Satguru Agro Industries Ltd, an edible oil and poultry feed company in Sholapur, Maharashtra, faces power cuts all day Wednesday and for a half-hour other days. Oils that lose heat in the middle of processing can spoil, hurting the firm, which has Rs50 crore in annual revenue.
So, production manager Kanish Patel came up with a plan to use cleaner energy that could run without interruptions and simultaneously bring in revenue through carbon credits.
There is just one catch. Patel needs a consultant to guide him through the complicated process, which he has researched on the Internet, and he has not been able to locate one in the past two months.
Clients such as Patel are the reason why environmental consultants in India are in the midst of ramping up their teams and starting service lines to help firms with environment-related projects —particularly those revolving around climate change. Consultants estimate that India’s companies will spend $500 million (Rs2,050 crore) to $1 billion over the next five years in this area and are eyeing $15-30 million of this as their potential revenue.
Overall, the companies calling on consultants want help navigating the complexity of complying with environmental regulations, cutting costs long-term with clean energy, building their brands by taking on environment friendly projects and generating revenue through carbon trading.
More specifically, says S. Majumdar, counsellor at CII-ITC Centre of Excellence for Sustainable Development, companies are most interested in energy audits that help them understand how much energy they are using and how to reduce it.
They are also increasingly reporting on sustainability, looking at the long-term environmental vision of the company and linking climate change with projects to reduce carbon emissions and gain carbon credits.
Ernst & Young India Pvt. Ltd (E&Y), Agrienergy Ltd, Senergy Global Pvt. Ltd, and ERM India Pvt. Ltd are some of the major players in the space, not counting many others such as independent environmental engineers and scientists.
Consultants say their growth is coming from a growing awareness among Indian companies and the increasing pressure on them. Foreign institutional investors and private equity firms, the consultants say, are more often looking to invest in companies that are working long term to keep down energy costs and utilize clean energy. Other companies that have acquired abroad and had to become compliant with environmental regulations are choosing to expand those efforts into India.
Also, as environment management rules have become stricter internationally, local subsidiaries have become more familiar with the issues and are interested to explore more projects.
“All these are impacting the mindset of entrepreneurs,” says Sudipta Das, partner of the risk advisory services at E&Y. According to him, over 40% of 600 projects globally that are seeking carbon credits are Indian firms. Carbon credits refer to a system formalized at the Kyoto Protocol.
This system guides developing countries to reduce their carbon emissions and translate that reduction into “carbon credits”, which can be sold at a market value to a company in a developed country. That company, in turn, can use the credit to meet its emission limits set by the protocol.
Environmental consulting industry is growing in India and worldwide. The Kyoto Protocol, combined with various natural disasters and the work of interest groups, has made companies worldwide more concerned about climate change. Says Paul Simpson, chief operating officer of the UK-based Carbon Disclosure Project: “We have seen a knowledge gap and, therefore, a rapidly rising demand for environmental consultants.”
Subir Gupta, head of ERM, says that the company has had a presence in India for 12 years, but business has taken off in the last 18 months. “We are expanding all our practices,” says Gupta. ERM has recently created a separate climate change practice with 19 people, and it is expected to grow to more than 100 soon.
E&Y is also expanding, particularly its climate change service line which will grow by 50% to 100 people by the end of the year.
Das of E&Y adds that most of his clients are looking for advice on projects that can result in carbon credits. The project heads within companies agreed that this is the area that they need the most help navigating today—either in terms of planning projects or getting the project approved.
Chintan Shah, head of the regulatory affairs and carbon credits practice at Senergy Global, an associate firm of Suzlon Energy Ltd, says that consultants are still learning the process of the carbon project approval and have a flow of work from larger companies. This is why some of the smaller companies are not getting attention. He says that will change over time as the consultants get used to the process and possibly more work is done by companies in-house.
Saumya Roy also contributed to this story.