GREEN BUSINESSES

IN PERU
A private sector report

1
 To be quoted as
Patricia Iturregui
Green Businesses in Peru: a report for the private sector. First English edition
in Lima, September 2017

Climate change / studies on the environment / competitiveness / OECD /

investment policy / private investments / private sector / Peru

This report is backed up by the Institute of Nature,

Territory and Renewable Energy Sciences

Reviewed by: Augusto Castro and Sofía Castro (INTE – PUCP), María Elena Gutiérrez, Javier
Perla and Pía Zevallos (Libélula), Francisco Avendaño and Lorenzo Eguren

Author and Editor:

© Patricia Milagros Iturregui Byrne
Pinos del Valle 235, Higuereta, Surco, Lima, Perú
piturregui@gmail.com

First edition in Spanish October, 2016

Design and Layout: Edwar Salas – Ojo Creativo
Cover Design: Gisella Scheuch based on detail of Patricia Iturregui painting
Translation: María Nelly Cuculiza
ISBN 978-612-00 2457-7

The unauthorized commercial use of this document is prohibited and may be punishable
under the applicable laws.

2
GREEN BUSINESSES
IN PERU
A PRIVATE SECTOR REPORT

Patricia Iturregui

3
«By 2021, year of the Bicentennial, Peru will be a member of the OECD.
Our Government Plan totally coincides with the United Nations Agenda
for the Sustainable Development Objectives to 2030»

Pedro Pablo Kuczynski, president of Peru,

July 28 2016

4
 CONTENT
Foreword - Diego de la Torre 7
Foreword - David Saettone 9
Foreword - Augusto Castro 11
Introduction 12
Summary 13
New context and new business opportunities 26
A sampler of green business opportunities in Peru 28
Agriculture 32
Energy 40
Interview to Juan Coronado, Auster Director 43
Forestry 44
Interview to Felipe Koechlin, General Manager RAMSA 50
Industry 52
Transportation 56
Urban Infrastructure 59
Waste 61
Water 63
Conclusions 69
References 70
Annexes 76

