summary:
In recent years, governments around the world have successively set 2050 net-zero emissions targets. To actively assist small and medium-sized enterprises (SMEs) in developing or transforming into low-carbon and sustainable businesses, and to proactively capitalize on green business opportunities, they have introduced various policy tools.
Common tools can be summarized into four aspects: (1) incentive control measures (2) green certification and awards (3) financial incentive support (4) technical support.
Financial incentive support tools are numerous, encompassing at least direct subsidies, private equity investments, and preferential loans in the EU. For startups facing greater difficulty accessing market funding, direct subsidies are particularly crucial for embarking on a net-zero path. By contrast, for growth-stage companies, private equity investments or low-carbon project investments can both provide a favorable environment for business development and encourage SMEs to improve their competitiveness. Furthermore, the EU's experience demonstrates a diverse range of technical support tools, the essence of which lies in providing platforms for collaboration, institutional reforms, and experience sharing.
Ⅰ. EU policy tools for SMEs in response to the 2050 net-zero emissions target:
The total greenhouse gas emissions of small and medium-sized enterprises (SMEs) worldwide are significant. As governments around the world set targets for net-zero emissions by 2050, they are introducing a variety of policy tools to actively assist SMEs in developing or transforming into low-carbon and sustainable enterprises and proactively capitalizing on green business opportunities. The following is a compilation of policy tools and application cases proposed by the European Union (EU) for SMEs in its member states for domestic consideration.
To help SMEs achieve sustainability, the EU has categorized common policy tools into four areas:
(1) Regulatory measures, such as simplifying administrative procedures for SMEs to develop sustainability-related matters, tax reductions, standardizing sustainability-related intellectual property applications, and encouraging SMEs to obtain environmental management certification to obtain extra points in public sector tenders.
(2) Green certifications and green prizes refer to the establishment of green certification standards or the issuance of green prizes to prove that SMEs are moving towards or achieving sustainable development, helping SMEs to improve their competitive advantage in green trade.
(3) Grant incentives: Grants, designated loans, and private equity/fund investments are used to help small and medium-sized enterprises obtain the funds they need for green transformation.
(4) Technical assistance involves developing the skills and knowledge required for sustainable transformation in SMEs through training or guidance, while also establishing a technical exchange platform to accelerate the diffusion of green technology innovation and strengthen sustainable development. Due to the numerous incentive control measures and the long-standing existence of green certification and awards, the following focuses on financial incentive support and technical assistance, listing relevant cases.
II. Brief Introduction to Relevant EU Cases:
1. Financial Incentive Support
Due to national resource allocation considerations, financial incentive support tools are often designed at the national level in conjunction with other policy objectives. For example, to help small and medium-sized enterprises (SMEs) overcome the difficulties caused by the COVID-19 pandemic and transform the crisis into an opportunity, the Greek government applied for the European Union Recovery Plan to establish the Greek Green Fund. The fund will focus on sectors including, but not limited to, green energy and the circular economy, promoting the transformation of Greek SMEs. The fund will entrust the Hellenic Development Bank of Investment (HDBI) with the investment of venture capital (or private equity) funds. As a shareholder, HDBI will set criteria for the fund's investment targets and funding levels.
In contrast, the Irish government has proposed the Green Enterprise: Innovation for a Circular Economy program. This involves a two-stage review process involving government-appointed experts and relevant public sector entities. Once approved, the remaining balance of funds will be disbursed based on regular reviews of product development progress, subject to subsequent negotiation.
The third example is the European Union, where national banks provide guarantees, such as Italy's CDP (Guarantee Programme of Cassa Depositi e Prestiti), and the European Investment Bank (EIB) injects funds to provide small and medium-sized enterprises with preferential loans for sustainable transformation.
