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Improved energy efficiency has become a strategic issue and represents a priority for European competitiveness. Countries adopt various energy policies on local and national levels where energy audit programs are the most common energy end-use efficiency policy for industrial small- and medium-sized enterprises (SMEs). However, studies indicate that cost-efficient energy conservation measures are not always implemented, which can be explained by the existence of barriers to energy efficiency. This paper investigates how Swedish municipalities can support local micro- and small-sized enterprises with improved energy efficiency and the existence of different barriers to the implementation of energy efficiency. Relating this empirical case study to the theoretical barriers outlined in the text, this study found that the major explanatory factors related to non-implementation of cost-effective energy efficiency measures among micro- and small-sized industrial enterprises were bounded rationality (lack of time and/or other priorities), split incentives (having other priorities for capital investments), and imperfect information (slim organization and lack of technical skill). This study also found that information in the form of a report was the main thing that companies gained from working on the project "Energy-Driven Business". Notably, the study involved companies that had participated in a local energy program and, still, companies face major barriers inhibiting implementation, indicating a need to further study other alternative policy models and how knowledge transfer can be improved. [ABSTRACT FROM AUTHOR]