5
 NOTE TO THE ENGLISH EDITION
After the publication of Green Businesses in Peru in Spanish,¹ El
Niño Costero severely affected the coastal areas of Peru last April.
The cost of reconstruction will be of 7.89 billion dollars or the 3.2%
of Peruvian GDP. Likewise, after hurricane Harvey in the US (Texas)
last August, $125 billion dollars will be required to rebuild the
affected infrastructure.
Climate emergencies are multiplying and there is a need for a
programmatic approach. In this direction, new types of insurance
schemes are emerging around the world. Under the latest Cancún
insurance policy in Mexico a collective pot of money will operate
with amounts between $1m and $7.5m for insurance premiums
on the policy. This is aimed to monitor and protect a 60km stretch
of reef and connected beach. If storms damage the reef system,
the insurer will pay out sums likely to be $25m to $70m in any
given year. The abovementioned collective pot is a contribution
by the insurance company Swiss Re, the Nature Conservancy, a
US environmental charity and local organizations dependent on
tourism.
However, to avoid even further multiplication of climate
emergencies, more has to be done to reduce greenhouse gas
emissions. Currently, there is mounting evidence that funds which
pursue environmental, social and governance (ESG) standards in
their strategies have a better performance than those that do not
do so by a significant margin. An ethical investment boom has
been predicted where now around 417 companies worldwide
rank high on ESG standards.
1
The Spanish edition is sold out
6
Last July, Swiss Re, announced plans to benchmark its $130bn
portfolio against ESG indices. This shift from traditional
benchmarks to ESG ones will involve investment into many more
ESG-compliant companies.
Although the value of funds directed to ESG investments are
not 100% precise, the Global Sustainable Investment Alliance,
an industry body, estimated that “ESG integration” was around
$10.4tn in 2016. Here “integration” meant the explicit inclusion of
ESG into financial analysis.
At this point we should not forget that IFC’s 2016 Climate
Investment Opportunities Report estimated that the Paris
Agreement will catalyze climate-smart investment opportunities
in certain emerging markets of up to $23 trillion between now and
2030. The report used the national climate-change commitments
and underlying policies of 21 emerging-market economies,
representing 48 percent of global emissions. For the case of Latin
America, the estimations are of $ 2.64 billion. More than half of this
amount is expected to go to transport investment.
The main reason to publish this report in English is to help the
process of communication within this wave of ESG investment.
Peru is an open economy that has continued to perform better
than other economies in the region with an impressive cumulative
growth. The challenge is to make it sustainable.
I invite the reader to go through the sampler of green investment
opportunities in Peru and contact me should you have anything
to ask.
Patricia Iturregui
Lima, September 2017
 Forewords
Diego de la Torre de la Piedra
Businessman. President of Global Compact Peru
It is the author of this report, Dr Patricia Iturregui, who persuaded
me to attend the UNFCCC Climate Conference in Copenhagen
back in 2009. Since then I have participated on a few similar
conferences and have witnessed the irreversible process of
the world to a low-carbon economy. Thanks to this I could get
in touch with global business leaders based in OECD countries
who were looking for information concerning global trends. With
it they build business models that create prosperity developed
with social and environmental responsibility. As much as 99%
of the scientific community agrees that rising of CO2 emissions
from anthropogenic sources break the delicate balance of the
ecosystem. This will produce an important rise of temperature to
the Earth and will cause an unbalance similar to an impact of 41
degrees C in our body.
Our country promotes the Pacific Alliance and showed leadership
in these topics with the creation of the Ministry of Environment
and the achievement of the draft Paris Agreement during COP20,
held in Lima, which allowed the adoption of the historic Paris
Agreement. It is a matter of State policy in Peru to adhere the
OECD and to pursue the sustainable development objectives for
the planet. The Peruvian adherence to the OECD Green Growth
Declaration reaffirms what many business leaders have been
thinking for a while: there is no dichotomy between green growth
and prosperity. Our industry inventories are relatively small so it
is possible to create new industries with low-carbon footprint
and low water impact. The formal business community in Peru is
committed to a low-carbon economy. We cannot assure the same
for the case of informal businesses. We need to incorporate them
if we are aiming to be a reliable country that wants to adhere to
the OECD. We need to position Peru and our companies at the
top of this new growth model that harmonizes the social and
environmental aspects.
1
This is a summary of the publication in Spanish Negocios Verdes en el Perú 119 pages ISBN 978-612-00-2457-The forewords are the same as in the publication.
7
Optimists are the ones who write history. As Helen Keller stated:
«No pessimist ever discovered the secret of the stars, or sailed
to an uncharted land, or opened a new doorway for the human
spirit». In 1863, Jules Verne wrote a novel, Paris on the XX Century,
but the manuscript was lost until his great grandson found it after
130 years. Verne envisaged Paris by 1960 with crystal buildings,
air conditioned, television, elevators and cars with petrol gas, fax
and something similar to the Internet. He imagined a modern city
with an amazing accuracy. In the future, as Michio Kaku believes,
we will not be passive spectators before the dance of nature.
We will be the choreographers and we will have the capacity to
amend legislation here and there for the benefit of humankind.
This power, almost divine, looks very advanced but all the seeds
for all these technologies are already sown. By 2100 we will
manipulate objects with mind power, will create perfect bodies
with biotechnology and computers will comply with our desires,
after reading our thoughts in silence. We will create engines able
to use the unlimited energy of the stars.
I tend to smile when somebody does not believe in the
opportunities that a low-carbon economy brings. It is a similar
situation to that back in 1903 when the New York Times stated
that airplanes were a waste of time. Just a week later the Wright
brothers were successful flying their airplane.
It is key that the private sector not only participates in research
and technological innovation, but also in the design of policy
regulations. As we were discussing with colleagues in Argentina
and Chile, called by the British Government, there are enormous
possibilities for new green industries, not necessarily with the
technologies and priorities developed by the North. For example,
many models of regulatory and incentive frameworks for clean
technologies do not take into account the specificities of our
region. By this reason, it is important to research in order to design
a climate change strategy that is consistent with Peru´s needs.
The challenge of global climate change demands thorough
thinking and answers with wide consensus. As a Chilean
colleague commented, the carbon certificates for hydropower
projects had a lot of obstacles for the region. In Europe, wind and
solar technologies have bigger dissemination as they do not have
our hydropower potential. We need the coordination between
the Ministry of Environment, the Ministry of Foreign Affairs and
the business sector to bring about innovative and coherent
proposals to the United Nations. If not, geographical and socio
economic particularities of Latin America and Peru will not be
considered due to lack of research and leadership of our political
actors and business leaders. Fortunately, CONFIEP and the local
Global Compact network have proposed, among others, that
reduction of informality should be part of the climate agenda. This
is consistent with one of the challenges that Peru has, according
to the OECD: the need to reduce labor informality while the
economy is diversified with an efficient management of natural
resources.
New versions of Bill Gates, Larry Page and Zuckerberg of the green
economy could be Peruvians if we invest properly in education
and we continue to be the world champions on macroeconomic
consistency, market economy and a vibrant democracy. Our
insertion to the world economy and to supranational mechanisms
such as free trade agreements and the UN Global Compact has
strengthened Peru´s presence in the world. I believe that this
role will be enhanced even more with the Pacific Alliance. The
recent creation of the Green Growth Platform within the Pacific
8
Alliance will allow our business leaders to exchange priorities
and agendas for action with the environment ministers of the
Alliance. The planet is getting smaller, bringing very important
challenges ahead such as development, security, sustainability
and international peace. We are called to incorporate topics that
involve the entire planet in our strategic design as businessmen.
This is part of the vision of being part of the first world as first
class business leaders. Topics as climate change and biodiversity,
among others, will be part of the world business agenda.
Participating in the business summits that I attended in the last
10 years in New York, Copenhagen, Río de Janeiro, Madrid and
Geneva, I have witnessed that modern businessmen, who are
efficient and competitive, involve the entire planet in their
strategic design. To turn Peruvian companies into international
companies will be easier if they have corporate strategies that
include environmental protection and climate change. We need
to channel our energy, creativity and concern in these topics of
global impact that will affect our children and grandchildren. This
is generating innovation, new industries and new opportunities.
The trend is irreversible towards a society and culture with
harmony with the environment, as my daughter reminds me with
a serious admonition: I am not printing this foreword on both
sides. It is important that, as businessmen, we should think about
our role as constructors of new economic and social models that
contribute to planet sustainability.
Congratulations to Patricia Iturregui for this report on the new
rules of the game and the opportunities of the green wave, in
view of our current process to adhere the OECD. By doing so, I am
sure that we will achieve the sustainable development objectives
to 2030 as we did in the past for 2015.
 David Saettone,
investor, chairman at Líderes +1
It is no coincidence that the concept of circular economy breaks
out in new ways of doing business. It is also no coincidence that
four out of ten consumers are willing to pay more for products
from responsible companies.
And it is because the world changed; the rules of the game
changed.
It is mandatory for companies to adapt, on the one hand, to the
demands of the new consumer, the conscious consumer, the one
who values his/her commitment to generating positive social
impacts and preserving the world through environmental care.
On the other hand, and as a result of the commitments made by
the United Nations at COP21, governments will gradually begin
to formulate ad hoc regulations, businesses that "close the circle",
to find new ways of operating more efficiently, imitating nature's
cycles. From an additional perspective, we add to the two previous
ones the entrepreneur's own perception and need to generate
a change that integrates all the participants in a positive growth
wave: fair management with suppliers will guarantee sufficient
quality stocks; empowered and well-paid employees will lead to
higher levels of productivity; satisfied customers will generate
greater value and better reputation for the brand. Finally, all these
factors will translate into better sales.
More than in past decades, companies now invest in people's
development. Not only in their employees, but also in their clients,
in their suppliers, in government, and in the community at large.
With these actors' progress, markets will grow, economies will be
larger and companies will be more successful. It is also important
to communicate what is done: companies that are known for a
positive impact management are considered lower risk. With
this, their access to financing becomes less expensive and their
margins increase. Then: Better reputation = Higher incomes.
According to the Carbon Disclosure Project, companies that take
into account climate-related issues have a return on investment
(ROI) that is 18% higher than the others’.
9
The decision of responsible entrepreneurs for migrating from
fossil fuels to renewables and whose purchasing behaviors are
aimed at incorporating expectations related to sustainability
will mark trends in the markets. The buyer who says "I will not
buy more products that generate deforestation" is setting the
tone for large corporations that want to be able to meet the
growing global demand, and take advantage of the extraordinary
opportunity that advances in technology offer to reduce their
impacts. Similarly, the financial instruments at their disposal
facilitate neutralization of the remaining ones.
By now there are companies whose objectives are focused on
their economic, environmental and social impacts, or which,
at least, seek their neutrality. There are companies, on the other
hand, that aim to turn their management into one of positive
impacts, that is, that seek to even "clean" others' impacts.
The Tropical Forest Alliance states that if we continue to deforest at
the current rate (15% of global GHG emissions) we not only put the
business model but also the entire society at risk. And the range of
opportunities is enormous regarding forest management in Peru:
Attention is directed towards the forests located in Peru,
Bolivia and Brazil, which are among the most biodiverse on
the planet. The National Strategy on Forests and Climate
Change was recently approved. It will enable Peru to address
the problems of deforestation and soil degradation in a
multi-sectoral and integral way. It encourages public-private
partnerships under the "production-protection" model by
promoting sustainable agriculture and livestock production
and offering diverse green business opportunities. Forests
are a source of health, food and pollution control. These three
points are at the same time great generators of businesses.
As Peru is the 9th country in the world and the second in
forest area in the region, it is important to focus on the proper
use of soils; responsible management can generate positive
impacts in the economic, social and environmental spheres.
 Our country can potentially be a major generator of carbon
credits whose demand will increase globally from 2020
onwards when the Paris Agreement will come into force.
The implementation of a Carbon Tax in some countries -like
Mexico and Chile in our region- is an event that will strongly
affect carbon markets.
Regarding the advantages of financing, which this agreement
will originate, we must not overlook the opportunity to
generate innovative ventures related to green growth:
biomass for renewable energies, fertilizers, sustainable timber
extraction, eco-lodges, coffee cultivation, cocoa and fungi,
among others. The new Forestry Law regulation gets us ready
to make us available to the existing green lines.
The new regulation of the Securities Market Superintendence
requires companies to start looking inward, recognize their
economic, social and environmental impacts and communicate
them. Reporting implementation is mandatory and although
information is not yet thorough at this first stage, the level and
scope of reporting will be progressive.
Peru's aspirations to become part of the OECD and fulfillment of
the 17 Sustainable Development Objectives, with goals to 2030,
drive us ahead and mark the way to develop more transparent
and responsible policies regarding population health status,
education, access, consumption and Earth stewardship. Global
standards become national goals insofar as we find common
goals and challenges in the face of a reality in which the resources
we considered inexhaustible are not.
10
Adoption of mitigation measures leads companies to an internal
and external efficiency process hand in hand with their need
to generate greater capacity development, and it represents a
development opportunity for environmental consultants, efficient
products (energy -LED luminaires-, construction -buildings with
LEED certification-, intelligent office equipment that represents
savings in paper and energy consumption, etc.) and a number of
additional items.
In September 2016, China and the United States ratified the
historic international pact reached at COP21 in Paris (both
countries produce 40% of the world's greenhouse gas emissions).
And, in early October 2016, the European Union did as well. It was
necessary that at least 55 countries accounting for 55% of global
emissions ratify their adherence to the agreement for it to take
effect. Once this goal is reached, November 4, 2016 is the date for
its coming into effect.
Living in these times is a privilege: a globalized world, the
dizzying development of technology and communication, the
enormous learning opportunities and almost limitless access.
We set ambitious goals and we achieve them, we imagine an
unthinkable growth and we achieve it... now we have to do it with
a broader view, almost literally "a look at the forest" and taking into
account that this Earth, which has given us everything, needs us
to keep in mind its ability to replenish everything we take from it.
We are called to perpetuate its existence for the generations that
will take the baton.
 Augusto Castro
Director of INTE-PUCP
A university is mainly focused on research and lecturing. These
are the two main purposes offered to society. Building
scientific knowledge does not deter us from recognizing and
promoting the concrete results we must achieve. For many, the
pragmatic approach leads science and knowledge. Science would
be then serving practice. So, recognizing that scientific results
guide community service involves a great ethical responsibility
for the scientific community.
Under this approach, the Institute for Natural Sciences, Land and
Renewable Energy (INTE – PUCP) has the pleasure to present
the report “Green Business in Peru”. This report is aimed to show
businessmen that it is absolutely feasible to successfully face
climate change challenges.
The text hereby presented, written by Patricia Iturregui, is actually
a provocation for business action to benefit the planet, for
innovation investment and innovation with social responsibility.
An ethical responsibility for future generations and fight against
poverty.
11
Under our approach as a university, committed with human
development, this work offers different possibilities for those
interested in making investments and favoring a new way to
understand society. A new energy matrix and technological
projects to help human communities without harming life and
global ecosystems. This book is in favor of supporting the ethical
and social dimension of business activities.
We should remember that Pope Francis has already highlighted in
its encyclical Laudato si that human beings are called to become
aware of the need to change production and consumption
lifestyles to tackle climate change. Under that direction, demanding
a new development paradigm, he calls for businessmen and
governments in favor of sustainable development. The work of
Patricia Iturregui poses important questions on which are the new
rules of the game and which are the opportunities offered and
existing in the current context.
We believe it is possible to achieve changes. To do so, business
plays a role and is required for a core commitment with society
and the planet.
 INTRODUCTION

The idea of writing this report for the private sector arose for two reasons: (a) there is no direct source of information for entrepreneurs,
and from their perspective, about the challenges and opportunities in our country on important environmental issues, such as climate
change and green growth concepts used by the Organization for Economic Co-operation and Development (OECD) to link Peru to this
organization, and (b) most climate change studies aim to persuade various ministries, in particular the Ministry of Economy and Finance
- MEF, about the economic convenience of climate policies and their collateral benefits, but have not been designed or directed with
clear language to the business sector to promote greater investment.

