The European Union-funded program for building partnerships between European and Brazilian SMEs in sectors that contribute to the low-carbon economy, Low Carbon Business Action in Brazil, completes its mission this month and will resume in a new cycle in the second half of 2020 not only in Brazil, but also in other Latin American countries. Mercedes Blázquez, Team Leader of the program, takes stock of the initiative's trajectory, which provided technical and financial assistance for about 95 projects, and tells about its expansion in the coming years.
1 - Low Carbon Business Action in Brazil ends in May with around 75 projects to be implemented in sectors such as renewable energy, energy efficiency in buildings and industrial processes, precision agriculture, waste management, biogas and forest risk management. How do you assess the program's first experience in Brazil?
Low Carbon Business Action in Brazil emerged as an initiative of the European Union to promote the exchange of technology and experience among companies from member countries of the bloc and in Brazil in the context of climate action and the reduction of greenhouse gas emissions. Since 2015, the program has been operating in the country providing technical and financial assistance that allows the development of partnerships and projects in sectors that contribute to sustainability and the low carbon economy in Brazil.
The program was divided into two phases. At first, we brought together more than 300 Brazilian and consumer companies and, from 2016 and 2017, we held business rounds until 95 projects were selected to receive technical assistance services to make these partnerships possible. The second phase of Low Carbon Business Action in Brazil, which began in late 2017 and ends in May this year, promoted support so that the initiatives could mature to the point of having their implementation envisioned in Brazil. Today, we have 75 mature projects and about five are already being implemented in the country.
2 - How do you view the synergy among participating companies? What are the main advantages of intercontinental partnerships in sectors that require high technology?
Throughout the program cycle, we had the opportunity to promote commercial partnerships, technology transfer and joint ventures between European companies, with innovative solutions; and Brazilian companies, with experience in key sustainability sectors and extensive knowledge of the market in Brazil. With this, small and medium-sized companies with advanced technologies that wish to access new markets, such as Latin America, have the opportunity to join companies that already operate in Brazil or consultancies with extensive knowledge of the specificities of the region. On the other hand, Brazilian companies can count on new solutions in the country. It is a win-win relationship for both parties.
Mercedes Blázquez, leader of Low Carbon Business Action in Brazil
3 - Which sectors had the greatest potential to benefit from the technologies of participating European companies during Low Carbon Business Action in Brazil?
A sector that concentrates more than 50% of the projects participating in the program is biogas, which according to CI Biogás (International Centre for Renewable Energies), has enormous growth potential in the country, being able to meet 36% of the Brazilian electric demand, as it is a constant way of generating clean energy, which on the other hand can provide a useful destination to waste that would previously have been discarded.
Another sector with great potential to benefit from the new technologies we are bringing to Brazil is that of renewable energy. Wind energy is the second main source of energy in the country and currently has more than 15 GW of installed capacity. Solar energy distributed, in turn, grew over 212% in Brazil in 2019. According to data from the National Electric Energy Agency (ANEEL), 110,997 systems were installed in the last year throughout the country, between mini and micro generators.
4 - The program is ending and already has the estimated impact results of the projects. The initiatives will have the capacity to save or reuse the water volume equivalent to more than 1,700 Olympic swimming pools per year, and the reduction in air pollution corresponds to more than 1,400 average vehicles in circulation throughout the year. Do you believe this number could be higher as the solutions gain scalability in the country?
No doubt the positive impact of the solutions implemented in Brazil will be greater when there is scalability of the business models. Most of the projects supported by Low Carbon Business Action in Brazil demonstrate the capacity for replicability in industries, agricultural systems, energy generation and even for small and medium producers in different regions of the country. The idea of most initiatives is to present pilot projects of sustainable business models to the market, which can be adapted for each end customer.
5 - Low Carbon Business Action in Brazil offered technical assistance and support in the search for the best financing instruments for participating initiatives. Given the experience of working with 95 projects in the country, can you identify the greatest difficulties for implementing solutions in sustainable sectors in Brazil?
One of the main obstacles to the implementation of projects aimed at low carbon sectors in Brazil is access to financing. Financing renewable energy projects in general has some challenges, since the investor seeks clarity on the risks involved and, for that, extensive knowledge of the market and regulatory frameworks is required. In addition, we could highlight the limited credit capacity, the limited choice of lines really adapted to sustainable sectors, the lack of technical training for credit and risk assessment specialists, the high perception of risks by financial institutions, but above all, the difficulty in presenting guarantees when the partners are foreigners or a new company is created between foreign and national partners.
6 - Has the business sector been more aware of the benefits of socio-environmental responsibility and the need to achieve efficiency in processes?
