Small businesses across Canada are developing a love-hate relationship with climate change-prevention programs, say business and environmental groups.

By Monte Stewart, Business Edge, October 31, 2008. Click here for original link.

And despite the recent dip in the price of fuel, its volatility over the past few months has convinced many small and medium-sized enterprises (SMEs) to curb their energy consumption and look for "green" business opportunities.

But many SMEs are also still voicing opposition to a carbon tax and emission cap-and-trade system.

"Many of our members want to do something," says Corinne Pohlmann, Ottawa-based vice-president of the Canadian Federation of Independent Business (CFIB). "They know something needs to be done for the environment, and they’d like to see something done. But they’re mixed, because they don’t understand this (cap-and-trade system) and they’re not so sure this is the right solution."

The CFIB’s latest business barometer, which measures SME confidence levels, shows the high cost of fuel probably had the biggest negative impact on its members over the past several months.

Pohlmann says high fuel costs have hit hardest in sectors such as agriculture and trucking, which bear increases directly. But industries that do not consume a lot of fuel felt an indirect effect through temporary airline fuel surcharges, increased shipping costs and other measures.

The CFIB is calling on Ottawa to scrap its 1.5-cent-per-litre federal fuel excise tax and stop charging the GST, along with federal and provincial gas taxes. "We have a tax-on-tax thing going on, which adds again to the cost of the fuel," says Pohlmann. "Of course, GST being a percentage, it goes up as the price goes up, and that’s just totally unfair."

The CFIB also wants Ottawa to conduct a review of all fuel taxes and place a moratorium on all talks related to carbon taxes until "we have some handle on the fuel pricing that’s going on out there."

But Matthew McCulloch, co-director of corporate consulting for the Calgary-based Pembina Institute, says small-business groups should do more to encourage their members to adopt carbon-neutral strategies. "(Small businesses) generally just ‘cry poor’ – that’s the problem," says McCulloch.

Under a cap-and-trade system, emitters and consumers purchase credits that allow them to emit more greenhouse gases than regulated. Sellers of credits benefit from being under the limits.

But CFIB surveys show members slightly oppose both a revenue-neutral carbon tax similar to the one already being assessed in B.C., and a market-based cap-and-trade system.

Pohlmann says small-business operators would rather see more education programs and incentives for reducing emissions than be penalized for a part of doing business – consuming energy.

"One of the biggest barriers is cost, because sometimes it takes a major investment in order to retrofit a building or upgrade a building," says Pohlmann. "A lot of banks won’t provide that kind of financing."

The Toronto-based Canadian Standards Association (CSA) has launched a new online CleanStart registry, which it claims is the first of its kind in North America. The registry helps businesses measure their emissions and achieve carbon neutrality based on guidelines established in 45 countries.

"The new registry is especially attractive to smaller businesses that want to start measuring their carbon emissions," Suzanne Kiraly, the CSA’s president of standards, told reporters during a news teleconference.

"Too often, small and medium-sized organizations are overwhelmed by the carbon-accounting processes. CSA has developed training, registries, online advice and calculators to help with this."

The CFIB does not measure small-business carbon consumption, but Pohlmann says the vast majority of its members are taking steps to reduce energy consumption.

But Ron Dembo, president and CEO of the Toronto-based Zerofootprint group of companies, which conducts carbon trading, says a cap-and-trade system does not unfairly punish small businesses.

These companies, he says, will have to participate in emission-reduction efforts "in some way."

"One way is a tax, but it’s not necessarily the right way," says Dembo, a former Yale computer science and management professor who specializes in algorithmics.

Zero’s companies provide carbon-management services and develops offset programs based on international standards.

"I would say there is a lack of knowledge about (carbon trading) at the moment, especially in Canada," says Dembo, co-author of the book, Everything You Wanted to Know About Offsetting But Were Afraid to Ask.

"If you go to Europe or even the U.K., it’s a completely different picture. In Europe, the people are being legislated into it."

He adds it’s inevitable that a federal cap-and-trade system will be introduced. "The war (on climate change) is about to happen. It has to happen."

Zero has partnered with Air Canada and its regional carrier Jazz on an offset program for passengers, who calculate the amount of carbon dioxide their trips produce and then purchase offsets.

Calgary-based WestJet also gives its passengers a chance to acquire offsets, through Vancouver-based Offsetters.

"It’s a bit of a different setup from other airlines where, typically, what we have seen is that the consumer purchases and pays for those offsets directly, themselves," says Richard Bartrem, WestJet’s vice-president of communications.

WestJet does not track small-business customers who obtain offsets, but says 50 per cent of its clients are business travellers.

"Given our low-cost structure, we actually pay it on behalf of the guest, provided they take one extra step of visiting Offsetters.org prior to making their reservation online with us."

Meanwhile, Vancouver-based Ecotrust Canada has launched a carbon-neutral workgroup pilot program that helps companies calculate and reduce greenhouse gas emissions.

The David Suzuki Foundation and Pembina Institute are helping to co-ordinate the program.

Pembina’s McCulloch says the regional project, which includes 13 companies and non-profits from B.C.’s Lower Mainland, North Coast and Vancouver Island, could serve as a national model.

As part of its greater vision, the project aims to help build a so-called "conservation economy" that derives profitable business ventures from environmental protection practices.

But McCulloch says some small businesses view a climate-change strategy and being carbon neutral as a way to get more customers and increase market share, while others say they will be out of pocket and can’t afford offsets.

However, he argues that small businesses can actually make money by selling carbon-neutral products and services.

CFIB’s Pohlmann predicts small businesses will play an active role in developing new emission-reduction technologies and practices. But it could take many years before real differences are made.

"From that aspect, it’s a never-ending journey that businesses will go on," she says.

(Monte Stewart can be reached at monte@businessedge.ca)