In a very short time, important national and international decisions have been taken that create new conditions for Peru's development
with an important emphasis on environmental issues. Firstly, the linkage to the OECD. Peru has undertaken to implement a Country
Program with a view to initiating a subsequent process of accession. The program highlights environmental issues and brings to the table
the close link between productivity, competitiveness and environmental regulation including climate policy to limit global emissions,
which involves at least energy, transport, forest, agriculture and waste management.

Secondly, in 2015, the international community adopted by consensus the Agenda 2030 for sustainable development in the United
Nations (UN). It contains detailed goals for the next fifteen years with 17 objectives and 169 specific targets. There is a strong interrelation
between social, environmental and economic issues in the sustainable development objectives (SDO). Private companies of all sizes
around the world are starting to take some of these goals into their medium and long term agenda.

Thirdly, the Paris Agreement on Climate Change (2015) introduces unprecedented changes by committing all countries of the world,
including Peru, to control the level of their greenhouse gas emissions, with targets also set for 2030. Additionally, they commit to increase
transparency in reporting their actions against climate change. The Agreement explicitly recognizes the private sector's strategic role.

After the Paris Agreement there is consensus that only ten years remain to build the climate security that the world economy and
ecosystems need to avoid a climate catastrophe by 2050 or before. And if we forget for a moment about climate change and think about
the employment that Peru requires for young people, it cannot take us more than ten years to participate in the race to competitiveness
required by the Pacific Alliance and the OECD. Back to the same: we need a clear and stable environmental policy to promote productivity
and competitiveness. The close connection between competitiveness and environmental policies has not been sufficiently understood
or debated in Peru. I hope that a clear message is found in this report.

The OECD can turn Peru into the best version of itself. The Country Program leads us to see ourselves in the mirror and, from there, to
improve what we do not like. It requires a new business awareness and a different behavior according to the new rules of the game. Here
is an attempt to describe what it means for Peru.

After twenty years of being linked to the issue of climate change and twenty-four to the environmental issue, I am convinced that
innovation, corporate dynamism and the ethical responsibility of advanced business leaders is what will best conduct us to the
development that Peru needs in this transition period. Two concrete experiences lead me to this conviction. After negotiating the
Kyoto Protocol in 1997, our small delegation knew that a change was beginning. We promoted the clean development mechanism
projects that generated the first carbon credits and with the agile process of the established thirty days, some sixty projects of private
investment, most of them in the hydropower sector, were finalized. It was a pleasure to work with visionary entrepreneurs and to see
how they got the community surrounding the project to accept it . This was a prerequisite for carbon credits. The international process
was slow and disappointing because China and India monopolized cooperation and carbon credits. Despite this, most Peruvian projects
registered in Bonn -site of the Climate Change Conference- obtained interesting monetary returns after the national approval of Peru.
Another experience was when I had the opportunity to lead the demands to desulfurize fuels in Peru between 2004 and 2006, which
would contribute to diminish air pollution and thus to use a type of diesel that would not spoil the engines that were of last generation
and more efficient. It took us two years to persuade the Ministry of Energy and Mines -MINEM- and the MEF to pass Law 28694. This not
only involved the restructuring of refineries in Peru, but also established the index of fuel noxiousness. It was established that -in eight
years- clean fuels would be cheaper than pollutants with high sulfur content. When rules are clear, as is the case with this law, private

12
investment arrives. Today, there is a private refinery that has complied with restructuring by investing more than 400 million dollars. But
the price signals to fuels are not operating as mandated by the law because the State refinery does not yet produce the fuel. We must
not subsidize pollution. This is an anti-competitive behavior. In this case we are in violation. I am sure that the new government will find
the most appropriate solution in line with OECD recommendations for green growth.

It is vital for Peru to go ahead in the issue of innovation because we are far behind, but we must recognize the progress and achievements
in the Productive Diversification Plan. The task is a major one, the global wave of green growth cannot be ignored and we must surf it
boldly, with scientific support and concrete actions. We must innovate not only in technologies but also in how social sectors dialog and
in the way we do business. Innovation is the key to be more competitive and to create more value, the infallible remedy against labor
informality.

This report is aimed at the private sector in order to answer a number of questions. How do environmental issues relate to competitiveness?
What change has the Paris Agreement on Climate Change introduced in the way we do business? What developments does the process
of linking Peru with the OECD bring? What is the status of green businesses in Peru?

I allow myself to dream of what could be generated in the Peruvian private sector from this report:

First, create a business council for sustainable development that follows the new rules of the game and actively participates in promoting
innovation inspired by ecosystems. This should be a task with all universities, not just one. Another indispensable task is to replicate the
Executive Boards (public-private) of the Productive Diversification Plan but only for Peru's climate commitment, and for specific issues.
It is high time that the private sector directly talks to the public sector about how emissions will be limited by 2030 and what benefits
to promote.

Second, to publish a periodical publication on green innovation and business opportunities in Peru that, due to its continuity and
updating, overcomes the deficiencies that this report may present.

Third, direct business participation in the meetings of the Pacific Alliance green growth platform based on what is defined in the previous
national internal coordination between companies and State. It is important for advanced entrepreneurs to express their opinion and
influence decisions.

Fourth, the private sector, including micro and small enterprises, must directly monitor climate financing at the national and international
levels. In addition, it is important to access the private window of the Green Climate Fund and it must work expeditiously. It is also
important to demand that green bonds be more robust and with verifiable methodologies.

Fifth, in order to properly recognize advanced companies and ensure Peru's competitiveness, the private sector could propose a climate
change law that would progressively introduce rights and duties by 2021 to meet commitments made by 2030. Clear rules give great
stability.

It is not about fighting climate change, it is about building the country and that we want to promote investments that benefit society
and the environment. There is a lot that can be done. It is our duty. I hope this report will begin to help that process.

13
 Summary

PARTE I
14
A new transition period towards
new rules of the game
This period becomes evident in Peru through three international processes: (a) the link to the Organization for
Economic Cooperation and Development (OECD) and the Pacific Alliance; (b) Peru’s climate commitment to
2030 with the ratification of the Paris Agreement; and, (c) the adoption of the UN’s Sustainable Development
Objectives (SDO), also to 2030. Business leaders and Peruvian entrepreneurs are taking interest in following
these processes and seeking the opportunities generated with these times of changes. We are going through
the sixth innovation wave in history, that is, the green wave, that of clean technologies and biotechnology. It is
an unstoppable wave. Those who flow with it will get ahead very fast, those who do not notice it can end up
seriously affected.

WAVES OF INNOVATION
Cleantech
& Biotech
(2009-)

6TA WAVE
Information
& Telecom
(1971-)

Oil, Automobiles
& Mass Production
(1910-1975)
INNOVATION

Steel, Electricity 5TA WAVE

& Heavy Engineering
(1875-1920)
4TA WAVE

Steam & Railways

(1830-1870) 3era WAVE

industrial 2da WAVE

(1770-1830)

1ra WAVE

Source: DONG Energy (2009); diagram based on Perez (2002) drawing on report by Merrill Lynch
1800 1850 1900 1950 does not specify2000
(2008) (schematic quantitative vertical axis).

15
 What are the advantages of becoming related to the OECD?

The OECD gathers experience and knowledge from all kinds
of policies and best practices that succeeded and failed in the
most developed countries. It is a top independent platform that
works cooperatively with the country. National challenges, such
as informality, inequity, State reform and need to adapt to a fast-
changing world demand structural changes. The OECD is the
inspiration source for gradual and irreversible structural reform
in all sectors relevant for the economic, environmental and social
development of a country.
According to Peru’s Multidimensional Study, by the OECD, if our
country wants to keep its emerging middle class and prevent
economic stagnation, it needs to overcome three challenges:
(a) reduce labor informality; (b) diversify the economy, improve
productivity and natural resource management; and, (c) improve
connectivity (infrastructure, transportation and logistics). The
study recommends that Peru finds the way to significantly
increase its productivity, reduce large inequalities and decrease
generalized informality. To do so, it is very important to improve
educational quality and relevance, health system quality and
coverage, as well as increase labor formalization and improve
working conditions.
The process of relating Peru to the OECD brings about
opportunities due to the higher trust it generates among
investors, but also because it entails new operation standards in
which environmental, social and corporate government aspects
will stand out due to their importance. Free trade agreements
with the USA, Canada, Europe and others have already meant a
turning point regarding environmental policy. The impact of our
relationship with the OECD will be similar.

Informality and
inefficiency of 2017 Reducing
labour demand 2016 onwards
labour
informality
and supply

Income
inequality, Vulnerabili Improving
geographic location, ty of connectivity
Challenges (infrastructure,
gender and ethnicity middle
affecting equal class in transportation
opportunities Peru and logistics)

Economic
Correct low- driversification,
productivity better productivity,
levels and capacity natural resource
to compete in management and
global markets productive
structure

Challenges for inclusive development in Peru according to OECD

Figure 2: Challenges for inclusive development in Peru, according to the OECD.