2. Technical Support
Technical support aims to cultivate the skills and knowledge necessary for SMEs to achieve sustainable transformation through training, and even to plan and construct development plans through expert guidance. However, due to the distinct characteristics of each industry, the simplest approach to resource utilization is to create a collaborative platform where participants can independently match themselves to solve their problems based on their own needs. This concept can be seen in the incubator created by the Brussels Institute for Research and Innovation in Belgium. While other incubators tend to be joined by entrepreneurs, this case study is unique in that it encourages participation from school teachers and students. In addition to cultivating young people's awareness of sustainable development through company visits, they can also apply for science vouchers to subsidize their participation in activities such as science competitions, fostering the development of sustainable innovation concepts.
Another key feature is the government's provision of a comprehensive administrative platform, linking all public departments involved in sustainability transformation and providing preliminary business services. For example, regional development agencies (such as science parks established by the National Science and Technology Commission) will publicly announce the application qualifications and standard procedures that small and medium-sized enterprises (SMEs) must meet to establish factories.
In Denmark, the Danish Business Administration (Erhvervsstyrelsen) funded the creation of a non-profit organization (Dansk Iværksætter Forening). This organization invites entrepreneurs who have successfully completed green or sustainable transitions (referred to as "climate heroes") to share their experiences and offer advice on solving potential problems through a similar mentoring approach. Furthermore, this organization has established the Danish Entrepreneurs Association, which is authorized by the government to participate in the formulation of policies related to business development, effectively strengthening public-private sector communication.
In addition to national assistance, the EU has also launched a Technical Support Instrument (TSI) within its Multiannual Financial Framework to assist member states and legal entities in achieving green and digital transformations. This instrument integrates EU resources and tailors a series of institutional reform services to the applicant's specific objectives, including improving the operational capacity and efficiency of public administration, fiscal and tax management, developing the digital economy, achieving waste reduction or developing green energy, attracting foreign direct investment, reforming the education system, improving financing opportunities, and enhancing the efficiency of non-performing loan disposal.
Ⅲ. Summary:
A review of case studies reveals a wide range of financial incentive support tools, including direct subsidies, private equity investments, and preferential loans in the EU. Considering China's significant potential for sustainable or low-carbon industries, direct subsidies are particularly important for startups currently facing limited access to market capital to embark on a net-zero path. Once the industry enters its growth phase, the government is advised to provide private equity funds or invest in low-carbon projects, providing a favorable business environment while encouraging SMEs to enhance their competitiveness.
Furthermore, the EU's experience demonstrates a wide variety of technical support tools. Their essence lies in providing collaborative platforms, institutional reforms, and experience sharing. Considering resource constraints and national conditions, establishing collaborative platforms is more effective. A review of the implementation and contributions of Taiwan's policy tools reveals that Taiwan already has well-established collaborative platforms, such as the International Entrepreneurship Accelerator, the Technology Entrepreneurship Amplifier, and the Local Enterprise Innovation Hub. However, while these subsidies (donations) encompass legally established sole proprietorships, partnerships, companies, legal entities, and universities, their objectives are often oriented toward industrial development, lacking any focus on fostering sustainable development concepts (among young people).
In addition, as the need for new startups or sustainable transformations may require cross-sector collaboration, such as in biofertilizers or organic processed foods, SMEs may need to simultaneously understand the relevant regulations of the Ministry of Economic Affairs and the Council of Agriculture. If relevant regulations and responses can be announced on the platform, this can also increase the willingness of SMEs to develop new startups or sustainable transformations.
Sources:
1. All SMEs in OCED member countries, combined, account for at least 50% of the global business sector's total greenhouse gas emissions and approximately 30% to 60% of the energy sector's total energy consumption (Carbon Trust, 2022; ETLA, 2015).
2. Investment targets include businesses in other sectors, including infrastructure, digital transformation, social housing, renewable energy, and the circular economy. Furthermore, funding levels will be determined by the project size (e.g., for projects €100 million or more, HDBI's maximum investment may not exceed 30% of the total project size; for projects €30 million or less, HDBI's maximum investment may not exceed 70%).
3. Eight major business organizations and relevant academic institutions have jointly proposed the "Proposal for the Development of Danish Company Law" (Forslag til udviklingen af dansk selskabsret).
Organizer: Ministry of Economic Affairs, SME Administration
Executing Unit: Plastics Industry Technology Development Center
