Companies and financial institutions mobilize investments to start sustainable projects in the country after Business to Finance event of European project Low Carbon Business Action in Brazil.


Low Carbon Business Action in Brazil Team, European Union Delegation, GIZ and IDOM



The Low Carbon Business Action in Brazil (LCBAB) program held on September 17 and 18 a business round in order to put into practice more than 65 sustainable projects in the Brazilian market. The meeting, called Business to Finance, received 150 people and promoted more than 150 pre-scheduled meetings among project partners, national and European banks as well as end customers; and the presentation of initiatives to investment funds.

On the first day of the event, Lise Pate, Task Manager of Low Carbon Business Action in Brazil explained the importance of the initiative. "Today, we are proud to promote a methodology that translates a general policy line in about 90 partnerships among companies in Brazil and Europe. The European Union is working on an expanded phase of the project that will also cover Mexico, Chile, Argentina, Colombia and Canada. In November 2018, we presented a long-term strategy for a prosperous, modern, competitive and neutral economy, which shows how Europe can lead this movement and invest in realistic technological solutions," he explains.

According to the executive manager of Environment and Sustainability of CNI, National Confederation of Industry (Confederação Nacional da Indústria), Davi Bomtempo, the low carbon agenda is always present among the priorities of the industry. "We have been discussing the circular economy, which is a topic that came to Brazil to stay. This is important not only for the industry, but also for the consumer who wants a more sustainable world", he explains.

For Mercedes Blázquez, leader of the Low Carbon Business Action in Brazil, it is necessary for the country to invest more in projects that fight the effects of climate change, and financing is a fundamental step towards the implementation of effective projects. "Financing has been a challenge in Brazil. To this end, our project began this process of facilitating access to financing in 2017. Several studies have analysed the sources of financing to mitigate the effects of greenhouse gases. 400 million dollars were invested around the world in sustainable projects, while Latin America raised only 7% for this type of initiative", he points out.

The trends of climate finance in Brazil were addressed in a conference by Marco Antônio Araujo Lima, executive director of the Brazilian Development Association (ABDE - Associação Brasileira de Desenvolvimento ). "Our goal is to work to make the way we operate in this sector as simple as possible. We have to be simple to be effective. We must create systems so that companies that want to invest can have information available to access all these resources that are allocated through the national development system. This type of work is already being done and it is very important to have results, because it is an available and important resource", he says.

The practices of low-carbon agriculture were the subject of a conference led by Rodrigo Justos de Brito, coordinator of sustainable development of the CNA - Confederation of Agriculture and Livestock of Brazil (Confederação da Agricultura e Pecuária do Brasil). "We have been working for more than ten years on issues related to sustainability and we have carried out Technical Assistance and Rural Extension to ensure efficiency in the use of water, soil resources and also to avoid the emission of polluting gases into the atmosphere", he says.

The biogas sector, on the other hand, was addressed at a conference by Alessandro Sanches, of the Brazilian Biogas Association (ABIOGAS - Associação Brasileira de Biogás), who defended the importance of expanding biogas production and its use as an energy source throughout Brazil. "Biogas is a source that can be generated all day long in any region of the country and season. We have substrates for sanitation, agro-industry and the sugar-energy sector, but we see production concentrated in the South and Southeast", he says.



Luís Ricardo Trezza, executive director of the Brazilian Association for Energy Efficiency (ABESCO - Associação Brasileira de Eficiência Energética), explained the business models for energy efficiency and the financing possibilities. Brazil is one of the countries with the greatest potential for producing solar photovoltaic energy. At the conference held by Camila Ramos, vice-president of financing at the Brazilian Association of Solar Energy (ABSOLAR - Associação Brasileira de Energia Solar), the opportunities for greater participation of this type of generation in the Brazilian energy matrix were discussed. "We have an exceptional and democratic resource throughout the Brazilian territory and we see a lot of potential for growth. ABSOLAR estimates that the solar sector should generate 37,000 new jobs in 2019 alone", she explains.

At a time when the country has seen an increase in the number of forest fires, Alan Batista, specialist in investments at the World Resources Institute (WRI), explained about financing in the forestry sector by means of VERENA - Economic Valuation of Reforestation with Native Species project, which seeks to demonstrate the technical and economic viability of reforestation with native species on a large scale, as well as its social benefits. "The fact that the projects are long-term imposes certain restrictions. From the point of view of the small producer, we have to think about systems that diversify market risks. One of the big issues is to invest in development research and innovation," she says.