16
 Environmental policy
can and should improve competitiveness

The OECD’s Multidimensional Study for Peru suggests policies and

measures to promote competitiveness, which is closely linked to
economic diversification and environmental policy.
The latter, geared towards energy efficiency and water use,
increases productivity and reduces costs. Generally, gradual
application of environmental standards usually leads to improving
productivity levels through the use of best practices and clean
technologies.
A country that uses clean technology and has high energy and
water efficiency is more productive and competitive. It helps
increase total factor productivity. Global trends show that the
new management and business models go even beyond,
promoting innovation to apply circular economy and effectively
incorporating externalities into accounting.
On the contrary, inefficient energy use implies use of fuels that
pollute the air, emissions in productive processes, inadequate
working conditions, etc.
On the other hand, permitting or «subsidizing» environmental
pollution and inadequate use of natural resources can be
considered as unfair competition or anti-competitive conduct
distorting commerce within the framework of foreign trade,
which could foreclose expansion opportunities.
Environmental policy can and should improve competitiveness:
it should correct inefficiencies, expand work skills and induce
innovation on how to do business around new technologies and
services related to energy efficiency and sustainable management,
water resources, transportation, agriculture, forestry, waste
management and industry.
OECD’s Green Growth Declaration, of which Peru is party, states
that «green» and «growth» interact. Likewise, it recommends:
(a) to promote green investment with market instruments and
other policies to change behaviors and produce private sector’s
appropriate answers, considering expansion incentives, and (b)
to reform the fossil fuel subsidy policy or subsidies to production
that increases gas emissions, among other provisions.
Nevertheless, nature-inspired innovation is the great qualitative
leap we need. OECD advises countries to identify segments which
have not been exploited before in existing industries. These are
just a few examples: manufacturing stone paper with mineral dust
waste; in fisheries, using catamarans would mean zero emissions
and return to the sea of female fishes; reuse of coffee pulp to grow
mushrooms with high protein content, among others.

PACIFIC ALLIANCE
INNOVATION INDEX
2015 Score
(from 1 to 100)
Position
(out of 120 countries)
2016 Score
(from 1 to 100)
Position
(out of 120 countries)

CHILE CHILE
38.4 44 41.2 42
MEXICO MEXICO
34.6 61 38.0 57
COLOMBIA COLOMBIA
34.3 63 36.4 67
PERU PERU
32.5 71 34.9 71

Fuente: Índice Mundial de Innovación 2016

Figure 3: Pacific Alliance Innovation Index.

Source: 2016 World Innovation Index.

17
 What are the implications of the climate change Paris Agreement for Peru?

For the first time, all the countries are committed to limit or reduce their greenhouse gas emissions that stem from burning fossil
fuels, from deforestation, from waste management and agriculture. It also includes targets for adaptation to climate change.

Paris Agreement characteristics

1. It is legally binding. A cap has been fixed for carbon emissions to keep global average temperature well below 2°C in the long
term.
2. National climate commitments will require national measures to fulfill them. All countries will report their progress to be
revised by groups of experts coordinated by the United Nations. All countries will submit more ambitious commitments every
5 years.
3. Developed countries will financially support mitigation and adaptation in developing countries. Joint contribution of US$ 100
billion per year to 2020 is kept. This figure will be kept until 2025, and a new and larger objective will be set before that date.
4. The Agreement establishes that net global emissions have to be equal to 0 as from 2050.
5. Carbon markets may operate before 2020 to fulfill country commitments. They include the possibility of bilateral mechanisms.
Regional and national mechanisms can be integrated to each other.

The Paris Agreement does not introduce a specific price for carbon emissions, but it calls for promotion of emission reduction by
fixing a price to carbon in the section referred to cities and private companies.

The Paris Agreement will imply changes in production and
consumption patterns. It is a clear signal for the coal and oil
industries, which will gradually be replaced as energy sources by
renewable energies and energy efficiency.
Peru’s climate commitment contemplates a 30% greenhouse
gas (GHG) emissions reduction to 2030, from a business as usual
scenario. This entails that Peru should be emitting no more than
approximately 209 Mt. C02 by 2030, instead of 289 Mt.C02 within
a BAU for the same year. Peruvian negotiators indicate that the
reduction is on percentages and not on numbers.
This would mean high deforestation levels, and low productivity
and energy use levels.
After the Paris Agreement, the countries started their road
towards a low-carbon economy. Climate commitments of all
countries before the United Nations organization (UN) imply a
significant transition of the electricity sector and energy efficiency
in the fifteen years to come. On the other hand, Peru’s greatest
mitigation potential lies with forestry, because it accounts for
more than 50% of our emissions to 2012.

The way of complying with the commitment would involve

achievement of projects to reduce emissions or capture carbon
in forestry, agriculture, industrial processes, energy, transportation,
solid waste and waste water.

If Peru makes no efforts to control growth of its GHG emissions to

2030, such emissions will double as compared to 2010 (figure 4).

18
 MtCO2eq

350.0
298.3
300.0

250.0 89.4

200.0
208.9
150.0

100.0

50.0

0.0

27
28
29
30
24
25
26
17
18
19
20
21
22
23
10
11
12
13
14
15
16

20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Domestic BaU iNDC mitigation scenario

Figure 4: Peru’s climate commitment to 2030. Source: iNDC Multisector Commission Technical Secretariat – RS 129-2015-PCM.

United Nations Sustainable Development Objectives

The UN has achieved world consensus about reaching 17 objectives and 169 targets (see figure 5) to 2030. Private companies can
significantly help to achieve them. Likewise, Peru’s compliance with its climate commitment directly and immediately facilitates
compliance with at least eight out of the seventeen sustainable development objectives and a great number of targets.

Ending poverty Zero hunger Health and Quality Gender equality Clean water and
wellbeing education sanitation

Affordable and Decent work and Industrial Inequality Sustainable Responsible

non-polluting economic growth innovation and reduction cities and production and
energy infrastructure communities consumption

Action for Submarine life Life in land Peace, justice Alliances to

climate ecosystems and sound reach
institutions objectives.
SUSTAINABLE
DEVELOPMENT
BJECTIVES

Figure 5: Sustainable development objectives to 2030. Legend: 1. Ending poverty 2. Zero hunger 3. Health and wellbeing 4. Quality education 5. Gender equality 6. Clean
water and sanitation 7. Affordable and non-polluting energy 8. Decent work and economic growth 9. Industrial innovation and infrastructure 10. Inequality reduction 11.
Sustainable cities and communities 12. Responsible production and consumption 13. Action for climate 14. Submarine life 15. Life in land ecosystems 16. Peace, justice and
sound institutions 17. Alliances to reach objectives.

19
 Sustainable Development Objectives

The referred eight objectives follow with some of the mitigation options considered in the Peruvian climate commitment towards the
Paris Agreement1

Objective 2: End hunger, achieve food security, Objective 7: Guarantee access to affordable,
improve nutrition and promote sustainable farming. safe, sustainable and modern energy for all.
A2 Reconverting rice farming into permanent crop farming E1 Combining renewable energies
A3 Recovering degraded soils in the jungle with silvo-pasture in the Peruvian E2 Distributed generation with solar panels
Amazon E3 Rural electrification with social panels
A4 Using improved fodder varieties in the highlands: ryegrass and clover 0 E4 Electric interconnection with Ecuador
A5 Training to improve rice yields on the coast E5 Reducing losses in the national grid
A6 Intermittent irrigation system for rice in the jungle E6 nergy co-generation with refineries

Objective 8: Promote sustained, inclusive and Objective 9: Build resilient infrastructure,

sustainable economic growth, full employment promote inclusive and sustainable
and productivity, and decent work for all. industrialization and foster innovation.
E2 Distributed generation with solar panels PI1 Replacing clinker with pozzolan in cement
T5 Training in eco-efficient driving PI2 Replacing clinker with slag from steelworks in cement
E18 Energy efficiency labelling in home appliances and equipment PI3 Replacing clinker with limestone filler in cement
E19 Integral energy management system in industries and services PI4 Replacing coal with natural gas in cement kilns
E25 Energy efficiency in brick manufacturing (Nama) PI5 Replacing coal with natural gas in Iron and Steel furnaces
PI6 Replacing clinker with rice husks in cement

Objective 11: Make cities and human Objective 12: Guarantee sustainable
settlements inclusive, safe, resilient and consumption and production modalities.
sustainable.
T7 Introducing light hybrid and electric vehicles A7 Alfalfa
T8 Introducing efficient gasoline vehicles A8 Fertilizers
T9 Integrated transportation system (Lima Metro Lines 2, 3 and 4) A9 Zero tillage
T10 Replacing clinker with pozzolan in cement A10 Organic matter
D4 Composting in landfills (IDB/JICA project)
D5 Recycling in landfills (IDB/JICA project)

Objective 13: Adopt urgent measures to fight Objective 15: Protect, reestablish and promote
climate change and its effects. sustainable use of land ecosystems, manage
forests sustainably and stop biological diversity
loss.
D1 Capturing and burning methane in landfills F6 Appropriate territory monitoring, control, surveillance and management
D2 Capturing and burning methane in other landfills (facilitating conditions)
D3 Semi-aerobic technology in landfills (IDB/JICA project F7 Commercial reforestation with input high yields
D6 Methane burning in WWTPs F8 Communal reforestation with medium technology
F9 Coffee agro-forestry systems (NAMA)
F10 Cacao agro-forestry system (NAMA)
F11 Forest management of Brazil nuts

