate, to enable timely businesses investments.

The Pond-Deshpande Centre is hosting a Green Horizon Summit on December 6 in Moncton, New Brunswick. The event will focus on supporting New Brunswick’s SMEs in the net-zero transition. I’ll be presenting an overview of the transition, which will include some insights shared in this post. I hope you’ll join us to continue this important conversation and explore innovative solutions to help decarbonize SMEs across the province.