As the uncertainty over the outcome of the global climate change negotiations continues, carbon consultants are increasingly reinventing their businesses to expand into alternative opportunities in related fields like renewable energy, clean technology and environmental sustainability, irrespective of their carbon component.
While leading carbon consultant Ernst & Young is renewing its focus on clean technology business in the country, corresponding to its global plan to hire 300 specialists for the practice, home-grown Emergent Ventures India (EVI) and Gensol Consultants are diversifying their portfolios to get actively into renewable energy and sustainability services.
Explaining the development, Paul Simpson, chief operating officer, Carbon Disclosure Project, a UK-based organisation famed for maintaining the largest inventory of carbon emissions of the biggest businesses in the world, says, “It’s only in keeping with the changing business scenario. Renewable energy has emerged as a bigger business opportunity than the carbon market today.”
While the global carbon market was worth $144 billion in 2009, investment in core clean energy (new renewables, biofuels and energy efficiency) amounted to $162 billion.
Besides, the carbon market is a political market. Its future would be influenced by the outcome of the global climate change negotiations, adds Simpson. It holds true more so for the $2.7-billion global Clean Development Mechanism (CDM), which is an instrument under the Kyoto Protocol that allows rich countries to invest in poor countries for offsetting their emissions. As with the rest of the climate change agreement, there is lack of clarity as of now on its continuance after the end of first phase in 2012. The uncertainty poses a business risk for Indian companies, which earned credits worth an estimated Rs 400 crore in 2009, according to Carbon Outlook, a marketplace information tracking resource. The carbon consultants themselves are estimated to have done business worth Rs 60-70 crore.
The recent reports about the UN reluctance to issue carbon credits in the case of projects emitting hydroflurocarbons-23 or HFC-23 because of the allegations that certain companies are overproducing them to earn more credits are also lowering the sentiment about carbon trade. It’s a cause for concern because Indian companies earned about two-thirds of the carbon credits (50 million) from HFC-23 projects out of a total of 79 million credits last year.
Whether it’s risk diversification to avoid depending solely on carbon markets or expansion to exploit newer avenues of growth, carbon consultants are gung-ho about exploring new business opportunities, particularly in the light of the country embarking on missions like installing 20-gw solar power by 2022 and kickstarting a Rs 74,000-crore energy efficiency trading market under the National Action Plan on Climate Change (NAPCC).
“In fact, the NAPCC has provided the regulatory framework for Indian companies to pursue a sustainability strategy, which provides a much bigger business opportunity in the entire sustainability market, including carbon, energy and water than the one offered by the CDM market,” says Sudipta Das, partner & national leader, Climate Change and Sustainability Services, Ernst & Young. “Indian companies are taking a holistic approach on climate change and sustainability and wish to integrate their triple bottom line of sustainability into their business strategies. It is our endeavour to enable them to do so,” he adds.
Likewise, EVI, which has a pipeline of 200 carbon credit projects under CDM, claims to be diversifying to exploit newer avenues of growth. Ashutosh Pandey, CEO, Carbon Advisory Business, EVI, says, “Since Indian businesses look beyond carbon when they evaluate climate change issues, we see tremendous growth for our business coming from clean technology and renewable energy.”
Positioning itself as a global climate change consulting company with operations in 10 countries, EVI today seeks to provide services in climate change risk and opportunity management, renewables like biomass, wind, hydro, waste to energy and solar technologies, and energy efficiency. Set up in 2004, the company began initially by offering services in greenhouse gas management, carbon foot-printing and carbon neutrality.
Similarly, Gensol Consultants, which was set up in 2007, to offer services in carbon advisory, carbon foot-printing and mitigation, is positioning itself as an emerging renewable energy player. Though Gensol has a robust carbon business with 350 clients and a pipeline of 25 million carbon credits, it has ventured to launch a Rs 350-crore Gensol Renewable Energy Fund to set up 100 mw of wind, solar and hydropower projects.
Gensol has already set up two separate companies Natural Resources Engineering, an EPC company for renewable energy projects, and Greensol Engineering for manufacturing solar modules. Anmol Jaggi, director, Gensol Consultants, says, “The carbon business experience has been a great learning experience. It has positioned us to be in all shades of green like renewable energy and energy efficiency. The key is to leverage our experience and harness the emerging opportunities.”
Some companies have simply leapfrogged. According to Raj Prabhu, managing partner, Mercom Capital Group, a Texas/Bangalore-based clean energy communications and consulting firm, “It makes sense to leave carbon management, which is about measuring carbon emissions, auditing, accounting and tax planning, to accounting consultancies. We prefer to focus on energy generation and efficiency side of clean energy business, including solar, wind, geothermal, waste-to-energy, biomass and energy efficiency.”
It seems it is only a matter of time before more such niche consultants mushroom all over the country.
Source: The Financial Express
Published on 19 September 2010