We can mention two examples of climate change mitigation
measures that directly contributed to achieving these objectives:
high-yield commercial reforestation contributes to manage forests
sustainably and put a brake to deforestation, the main emission
source in Peru (Objective 15); the integrated transportation
system, based in a network of exclusive corridors and standardized
buses in complementary routes that act as integrators and feeders
in Lima would significantly improve transportation quality, reduce
pollution and gas emission, decrease traffic accidents, among
others (Objective 11). Besides, training in high-yield technological
packages, as in the case of rice farming, reduces water use
and GHG, offers larger yields, more revenues and wellbeing
to producers and frees labor to plant crops different from rice
(Objective 2).
The Green Growth strategy will be the most effective mechanism
to reach these objectives. Besides, the preceding eight objectives
are perfectly in harmony with Peru’s development challenges as
identified by the OECD in its Multidimensional Study for Peru. As
we saw in page 16, these challenges are economic diversification,
connectivity and reduction of labor informality.
The Paris Agreement ratified by Peru, the Country Program with
the OECD, and the Sustainable Development Objectives (SDO) will
mark the new national development agenda to 2021 and to 2030.
Similarly, the Pacific Alliance –additionally to the benefits it will
bring for our economic diversification- will be a sort of benchmark
for Peru, since its partners -Chile, Colombia and México- already
have concrete actions and green growth strategies underway,
within OECD’s framework.

1
The Annex I shows the full list of Peruvian mitigation options.

20
Change Processes in Peru

There are at least seven important change processes in Peru that positively converge in the three international processes,
which are changing the rules of the game:

1.1. A new government which, within the objective of achieving a modern Peru, considers that development goes
hand in hand with environmental sustainability policies.
2.2. A sound incentive policy for innovation with competitive funds and important tax cuts for companies that
develop research that will contribute to achieving the Productive Diversification Plan.
3.3. Favorable conditions to achieve a forestry boom, aligned with a national target, to put a brake to deforestation,
which currently goes at an alarming pace (130 000 hectares per year), and with an internationally assumed
target of restoring 3.2 million ha. This is how we will be able to take advantage of Amazon forests sustainably,
forests which account for more than 60% of our territory.
4.4. Human capital is taking a green direction: educational institutions clearly prioritize innovation and environment.
Environmental careers have significantly increased in many universities, and schools consider this subject as
important. Besides, there are several corporate moves in the direction of green businesses and youth initiatives,
such as Generation+1.
5.5. Lima undergoes a governance crisis, partly due to transportation and to solid waste dumped to rivers by both
industries and people. La Atarjea, the water treatment plant, practically receives waste water to make it potable.
The water deficit in Lima may reach 29% in 2030. What is positive in this crisis is that it will inevitably lead to a
comprehensive environmental solution for the capital city.
6.6. The country’s regions have shown dynamic growth and economic development, even greater than Lima.

7.7. The millennials —according to some accounts, these are people born between 1980 and 2000— have a clear
idea about responsible consumption with environmental and gender priorities.

CHANGE PROCESSES IN PERU

A new A sound incentive

government policy for
innovation

Favorable
conditions to Lima undergoes
achieve a forestry a governance
boom crisis
Human
capital is taking a
green direction

Millenials with
Country´s regions clarity about
have shown responsible
dynamic growth consumption

21
 Which are the Green Business Opportunities coming up?

Green businesses base a significant part of their revenues on products and services that generate a positive impact on the
environment, or make efficient use of natural resources.

In alphabetical order, we present two types of businesses, which are only a sampler of possible green businesses:

Sampler of green businesses to develop

Agriculture Water Forests Energy

6.Innovation: forest regeneration
1. Innovation: conversion of coffee -or other-
4. IInvestments to supply and productive center 8. Distributed generation
pulp into protein
Lima with water Sustainable forest market
2. Climate-smart agriculture:
5. Waste water treatment management in forest 9. National energy
Fertilizers
concessions efficiency program
Training to improve rice yield
High-yield commercial
on the coast
reforestation
3. Organic product exports
7. Coffee agroforestry system

Industry Urban Infrastructure Waste Transportation

14. Southern intermodal station
10. Cement NAMA 11. Innovation: anti-seismic
13. Waste NAMA (Lima)
construction with bamboo
15. Replacement of small buses
12. Carbon-neutral urban develop-
for larger buses in Lima and
ments
El Callao

MUESTRA DE OPORTUNIDADES DE NEGOCIOS VERDES

Agriculture Water Forests Energy

16. Innovation: Animal feed
with spirulina produced
from farming waste
17. Innovation: Soil recovery
with natural fertilizers
18. Enlargement of the
Graton tunnel – San
Mateo
19. New waste water plant
in San Bartolo
20. Ecosystem services for
Lima
21. Cacao without deforestation in Madre de Dios 26. Replacement of
22. Sustainable forest management in forest fluorescent lamps at malls
concessions 27. Thermal building
23. High-yield commercial reforestation reconversion to natural gas
24. Cacao agroforestry system 28. Elimination of incandes-
25. Sustainable forest management for Brazil nuts cent light bulbs with 50%
replaced by LEDs in 2020

22
Industry Urban Waste Transportation
 Industry Urban Infrastructure Waste Transportation
14. Southern intermodal station
10. Cement NAMA 11. Innovation: anti-seismic
13. Waste NAMA (Lima)
construction with bamboo
15. Replacement of small buses
12. Carbon-neutral urban develop-
for larger buses in Lima and
ments
El Callao

Business Opportunities Sample

MUESTRA DE OPORTUNIDADES DE NEGOCIOS VERDES

Agriculture Water Forests Energy

16. Innovation: Animal feed
with spirulina produced
from farming waste
17. Innovation: Soil recovery
with natural fertilizers
18. Enlargement of the
Graton tunnel – San
Mateo
19. New waste water plant
in San Bartolo
20. Ecosystem services for
Lima
21. Cacao without deforestation in Madre de Dios 26. Replacement of
22. Sustainable forest management in forest fluorescent lamps at malls
concessions 27. Thermal building
23. High-yield commercial reforestation reconversion to natural gas
24. Cacao agroforestry system 28. Elimination of incandes-
25. Sustainable forest management for Brazil nuts cent light bulbs with 50%
replaced by LEDs in 2020

Industry Urban Waste Transportation

29. Innovation: Stone paper production
Infrastructure
with mineral dust waste and plastic 36. Landfills with methane 38. Teleworking
30. Replacement of aging engines in mining capture and burning to 39. (Outsourced) congestion
35.Green construction in generate power , such as
and industry commercial buildings tolls for cars
31. Replacement of boilers in industries Portillo Grande and Zapallal
37. Incineration of mud from the 40. Eco-efficient driving
32. Cogeneration in industries 41. Concession of routes for
33. Advanced measurement infrastructure in Taboada waste-water plant to
generate energy complimentary corridors
the industrial sector
34. NAMA on the brick industry

The case of water

According to studies, due to climate change, Lima might face a 29%
water deficit by 2030. This is a conservative scenario; an optimistic
one points at a 13% water excess. Expert recommendation goes
for assuming the conservative scenario and getting ready for
deficit.
Deficit can be managed through two options:
 Demand reduction by rehabilitating the distribution
network, and by promoting low-flow showers, faucets and
toilets and a small increase in tariffs. These are approximately
US$2 billion investments, not including investments by
final users.
 Supply increase through measures already considered
in Sedapal’s Master Plan amounting to US$856.000.000,
which would include US$259.000.000 for water treatment
installations. This investment would be paid along a 10.8-
year period and can be financed by an 18% tariff increase
among residential, commercial and industrial users, as
pointed out in said plan.
Whatever the chosen option, it would entail construction
and engineering contracts, among others. The preparation of
contractual terms that enhance efficiency is important. Most
competitive processes use scores based only on the capital
investment (CAPEX) amount, but not on the operational cost
(OPEX) and on contracted infrastructure efficiency.
Private investment, co-financed by Sedapal, could go to enlarging
the Graton tunnel in San Mateo. According to the company’s
Master Plan, building two parallel tunnels is feasible. They would
add up to those existing now, resulting in 1.5m3/s more. This has
a double use: increasing water supply, and generating energy
through a 5MW hydropower plant. The company that builds this
expansion may also explore more «water concessions» along the
Andes through a network of tunnels from the mountains to the
coast. To a great extent, this would counteract the consequences
of glacier recess caused by climate change. The investment
amount is approximately US$ 70 million to build the tunnel, not
including hydropower plant construction costs. The contract may
be a turn-key agreement.

