The Conservative government is on the right track with its approach to greenhouse gas reductions, but it needs an extra push to reach its 2020 targets, a group of independent researchers says.

The report by the International Institute for Sustainable Development, released Monday, examined Ottawa's approach of gradually introducing emissions regulations one industry at a time.

The IISD report noted that for political reasons, the possibility of bringing in a federal carbon tax or national cap-and-trade system has been pushed off the table. The federal government has insisted on linking its climate change policy with that of the United States for competitive reasons.

According to the report, Ottawa has spent billions on climate change programs for decades, such as building retrofits and carbon capture-and-storage demonstration projects, that have had limited success in reducing emissions.

Nevertheless, the IISD researchers found that when coupled with what the provinces are doing, Canada is about halfway to its international target of reducing greenhouse gas emissions by 2020 to 17 per cent below 2005 levels.

"While there is still much work to do, Canada is moving in the right direction on [greenhouse gas] policy," reads the report, written by IISD climate change and energy director Dave Sawyer.

How can Canada make up the difference? The institute, a Geneva-based group that advises the Organization for Economic Co-operation and Development and others, says the government will have to look at introducing emissions targets for industries it hadn't intended to regulate. That means targeting sectors such as transportation, which have been kept out of the emissions-cut plan.

The government should also consider establishing a domestic offset program, where companies purchase offsets when they can't meet their targets.

Ultimately, the report's authors say, Ottawa can't rule out a future carbon-pricing system and must develop a common system with the provinces to find efficiencies. They point out the cost to Canadian coal-fired electric plants for its emissions targets is about the same as it is for companies in Europe that are part of a cap-and-trade system.

"While it isn't currently politically feasible to implement a national carbon-pricing policy, it will eventually be necessary in order to the deliver cost-effective reductions required to meet Canada's longer-term aspirations for GHG emission reductions," Sawyer said in a statement.

A report by the National Roundtable on the Economy and the Environment last January recommended that the government set a price on carbon, and create a national cap-and-trade system, as it waits for Washington to settle its own approach to greenhouse gas emissions.