Government Policy Advisors Concerning Carbon Markets

2008 was a year of mixed fortunes. The world was rocked by an epic financial tailspin, but clean technology and carbon markets remained afloat as companies continued to invest in them despite economic uncertainty. This rise that was behind the creation of Bajo en Carbono that same year.

As explained by Enrique Rebolledo, Bajo en Carbono’s Business Development Manager and one of the company’s founders, the firm has begun to tap into the opportunities formed by the clean technology market. Given the subsidies and support grants clean technologies had been receiving in Europe, the opportunity to transfer that technology to Mexico was there for the taking. The Bajo en Carbono team had several goals at the outset: beyond a transfer of technology from overseas, the idea was also to kick start the development of local Mexican technology and to support government policies aiming to help that process.

Five years on, Bajo en Carbono has developed two main areas of activities that are equally important to achieving those original goals. The first activity sees the company working closely with ministries and environmental agencies as its staff assesses and supports the development of climate change policy ideas at the federal and state levels. “Many of SEMARNAT’s policy documents were done by us. We carry it out economic analyses about the potential of introducing certain technologies or approaches in Mexico. We have closely looked at feed-in tariffs and at valuing the cost of carbon in the electricity sector, which was done for SENER,” says Rebolledo.

The company’s second core business is to help companies find ways to finance their own clean technology, particularly through the Kyoto Protocol’s Clean Development Mechanism or the LAERFTE (Law on the Use of Renewable Energies and the Financing of the Energy Transition). According to Rebolledo, the General Law on Climate Change was “ambiguous,” causing companies to turn to Bajo en Carbono for fear they would be over-regulated in a new market seeking emission reductions.

The LAERFTE also gave Bajo en Carbono the chance to work on another government project, evaluating externalities derived from electricity generation in Mexico. The company’s findingswerethat,givenCFE’sobligationtobuyelectricityat the lowest cost possible, Mexico should prioritize investment in renewable energy. “If we all included the global and local externalities generated by CO2 emissions, we would notice the need to make a shift towards renewable energies,” says Rebolledo. While Rebolledo and fellow founder Fernando Rodríguez are hopeful their advice will soon be implemented, they understand they face opposition from within certain institutions. “PEMEX and CFE are the two largest polluters in the country. If we do not regulate both, it becomes difficult for Mexico to transition to a low-carbon economy,” explains Rodríguez.

Bajo en Carbono has had to adapt to help its clients navigate a changing landscape. Priorities have evolved, forcing the company’s team to adopt a more flexible approach to finding solutions. Rebolledo says that originally its clients were interested in carbon credits. Following the changes seen over the last two years, Bajo de Carbono has been solicited to help customers obtain carbon financing, after these had begun a new industrial process or had starting using renewable energy for their installations. But the need for the consultancy service Bajo en Carbono offers is predominant among all its clients, says Rodríguez. Bajo en Carbono is able to help develop CDM projects, energy efficiency projects or even act as an equipment supplier, varying its offering to service any mixture of needs. Our clients may not come from the big leagues, says Rebolledo, but they come from the ranks of the “medium-sized companies that have not gone public, that do not have a sustainability department or the right expertise in these areas.”

Bajo en Carbono maintains this flexibility by not being a technology provider itself. Instead, it relies on a wide pool of technicians and suppliers to find the solutions its clients are looking for in terms of return on investment, of the energy they will generate and of the regulation they will face. Where such a thorough analysis might prove daunting to many, the experience of Rebolledo and Rodríguez in designing solutions for the IDB and the World Bank has readied them for these challenges. With these international institutions, the pair worked on clean transportation and ways to reduce cities’ carbon footprints. Such a track record serves as an excellent calling card in the Mexican market. But rather than rest on its laurels, Bajo en Carbono is already eyeing up its next move. “We see a void for a local lobby system that could help develop local public policy on carbon emissions. This void could easily be taken up by a private company like us. This would be a good growth prospect for us along with our usual project development.”