23
 Nature-inspired innovation

The Zero Emission Foundation (ZERI) has identified more than one 
hundred cases of innovation that show how a zero-emission and
no-waste production and consumption model is economically
and scientifically feasible, and which would generate 100
million jobs worldwide. These nature-inspired innovations could
well merit an analytical study about their potential in Peru. The
following are two examples of innovations that can be applied in
our country.
 Production of stone paper with mineral dust waste and
plastic:
 It is produced by mixing fine mineral dust with high
density polyethylene. The first factory was installed in
Shenyang in 2013. This is a very standardized process
that allows for production of 17 kinds of paper, following
client specifications. Investment on equipment is
approximately US$150 million, which means 40% less than
investment needed for a traditional paper mill. It is ideal for
manufacturing Kraft paper used for cement bags or to pack
food, including tetra pack for beverages. Mining companies
are majority investors in the stone paper plant.
Conversion of coffee pulp into proteins:
• Ninety-nine percent of coffee is wasted, when it could
actually be used to grow mushrooms and generate jobs.
About 250 kg of mushrooms per day can be produced
in 0.4 ha on a daily basis. Protein level can help improve
nutrition in depressed areas (SDO Objective 2). The
cultivation method is three-dimensional. If this were
applied to 5% of the area devoted to coffee, 42 500 jobs
would be generated (Pauli, 2011).
• Besides, many mitigation projects contemplated in Peru’s
climate commitment, which also reduce emissions and
improve natural resource use, could become interesting
business options for visionaries and entrepreneurs.
Intelfin (2015) evaluated the financial profitability of ten
mitigation projects in energy, forestry and waste. If we
consider market data, economic profitability (economic
IRR), exceeds capital cost. Therefore, these projects are
potentially attractive for private investors (figure 6).

Economic NPV/Investment Amount Ratio

4.5
4.0 3.9

3.5
3.0 2.9
2.5
2.0
1.7
1.5 1.4

1.0
0.7
0.5 0.3 0.4
0.1 0.1
0.0
construction of segregation replacement of engine sustainable Electricity and boiler sustainable implemen-
landfills with and recycling fluorescent replacement forest heat replacement management tation of
capture and of inorganic lamps in the management co-generation of lumberable agroforestry
burn solid waste commercial for Brazil nut forest systems
of methane for sector production concessions (coffee +
power lumberable)
production

Figure 6: Financial profitability assessment of ten mitigation projects.

Source: Presentation at a workshop in the Ministry of Environment of Peru, 2015.

24
The Peruvian private market is on its way to maturity and is not left behind. Some interesting Peruvian initiatives are: the Responsible
Investment Program (PIR); the private company platform on Corporate Climate Commitment (7C); business models that point at a
sustainability purpose known as «compañías B»; the Peruvian CEO platform for low-carbon development «Líderes+1»; the good
environmental practices initiative for small- and microbusinesses «Ecopyme»; the public-private alliance «Biodiversidad y empresas»
(ByE); Peru’s companies participating in the Global Compact on initiatives on human rights, work standards, environment and fight
against corruption, among others.

International climate
funding opportunities
The Green Climate Fund is the main financial mechanism in the Green bonds in the world are grouped in four areas of interest:
UN convention on climate change. It is expected to mobilize US$ climate change, natural resource deterioration, biodiversity loss,
100 billion per year from now to 2020-2025. It aims at helping and pollution control.
developing countries to limit their GHG emissions and to adapt
to impacts. The private sector needs to show interest in and support green
bonds so that politicians feel confident about taking bolder
A strategic item in financial companies’ agendas is to evaluate ways measures in their mitigation and adaptation to climate change, as
of participation and to become benefited by Green Fund projects, well as in other environmental objectives.
which provide a window for the private sector. The fund’s board
has agreed to place US$500 -700 million in 2017 to implement
private sector proposals, including US$200 MM for micro-small-
and mid-sized companies. The fund fosters inter-sector initiatives
that may scale up financing and attract financial capital markets. It In Peru, the IFC issued Green Bonds in August 2014
also aims at leading them towards a programmatic approach, so for 42 million soles steered to investments that favor
that they are replicable and so that they can be financed through emerging market environments. The investor in the 15-
investor clubs. year bond is Rímac Seguros. The issuance structuring
agent was JP Morgan³. In November 2015, the Inter
On the other hand, the green bond market reaches some US$ 700 American Bank (IDB) launched a fund of up to US$
billion issuance² and these bonds are already issued in emerging 450 million (Regional Green Bond Facility for Energy
countries. Green bonds are securities issued by financial entities, Efficiency). This is a program for the private sector
companies, and national-regional-local public authorities to (small- and mid-sized companies) that mobilizes
attract capital from stock markets and thus fund projects with different funds through capital markets from insurance
positive environmental impact. Yield offered to bond buyers has companies and pension funds, among others.
to be competitive and the placement rate needs to be subsidized.
To do so, additional resources are needed to make the instrument
sustainable, whether from national public sources, international
donations, or collection of rates paid for emitting.

2
These estimations from the Climate Bonds Initiative include all kinds of Green Bonds. Since there are various definitions of «green», figures are not 100% accurate.
³ Diario Gestión (12 agosto 2014).

25
 New context and new
business opportunities

PARTE II
26
 New context and new
business opportunities

Peru is experiencing a moment of transformation framed in a global transition towards a sustainable economy that has already generated
changes in investments and trends in technology worldwide. In this process there are opportunities for the private sector. In 2015, leaders
from several countries committed to working with companies and entrepreneurs to help address the challenges of climate change. Bill
Gates, Mark Zuckerberg, Richard Branson, among others, have formed a group to invest in the early phase of clean energy companies.

The process of linking Peru to the OECD brings with it opportunities because of the higher level of confidence it generates for investors,
but also because it entails new operational standards where non-financial issues will stand out because of their importance. We are
referring to environmental, social and corporate governance issues. Trade promotion agreements with the United States, Canada, Europe
and others have already marked a before and after in environmental policy, and the impact of the link with the OECD will be similar.

What is a green business?

Green business classification
In simple terms, green businesses are those that base a large part
of their income on products and services that generate a positive
impact on the environment or the efficient use of natural resources.
For the purpose of this publication, we will use a definition inspired
by the typology known as the "Low Carbon Classification System"
introduced in early 2016 by FTSE Russell of the London Stock
Exchange and in the list of projects that may be financed through
green bonds from the Central Bank of China. The aforementioned
low carbon industry classification system helps investors decide to
place financing on green products, goods and services.
The definition we use involves businesses conducted by
companies, projects or financial instruments related to:
a. Climate-resilient ecological infrastructure, including
freshwater environments, forests, soils and coral reefs
b. Energy efficiency and renewable energy in industry,
transportation, housing, construction, equipment and
communications
c. Environmentally appropriate technologies
d. Conservation and sustainable use of biological diversity
e. Protection and valuation of ecosystem services
f. Sustainable agriculture, including organic production

27
FTSE RUSSELL (London Stock Exchange) –
Low-carbon industrial classification

FTSE RUSSELL INDUSTRIAL CLASSIFICATION SYSTEM

1. LCEG Energy 2. LCEGQ Energy 3. LCEM Energy 4. LCEE Energy

Generation Equipment Management Efficiency

LCEG01 biofuels LCEQ01 biofuels LCEM01 combined LCEE01 advanced materials

heat/power

LCEE02 buildings and

LCEG02 clean fossil fuels LCEQ02 Clean fossil fuels LCEM02controls
properties

LCEG03 geothermal LCEQ03 geothermal LCEM03 fuel cells LCEE03 industrial processes

LCEG04 hydropower LCEQ04 hydropower LCEM04 integrated LCEE04 integrated

LCEG05 integrated LCEQ05 integrated LCEM05 support and logistics LCEE05 Information and
technology processes

LCEG06 nuclear LCEQ06 nuclear LCEM06 energy storage LCEE06 lighting

LCEG07 oceanic LCEQ07 oceanic LCEM07 Smart grids LCEE07 video-conferences

LCEG08 solar LCEQ08 solar

LCEG09 waste-to-energy LCEQ09 waste-to-energy

LCEG10 wind LCEQ10 wind

5. LCEI Environmental 6. LCER Environmental 7. LCMS Modal 8. LCOS Operational

infrastructure resources change change

LCE01 Carbon capture LCOS01 Financing/

LCER01 agriculture LCMS01 Aviation
and storage investment
LCE02 desalination LCER02 aquiculture LCMS02 integrated LCOS02 integrated

LCE03 Flood and soil

LCER03 integrated LCMS03 trains LCOS03 retailer/wholesaler
erosion control

LCE04 integrated LCER04 mining LCMS04 vehicles LCOS04 property

LCE05 support and logistics LCER05 minerals and metals LCMS05 maritime/aquatic

LCE06 pollution
management LCER06 water resources

LCE07 recycled products LCER07 sustainable forests

LCE08 recycling services

LCE09 waste management

LCE10 water management

Fuente: Página web FTSE RUSSELL/traducción no oficial de la autora

28
 Chinese catalog of projects endorsable for Green Bonds

Resource conservation and

Energy saving
- Industrial energy saving
Sustainable construction
1. Energy management center
- Urban and rural infrastructure
with energy savings and energy
efficiency
recycling
Control and Prevention of - Water conservation and
Pollution non-conventional water use
- Redevelopment and integral use of
Control and Prevention of slags and others associated with
2. pollution
- environmental restoration
3. mines (tailings and associated mine
byproducts)
project - Recycling and use of industrial solid
- clean coal use waste, gases and effluents
- Recycling, processing and use of
renewable energy
- Remanufacturing of
electromechanical products

Clean energy
Clean transportation Ecological protection and
- Generation with wind energy adaptation to climate change
Trains - Generation with photovoltaic
Urban trains energy - Ecological protection of nature and
Urban and rural transportation protected tourism development
4. Aquatic transportation 5. - Smart grids
- Distributed energy 6. ecological agriculture and fisheries
- Clean fuels - Solar energy application - Forestry development
New car - Generation with hydropower - Emergency prevention and disaster
Internet use for transportation plants control
- Other new ways to generate
energy

Fuente: Green Bond Endorsed Project Catalogue (2015 Edition) Bank of China/traducción no official de la autora

A sampler of green businesses in Peru

This paper does not exhaust the range of activities and projects, it just presents a sample
of projects identified by several studies and revised literature.

