Carbon Trust is an independent, expert partner of leading organizations around the world, helping them contribute to and benefit from a more sustainable future through carbon reduction, resource efficiency strategies and commercializing low-carbon technologies
Q: What is your strategy while working with energy-related companies?
A: There are two different points of view when considering environmental and social responsibility. One is how these aspects are managed internally within the company to comply with regulation, and the other relies on how the company invests externally in its projects. One of Carbon Trust’s main activities is to help companies become qualified suppliers by taking the lead on environmental responsibility via renewable energy generation. To accomplish its goal, we first identify if our client can invest in renewable energy technologies. The next step is to determine the best financial mechanism for the project and explore if the company is eligible to issue green bonds, a CKD, a C ERPI or any other relevant financial instrument. As companies usually work with long-term planning schemes, it becomes difficult to disrupt their strategy in the medium or short terms.
Q: How would you rate the advancement of the carbon market in Mexico?
A: The carbon market has two channels: the voluntary and the compliance market. The voluntary market is already established, but the main barrier is that there is no demand for carbon credits. A good example of this market is the aviation sector: when traveling by airplane, money can be donated for this purpose. Airlines place this profit in a fund with the objective of buying offsets for various projects.
The compliance market was enacted recently with the amendment to the General Climate Change Law that establishes the implementation of a carbon market. It works under the same concepts as the EU Emissions Trading System (ETS) or the Cap-and-Trade (C&T) in California. With this compliance market, the creation of a cap economy-wide will oblige companies to reduce their GHG emissions by providing market-based instruments or boosting innovation to achieve GHG emissions. In order to comply with the ETS/C&T, companies are obliged to submit annually a GHG inventory report to SEMARNAT under the National Emissions Register framework.
This regulation is currently being modified to make sure the amendments of the General Climate Change Law are properly incorporated. The pilot market starts at the beginning of January 2019 and will last for three years. The full implementation of the carbon market in accordance with the Climate Change Law starts in 2021.
Q: What do you think the current administration should prioritize to incentivize the development of renewable energies in the country?
A: Energy across the world can be categorized into two different topics: oil and gas and renewable energy. Despite Carbon Trust’s work with renewable energy, it does not mean the oil and gas sector is not relevant. I think it is critical to consider the importance of both industries. I am worried that the new government is not seeing this as a priority. Renewable energy projects should be developed not only because they help mitigate climate change or help achieve national GHG reduction goals, but because they make business sense. As long as the new administration understands that there are two different priorities in the energy sector, things will work out well. The UK and Germany are good examples of how the transition must work simultaneously because one sector should not be ignored to develop another market. It is a process that works both ways and our job is to establish renewable energy as part of the public agenda.