Catalyst for the Success of Green Technology

The United Nations Environment Program launched the Green Economy Initiative in late 2008. It consists of several components that collectively provide the analysis and policy support for investing in green sectors and greening environmental unfriendly sectors. According to the UN’s definition, a green economy has low carbon emissions, is resource efficient, and socially inclusive.

When Luis Aguirre-Torres, CEO of Greenmomentum Inc., read the UN’s publication in 2008, he was not pleased. “It basically states that countries like the US have the obligation to contribute to a green economy, whereas less developed countries like Mexico can wait for developed countries to before acting. Why do we have to wait for other countries to act when Mexico is very capable of making its own contributions?” This set in motion a series of actions that saw Greenmomentum become part of the UN Climate Change Conference of 2010 in Cancun and liaise with many key environmental players, leading to the creation of Cleantech Challenge Mexico, a form of competition to increase Mexico’s competitiveness. The contest promotes entrepreneurial culture and green jobs, while providing training for company development and financing for clean technology projects. AguirreTorres explains this model is different from others as it proposes a unique scheme, known as an ecosystem of technological, social and economic innovation. According to the World Economic Forum, there are 12 pillars that determine a country’s competitiveness and Cleantech Challenge includes four of them. “It seeks to contribute to the transition from an efficiency-oriented economy to an innovation-oriented economy,” he says. Cleantech Challenge Mexico’s 2014 edition invites green business entrepreneurs to enter, with a chance to win MX$250,000 (US$18,700) and to network with potential investors and strategic partners. “The latest buzz around cleantech is about water technology,” says Aguirre-Torres. Local governments are installing the technology, while SMEs are developing it. “We talk to about 200 SMEs every year and about 10% of them are focusing on water technology. This area presents an opportunity that will continue expanding because there is a real need for it in Mexico. A lot of money is going to come in from investment and technology development.” he adds. Due to its success, Greenmomentum has undergone a restructuration process. Cleantech Challenge has been so successful that it now operates as separate entity from Greenmomentum, although still part of the same group. Greenmomentum itself offers marketing intelligence services with the aim of boosting the development of clean technology projects through financing and technical support. Aguirre-Torres observes that Greenmomentum’s business model is like a funnel: at the top, one finds many small and medium-sized enterprises (SMEs) that develop clean technology, while a few corporations exist on the bottom. The company generates revenue through its consulting services to SMEs, big corporations, government agencies, and NGOs alike. “To larger companies, we offer solutions to problems relating to efficiency, waste management, and carbon emissions, based on what the SMEs can offer.” Ideally, by offering and implementing these solutions, small and medium-sized companies eventually become national providers for larger corporations. In this way, Greenmomentum helps the big players directly support the process of economic growth and national competitiveness.

However, Aguirre-Torres points out that it is common for small companies not to be able to sell their products to corporations as they do not fulfill their requirements to become suppliers, such as production capacity, financial backup, and scalability. Greenmomentum steps in at this point to help small companies validate their technology, business and commercial models. It assists them in creating a structure that allows them to have the financial backup and the commercial processes to become part of the supply chain for big players. This is all part of Greenmomentum’s goal to create a national supply chain that is both sustainable and financially viable. Usually, it is up to Greenmomentum to promote sustainable initiatives although it is seeing larger clients approach it in search for green solutions. Aguirre-Torres recalls the example of one of the biggest banks in Mexico that wanted to implement sustainable actions across its operations. Greemomentum was able to make recommendations that transformed the institution, not only by reducing its carbon footprint, but also including internal actions to maximize the efficient use of water and energy resources. These actions were eventually reflected in the reduction of operating costs.

Cleantech Challenge has had a positive impact on Mexico’s competitiveness and is Greenmomentum’s flagship program, spreading its brand name. In 2012, the White House recognized the company for promoting social, technological, and economic change in Latin America. With this recognition, the company acquired an implicit commitment from the White House to replicate the Cleantech Challenge model in the next three years in 12 Latin American countries, Aguirre-Torres empathizes. Last year, the company began international operations by establishing strategic partners outside Mexico with Cleantech Forum across Europe, Innobasque in the Basque Country, and LabCorp in Panama. It also participated in energy summits in New York and San Francisco as part of a marketing effort to position the company outside Mexico and start offering services for foreign firms coming to the country.

Mexico’s way to a green economy is still a long and winding road. The first step in Aguirre-Torres’ perspective is making energy efficiency mandatory. “I am not talking about changing light bulbs but of installing predictive systems that tell how much energy is being consumed. We have to invest in energy efficiency technologies at a residential and commercial level. On the other hand, it is urgent that CFE transitions to a smart grid to reduce energy waste.” All this goes back to financing clean technology but AguirreTorres believes the challenge lies in simply understanding how to make that financing process profitable.