We will present two categories of activities:

Green business opportunities that may or may not

Green businesses
contain information on the internal rate of return and net
to be developed.
present value.

Sectors are presented in alphabetical order. In some cases, interviews and international
cases are included for some sectors.

29
 Sampler of green businesses to develop

Agriculture
Agriculture Water
Water Forests
Forests Energy
Energy
6.Innovation: forest
6.Innovation: forest regeneration
regeneration
1. Innovation:
1. Innovation: conversion
conversion ofof coffee
coffee -or
-or other-
other-
4. IInvestments
IInvestments to
to supply
supply and productive
and productive center
center 8.
8. Distributed
Distributed generation
generation
pulp into
pulp into protein
protein 4.
Lima with
with water
water Sustainable forest
Sustainable forest market
market
2. Climate-smart
2. Climate-smart agriculture:
agriculture: Lima
5. Waste
Waste water
water treatment
treatment management in
management in forest
forest 9. National energy
9. National energy
Fertilizers
Fertilizers 5.
concessions
concessions efficiency
efficiency program
program
Training to
Training to improve
improve rice
rice yield
yield
High-yield commercial
High-yield commercial
on the
on the coast
coast
reforestation
reforestation
3. Organic
3. Organic product
product exports
exports
7. Coffee
7. Coffee agroforestry
agroforestry system
system

Industry
Industry Urban Infrastructure
Urban Infrastructure Waste
Waste Transportation
Transportation
14. Southern
14. Southern intermodal
intermodal station
station
10. Cement
10. Cement NAMA
NAMA 11. Innovation:
11. Innovation: anti-seismic
anti-seismic
13. Waste
13. Waste NAMA
NAMA (Lima)
(Lima)
construction with
construction with bamboo
bamboo
15. Replacement
15. Replacement of of small
small buses
buses
12. Carbon-neutral
12. Carbon-neutral urban
urban develop-
develop-
for larger
for larger buses
buses in
in Lima
Lima and
and
ments
ments El Callao
El Callao

Business Opportunities Sample

MUESTRA
MUESTRA DE
DE OPORTUNIDADES
OPORTUNIDADES DE
DE NEGOCIOS
NEGOCIOS VERDES
VERDES

Agriculture
Agriculture Water
Water Forests
Forests Energy
Energy

16.
16. Innovation:
Innovation: Animal
Animal feed
feed 18. Enlargement
18. Enlargement ofof the
the 21.
21. Cacao
Cacao without
without deforestation
deforestation in
in Madre
Madre dede Dios
Dios 26.
26. Replacement
Replacement of of
with
with spirulina
spirulina produced
produced Graton tunnel
Graton tunnel –– San
San 22.
22. Sustainable
Sustainable forest
forest management
management in in forest
forest fluorescent
fluorescent lamps
lamps atat malls
malls
from farming waste
from farming waste Mateo
Mateo concessions
concessions 27. Thermal building
27. Thermal building
17.
17. Innovation:
Innovation: Soil
Soil recovery
recovery 19. New
19. New waste
waste water
water plant
plant 23.
23. High-yield
High-yield commercial
commercial reforestation
reforestation reconversion
reconversion to natural gas
to natural gas
with
with natural
natural fertilizers
fertilizers in San
in San Bartolo
Bartolo 24.
24. Cacao agroforestry
Cacao agroforestry system
system 28.
28. Elimination
Elimination of
of incandes-
incandes-
20. Ecosystem
20. Ecosystem services
services for
for 25.
25. Sustainable forest management for
Sustainable forest management for Brazil
Brazil nuts
nuts cent light bulbs with 50%
cent light bulbs with 50%
Lima
Lima replaced
replaced by
by LEDs
LEDs in
in 2020
2020

Industry
Industry Urban
Urban Waste
Waste Transportation
Transportation
29.
Infrastructure
Infrastructure
29. Innovation:
Innovation: Stone
Stone paper
paper production
production 36.
with mineral
with mineral dust
dust waste
waste and
and plastic
plastic 36. Landfills
Landfills with
with methane
methane 38.
38. Teleworking
Teleworking
capture and
capture and burning
burning to to 39.
30. Replacement
30. Replacement of of aging
aging engines
engines inin mining
mining 35.Green
35.Green construction
construction in
in generate power
power ,, such
such as
as 39. (Outsourced)
(Outsourced) congestion
congestion
and industry
and industry generate tolls
tolls for
for cars
cars
commercial
commercial buildings
buildings Portillo Grande and Zapallal
Portillo Grande and Zapallal
31. Replacement of boilers in industries
31. Replacement of boilers in industries 40. Eco-efficient driving
40. Eco-efficient driving
32. Cogeneration
Cogeneration in in industries
industries 37.
37. Incineration of mud from the
Incineration of mud from the
32. Taboada waste-water
waste-water plant
plant to
to 41.
41. Concession
Concession ofof routes
routes for
for
33. Advanced
33. Advanced measurement
measurement infrastructure
infrastructure in
in Taboada
generate energy
generate energy complimentary
complimentary corridors
corridors
the industrial sector
the industrial sector
34. NAMA on the brick industry
34. NAMA on the brick industry

30
Lima-Callao study
To describe green business by sector, we now refer to the PUCP  Increase in employment and skills in environmental goods
(Catholic University of Peru) study with the University of Leeds, and services.
completed in 2014, to identify a portfolio of low-carbon and  Reduced air pollution, improved health, reduced noise and
climate resilient investments (water included) in Lima-Callao. traffic decongestion.
The study concluded that billing for energy, water and waste Below we show 30 of the 78 measures identified in various
consumption generated an annual economic loss of 8% of the economic sectors that have a positive net present value (NPV)
Lima and Callao GDP, with a significant increase in billing by 2030. and would therefore be of interest to the private sector. The
The following is attained through an investment of 0.8% of the five measures with the highest NPV are described below in the
annual city GDP to commercially take advantage of attractive corresponding sector and these are:
opportunities:
 Replacing combis with buses
 Lower the cost of water and waste energy from 8% to 1.5%  Taxi conversion to natural gas
of GDP.
 Congestion tolls for gasoline and diesel private cars
 Cost-efficient measures are paid in 3 years and neutral costs
 Thermal reconversion of buildings to natural gas
in 5 years.
 Incandescent lighting phased out and 50% LED in 2020

Lima and Callao: net present value of mitigation measures to 2030

Transportation Commercial
NPV NPV
Replacing Combis with Omnibuses Thermal (natural gas, LPG, diesel, petrol) retrofit
819.6
Petrol Taxis CNG retrofit 1539.3 in buildings
Congestions tolls for petrol and diesel private cars 1053.1 497.3 Green building standards - commercial buildings
Scrapping cars >20 years old for hybrid cars 732.6 195.6 Commercial sector electricity retrofit programme
Scrapping cars >20 years old for petrol cars 599.8 106.4 Street lighting - conversion to LEDs
CNG Cars Refrofit 422.7
Bus Rapid Transit 366.0
Teleworking Campaign 264.2

Residential Electricity

Incandescent Lighting Phase Out and 50% LED by 2020 738.7 471.6 Diesel replaced by solar PV (~160 MW by 2030)
Liquid Petroleum Gas to Natural Gas: 50% of households 676.8 357.2 Diesel replaced by wind by 2030 (~130MW by 2030)
connected by 2020 (860,000 connections)
Incandescent Lighting Phase Out 673.7
Solar hot water 10% by 2030 (EE1) Industry
267.2
Solar hot water 10% by 2030 (BAU) 190.1
High Efficiency (EE1) Refrigerator 185.8 450.6 Electricity conservation in other industrial sectors
Solar hot water 10% by 2030 (EE2) 145.9 439.4 Switch boilers to natural gas
Solar hot water 5% by 2030 (BAU) 133.6 208.5 Installing advanced metering infrastructure - industrial
Installing Advanced Metering Infrastructure - Domestic 123.9 (75% deployment)
(75% deployment) 159.0 Ethylene sector carbon reduction programme
Green Residential Buildings 120.4
(20% of buildings built 2015-2030)
Solar hot water 5% by 2030 (EE1) 95.0

Figura 1: Values are in dollars per ton of CO₂ equivalent. Prepared by: Sofía Castro, INTE.
Source: The economy of resilient and low-carbon cities: Lima and Callao