Investors and investment funds

The second day of the event was dedicated to the presentation of 41 pitches of association projects between European and Brazilian companies to a pool of 12 impact and climate investors (among investment funds, private equity, venture capital, seed capital, among others), with the objective of attracting investors to release their projects in Brazil. It also had simultaneous conferences, focused on financial instruments, which addressed the impact of financing trends in sustainable sectors in Brazil, low carbon project financing models, and ESG (best environmental, social and governance practices) trends in investment funds. They gave lectures representing the companies SITAWI Finance for Good, Rhodium, Sense-Lab, Atla Consultoria and associations ANBIMA - Brazilian Association of Financial and Capital Markets Entities (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais) and ABVCAP - Brazilian Association of Private Equity and Venture Capital (Associação Brasileira de Private Equity e Venture Capital).

"The impact business was born to have a financial feedback and, at the same time, have a positive impact on society and the environment. In Brazil, we still have a small ecosystem, but it already moves money in different sectors", explains Fernanda Dativo from SITAWI Finance For Good, during a conference on the evolution of impact investments in the world.

"The impact investment adds measurement of social and environmental points of view, in addition to risk and feedback indicators of traditional investments. It's a more complete and conscious look", explains Rachel Sampaio of Rhodium. "There is a market opportunity. We realize that today there is a consumption trend aligned with the ideology and morale of consumers."

Eduardo Grytz, investment manager and ABVCAP representative, spoke about the private equity and venture capital market scenario in the country and the growing importance of ESG. "The private equity and venture capital industry is a poignant market and has US$ 40 billion of committed capital in the world, with US$ 10 billion in capital not yet invested. In Brazil, there have been investments in practically all sectors", he explains. "ESG as a policy has been proven by means of several studies as a value-adding tool for companies. Companies that adopt ESG practices have better governance and results in the long term. It is an issue that becomes mandatory in the investment market", he concludes.

Paulo Figueiredo, managing partner at Atla Consultoria, explained about the requirements for financing low carbon projects. "The investor wants to see the beginning, middle and the end in projects and it is important to be aware of the risks. It is essential for banks, for example, to predict if the project pays for itself, if the math is correct, if there is sufficient cash flow", he explains. "It is necessary to know the market, the type of money available, the deadlines, the specific regulatory frameworks of the project and the fiscal regime, in order to shape the project", he adds.

History

The event is an important part of a cycle that began in 2017 when Low Carbon Business Action in Brazil mapped out over 400 institutions and financial instruments available in Europe and Brazil to enable financing of low carbon technologies in the country. More than 30 financial institutions were selected, while each project underwent a rigorous technical analysis that allowed defining its technical and financial feasibility, as well as its environmental impact. 300 million Euro are expected to be mobilized after the meeting.

"As a result of the business round we will be able to see the implementation of the projects, already having in hands the environmental impact indicators of each one of them. It will be an important step to aggregate European technology and innovation in several sectors, such as energy, biogas and waste management, which will certainly bring significant environmental, social and financial feedbacks in the long term", explains Mercedes Blázquez, leader of the Low Carbon Brazil project.

The Low Carbon Business Action in Brazil program closes its cycle in December 2019 and is already planning its continuity in 2020.

Experts say that Brazil has met its target to reduce carbon emissions, during the meeting of the Environment Commission (CMA - Comissão de Meio Ambiente).




Experts met on September 26, at the Environment Commission (CMA), to discuss the scope of the National Climate Change Policy (PMNC - Política Nacional de Mudança Climática). During the discussion, they affirmed that Brazil has met its target to reduce carbon emissions.

Ricardo Esparta, chemical engineer and director of Ecopart Assessoria, who participated as a technical expert in Phase 1 of Low Carbon Business Action in Brazil, assessed the National Climate Change Policy (Law 12,187, of 2009), created to help achieve the environmental targets of the Paris Agreement, which established a reduction of up to 39% in greenhouse gas emissions in Brazil by 2020. Composed of several regionally directed plans, the policy seeks to meet emission reduction targets considering sectors such as electric power generation and distribution, urban public transportation, industry, health services and agriculture, according to the specificities of each sector.

According to Esparta, in its creation in 2009, the National Climate Change Policy expected the economy to grow by 5% per year. Given that Brazil did not grow at this rate and still faced a slowdown in the economy, which has an impact on energy consumption, the climate targets were easily met. In addition, there was a reduction in deforestation from 2005 to 2012, one of the largest carbon emitters in Brazil, remaining practically stagnant since then.

One of his criticisms regarding the National Climate Change Policy (PMNC) was the establishment of a target without there being, according to the expert, a more careful and realistic concern with the support for a transition to a low carbon economy and less dependent on fossil fuels. However, Esparta sees solutions. "Wind energy was one of the most expensive in the early 2000s and today it is one of the cheapest, as is solar photovoltaic, which makes it more economically attractive today", he highlighted during the meeting.



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