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This paper discusses potential policy options available to local and municipal authorities, to achieve reductions in energy usage and greenhouse gas (GHG) emissions from small and medium‐sized enterprises (SMEs). Researchers conducted surveys with 112 SMEs, and the results have been used to disaggregate the category of ‘SME’ into sub‐sectors based on industrial sector, two measurements of employee size and annual turnover. A statistical analysis identifies key characteristics and behaviours of the sub‐sectors of firms and discusses the type of policy measure these groups of SMEs would probably respond to. The key results of the research indicate that categories of firms differ in terms of energy use behaviours, internal constraints and attitudes toward possible policy options. The paper presents a ‘policy matrix’ to represent the most and least likely policy options to achieve energy savings from different …