We see a positive movement around the world regarding companies' search for social and environmental responsibility. The initiatives of companies on environmental preservation, social equity and governance, expressed by the term ESG, have become increasingly relevant. A recent Bloomberg Intelligence survey indicated that investors who invested on ESG share strategies reached higher rates in 2020 on the US stock exchange. Most funds, focused on companies with good environmental, social and governance practices, had a better performance.
We live in a world of limited resources; therefore, companies, industries and agricultural producers need to think about ways to reuse what they use, by means of circular economy, and to reduce their footprint in the environment. The advantages of adopting sustainable practices are exemplified in several studies in different sectors. Projects supported by Low Carbon Business Action in Brazil, for example, have estimates of how much can be obtained in energy gains, in energy efficiency, in reducing waste generation, energy and water consumption, among other indicators.
7 - Tell us about the expansion of the program in America, which in addition to Brazil and Mexico will include Argentina, Chile, Colombia and Canada, with a focus on promoting circular economy. What will be their main differentiating features in relation to the model already applied in Brazil? Will the program be applied with the same approach in all participating countries?
The program will be expanded with an emphasis on circular economy. There will be a call to select interested companies and the development of initiatives with the collaboration of European industrial clusters that will act to facilitate partnerships between European SMEs and partner countries. With this, the adoption of low carbon technologies by the existing industry in partner countries will be promoted, as well as the creation of new low-cost technologies, also promoting the use of circular economy solutions.
The aim is to reinforce the European Union's vanguard in climate action by mobilizing intermediary industrial clusters in Europe to promote joint business partnerships and develop commercially viable business projects with partner countries. The action will be supported by the Cluster Internationalization Program for SMEs developed under the European Union's Programme for Competitiveness of Enterprises and SMEs (COSME) in the last four years, as well as in the Low Carbon Business Action projects, implemented in a pilot way successfully in Mexico and Brazil.
8 - What will be the sectors and target audiences of the next stage? Will it also include smart city initiatives or entrepreneurship? Or will it be more focused on industrial and agricultural processes?
The main sectors to be covered are renewable energies, efficiency in industrial processes, forestry risk management, biofuels, biogas, precision agriculture, waste management and low-emission transport.
As mentioned, the promotion of the circular economy will be the focus of the program and how it can be applied in different sectors. As a comprehensive concept, the European Union hopes to be able to operate in new sectors, in addition to those that have been successfully activated in Brazil and Mexico, by means of Low Carbon Business Action. This includes smart city and entrepreneurship initiatives. The idea is to expand the range and identify disruptive initiatives that may also improve urban life.
9 - Low Carbon Business Action in Brazil had the participation of European clusters that bring together companies with innovative technologies. Which other European associations can play a relevant consultancy role in the next step?
In Brazil, the program had more than ten clusters which supported around 20 projects. For the expansion of the program in America, we have identified other associations that could be partners and have been doing relevant work in promoting technical knowledge and solutions in their respective sectors. Our strategic partner will be the European Cluster Collaboration Platform (ECCP), and some associations and clusters that we have already mapped: European Biogas Association, CAPConstruction - Wallonia Clusters, Cluster Tweed, ACQUEAU, Flanders Bio, Ghent BioEnergy Valley, Plastics Recyclers Europe, Cluster Eco Construction, Smart Hub Flemish, Greenwin and Smart Digital Farming. But there are dozens of other stakeholders with whom we can cooperate in the future.
10 - Have you already mapped the Brazilian entities that could be partners in the next step?
Yes, we already have a close relationship with the main associations of companies that operate in each of the objective sectors of the phase that we are closing, and by preliminary analysis, we must continue to work with most of these sectors, especially with those that showed enormous potential. such as Waste Management, Biogas and Biomethane, Low Carbon Agriculture, etc. We are going to reinforce the ties of contact with industry and business associations to, together, help companies from both regions to do business and, at the same time, contribute to the reduction of emissions and other agents that harm our environment.
11 - How would you define the current moment of sustainability in Brazil? And what are the expectations for the coming years?
Brazil is experiencing an excellent moment in the renewable energy sector, with great room for growth. The abundance of natural resources in the largest country in Latin America is undeniable and this presents numerous opportunities for the development of initiatives that are really relevant to the low-carbon economy.
At the same time, we have seen major environmental disasters and timid remediation measures. This raises an alert for the need to look at sustainability as something essential for the development of Brazil, something that must be protected by the State and placed as an inherent part of the core business by companies. In this way, the demand of society and new generations will look at the companies they consume in relation to their responsible performance with the Environment. As bleak as the scenario may be, we must not forget the thousands of Brazilian companies that work to build effective solutions that can not only contribute to the mitigation of environmental and climatic damage, but also generate jobs and income for the population.