Miguel Rescalvo
Regional Manager
DNV KEMA’s Climate Change Division

Knocking Down Barriers to Climate Change Strategies

Wed, 02/19/2014 - 12:20

Consultancy firms can help utilities and governments plan energy strategies and increase energy efficiency through technical and operational support. Challenges such as climate change raise the bar for consultancy firms dedicated to the power sector while providing opportunities to stand out in the market. Norwegian classification firm DNV already had a strong presence in the oil and gas sector before entering the wind and solar energy industries. However, the company lacked experience in areas such as distribution and transmission infrastructure, energy efficiency, and management consulting for the energy sector. Dutch firm KEMA was proficient in these areas, and the merger of both companies expanded their landscape to a broader set of activities related to climate change issues. Their current services encompass the entire chain of value of the energy industry. The company diversified its services and interests using its knowledge of the Kyoto Protocol mechanisms after the CO2 market dropped. “DNV KEMA has become a prime mover in the fight against climate change, working alongside international institutions such as the World Bank, and is assisting the Mexican government and several multilateral organizations on rethinking their adaptation and mitigation mechanisms within the context of the decline of the CO2 market and its unfavorable aftermath showed that it was unviable. Its shortcomings became more evident after five years, but this also helped show the virtues of certain initiatives virtues in mitigating the effects of climate change,” says Miguel Rescalvo, Regional Manager for DNV KEMA’s Climate Change Division. He believes that the bitter experience actually left a positive legacy, particularly for Latin American countries. The Clean Development Mechanism had a positive impact raising awareness and getting the private sector involved through the use of financial incentives. After all, the private sector has the power to change the rules for the industry and market.

DNV KEMA is proficient at measuring, verifying, and reporting information and programs, helping develop new strategies and improving the operational reliability of existing ones. Although the firm is not working directly in the Mexican energy sector, it is working with the federal government on designing programs with a sectional approach. Advancements in evaluating programs include improving the energy efficiency of refrigerators and light bulbs, launching programs like the green mortgageprogram, evaluating practices in mitigation strategies, and facilitating access to international finance agencies and institutions. “We support innovation in climate change strategies in order to design a new framework alongside international agencies, which is compatible with DNV KEMA’s mission and vision,” claims Rescalvo. The company’s priorities and strategies fluctuate according to clients and market conditions. Rescalvo says the firm is looking closely at new market mechanisms that should follow mitigation and adaptation services, and emphasizes DNV KEMA’s ambition to use its globally acquired expertise and knowhow in program implementation. On the other hand, DNV KEMA has plenty of experience in energy efficiency, which the firm wants to implement in Mexico once barriers are torn down.

“Mexico’s electricity sector might be tightly regulated, however the fact that the country holds a position as one of the frontrunners in fighting climate change – partly due to the country’s General Law on Climate Change – is an indicator this has to change,” says Rescalvo. “Maybe the government is not green for the sake of it, but it is definitely able to identify business and employment opportunities for Mexico,” says Ramiro Barrios, Climate Change & Sustainability Consulting Services Coordinator for DNV KEMA. He firmly believes that the current administration will not drop the environmental agenda, given its creative ways of involving the private sector and attracting investments through sectional programs. Linked to this, DNV KEMA wants to participate in feasibility studies in collaboration with the World Bank and five private institutions. The goal is to make energy efficiency programs more attractive in order to open up the market. “The private sector’s involvement is complex,” says Barrios. “Critics highlight the lack of fairness in this program because it only finances one private actor, but it is a necessary initial step.”

When the new Climate Change Commission was ratified, the government stressed the lack of correlation between economic growth and environmental protection. “The first step should be creating incentives to promote activities that might be seen as unattractive from an economic viewpoint.” Barrios directly points to reducing subsidies for fossil fuels as a priority, arguing that making petrol more expensive would have positive environmental impacts and increase the availability of economic resources. Simultaneously, the quality of fossil fuels should be improved by removing sulfur from gasoline and diesel to improve air quality. When environmentally conscious measures are not against economic growth, intervening in the energy sector is a profitable endeavor.