31
The figure below shows the return on investment timeframe. The
assumptions regarding the five measures that take less than one
year for return are described below in the corresponding sector.
These are:
 Flaring methane gas from the Zapallal landfill
 Incineration of sludge from the Taboada wastewater
treatment plant
 Advanced measurement in industry
 Replacing incandescent lights
 Replacing combis with buses

Lima and Callao: investment return time, less than 5 years

Waste Industry

Zapallal landfill gas flaring 0.0 0.1 Installing advanced metering infrastructure - industrial
Taboada sluge to energy Incinerator 0.0 (75% deployment)
Portillo Grande landfill gas capture for energy generation 3.1 2.2 Switch boilers to natural gas

106.4
Residential Transportation

Incandescent Lighting Phase Out 0.4 0.6 Replacing Combis with Omnibuses
Incandescent Lighting Phase Out and 50% LED by 2020 0.8 1.0 Petrol Taxis CNG retrofit
Installing Advanced Metering Infrastructure - Domestic 1.2 2.0 Congestions tolls for petrol and diesel private cars
(75% deployment) 4.7 Traffic Management Investments
Electricity Conservation Education 1.2
5.3 Teleworking Campaign
Solar hot water 5% by 2030 (BAU) 1.9
Solar hot water 10% by 2030 (BAU) 1.9
Green Residential Buildings 2.4
(20% of buildings built 2015-2030) Commercial
High Efficiency (EE1) Water Heaters 2.4
Solar hot water 5% by 2030 (EE1) 2.5 0.7 Thermal (natural gas, LPG, diesel, petrol) retrofit in
Solar hot water 10% by 2030 (EE1) 2.5 buildings
Solar hot water 5% by 2030 (EE2) 3.2 0.8 Public sector electricity retrofit programme
Solar hot water 10% by 2030 (EE2) 3.2 1.2 Commercial sector electricity retrofit programme
Liquid Petroleum Gas to Natural Gas: 50% of households 4.1 1.2 Malls sector electricity retrofit programme
connected by 2020 (860,000 connections) 1.5 Green building standards - commercial buildings
High Efficiency (EE2) Water Heaters 4.8 2.5 Hospital electricity retrofit programme
2.6 Traffic lights - conversion to LED
3.6 AMI meters - commercial (75% deployment)
Electricity 4.5 Solar hot water for commercial sector
5.0 Solar PV for commercial sector (with FIT)

Diesel replaced by solar PV (~160 MW by 2030) 3.6

Diesel replaced by wind by 2030 (~130MW by 2030) 3.9

Figura 2: Prepared by: Sofía Castro, INTE.

Source: The economy of resilient and low-carbon cities: Lima and Callao

32
 Agriculture
Climate-smart agriculture
This initiative was launched in 2013 with support from FAO and
the World Bank towards three main objectives:
1.
sustainable increase in productivity and agricultural
revenues
2. adapting and building resilience to climate change
3. the reduction and / or absorption of greenhouse gases, as
far as possible.
Climate-smart agriculture is an approach to developing
agricultural strategies to ensure sustainable food security in
the context of climate change. It involves the following actions:
a. Crop management, livestock, aquaculture and fisheries
to balance the needs of food security and livelihoods
in the short term by prioritizing climate risk prevention
(adaptation) and gas reduction (mitigation).
b. Management of ecosystems and landscape to conserve
ecosystem services that are strategic for food security,
agricultural development, adaptation and mitigation.
33
c. Services for farmers and land managers to enable them
to better manage the risks / impacts of climate change, as
well as mitigation actions.
d. Broader changes in food systems that include demand-side
measures and value-added interventions that reinforce
benefits.
The importance of this initiative is to consider the improvement
of financing options. Innovative financing mechanisms are
sought that link and combine agriculture and climate financing
with public and private sector investments.
An innovative financing proposal could be funded by the
Green Climate Fund or the Global Environment Facility (GEF).
The entire agricultural issue deserves to be considered as a
green business to be developed. Here is a preview of green
businesses in agriculture.
 Business to be developed
Innovation:
Transformation of coffee and other pulp into protein

Turning coffee debris into a healthier and protein-rich food for
mushroom cultivation, for example, is a big advantage in times of
great challenges, such as the price volatility of coffee. The enormous
coffee industry has two types of waste: (a) that generated in the
so-called pulp farm, and (b) waste in the preparation of coffee. From
coffee beans off the farm to the coffee consumption, 99.8% of the
coffee is discarded and only 0.2% is ingested. Mushrooms grow on
cellulose flax and the coffee bean is strictly monitored from the farm
to the consumer with quality controls like no other product.
Discarded coffee pulp from the plantations is left to rot under the
excuse that it is a good fertilizer. According to Pauli, 16 million
tons of coffee scraps are discharged annually and landfills emit
millions of tons of greenhouse gases. Reintroducing waste as
nutrients simplifies waste management and reduces methane by
decomposing biomass (Pauli, 2011, pp. 116-120).
About 250 kg of mushrooms can be produced per 0.4 ha per day.
The growth method is three-dimensional.4

As Peru is the second largest producer of organic coffee, it would

be important to develop this business. In addition, more than 40000
Contact:
jobs would be created.
Hicela Mosquera
hicela.mosquera@yahoo.es

Potential Opportunities Financing of studies Employment potential

Mushrooms, biofuel, feed, exports, local Possible funding from Innóvate Perú If applied in 5% of the ha planted to coffee in Peru,
food that is, 21 250 ha, it would create 42 500 jobs.5

Business to be developed:
Organic product exports

Organic agriculture6 global sales exceeded 25 billion dollars
per year in 2013. This agriculture is highly visible as a very fast
growing player in agricultural production (Kristiansen et al.,
2006).
Exports of organic products in Peru were USD 225 million in
2016 compared to USD 25 million in 2000. The main export
products are coffee, bananas and cocoa. Cotton and mango
lag far behind. Promperú, recommends further promotion of
hot peppers and lucuma.
It is also interesting to consider the list of biodiversity
products currently promoted by Mincetur. It should be noted
that Produce, through StartUp Peru, has called innovative
Peruvian companies to participate in the first contest to value
Peruvian biodiversity among those companies committed to
sustainable use and biological diversity. The selected projects
will be able to access non-refundable funds of up to S/ 150
thousand, which will account for a maximum 70% of the total
budget for the submitted project, while the remaining 30% will
be provided by the beneficiary company.7

4
3D-grown cells behave more similarly to growth in their organisms of origin. At present, 3D cell culture is booming and is becoming an essential technique in many areas of cell biology.
5
(Pauli, 2011, p. 112) In The Blue Economy, the author multiplies 0.4 ha x 2 jobs. For our calculation we have more conservatively multiplied 1ha x 2 jobs. We have taken the hectare obtained from the 2014
Agrarian Statistical Compendium (INEI), which shows that 425 000 ha are devoted to coffee. We have assumed national consumption of 10 800 tons per year. This figure was validated by an expert from
Universidad del Pacífico Research Center - CIUP as a reasonable and probable estimate.
6
According to the Codex: «Organic agriculture is a holistic management system for production that promotes and improves ecosystem health, including biological cycles and soil biological activity. Organic
agriculture is based upon a minimum use of external inputs and avoids synthetic fertilizers and pesticides. Handlers, processers and retail merchants of organic foods are ruled by regulations that keep
the integrity of organic products. The main objective of organic agriculture is to optimize the health and productivity of communities that base their livelihood on their lands, plants, animals and people»
7
See http://www.innovateperu.gob.pe/noticias/item/1174-reto-biodiversidad-nuevo-concurso-para-empresas-innovadoras

34
Table 1:
Main organic product exports (2013-2015) in thousands of USD
*With organic certification UTZ,NOP

Tariff
Heading Description Economy 2009 2010 2011 treatment

Canada 510 53 A
0803001200 Fresh Cavendish Valery bananas United States 1152 1577 75 A
Japan 38 28 10-20% (11 years)

Canada 130 A
0803001900 Other fresh bananas or plantains Korea 25 12 A
United States 33 10 A

United States 596 776 66 A

0803002000 Dry bananas or plantains
Japan 11 8 A

Canada 68 A
0804502000 Fresh or dry mangos and mangostans
United States 431 654 607 A

Australia 70 A
Unroasted non-decaf coffee – Other Canada 695 99 A
0901119000
coffees United States 1342 3742 187 A
Japan 74 A

0901211000 Roasted coffee, non-decaf coffee, in United States 7 A

grain

Other coffees; coffee peel and crust; Canada 114 A

0901900000 coffee-like products containing United States 136 69
coffee. A

Cacao in grains, whole or crushed, 130 59 A

Canada
1801001900
raw or roasted – other cacaos United States 18 51 A

5201001000 Cotton Japan 71 A

Fiber length longer than 28.57 mm (1

5201002000 1/8 inch) but shorter than or equal to Thailand 312 A
34.92 mm (1 3/8)

Fiber length longer than 22.22 mm 40% (excluded)

China 59 60
5201003000
(7/8 inch) but shorter than or equal to Japan 1
28.57 mm (1 1/8) A

5202100000 Cotton waste, yarn Japan 6 A

5202990000 Other yarn waste Canada 17 A

35
Table 2:
ENVIRONMENTAL GOODS

Biodiversity products and their presentations

Product Presentation Product Presentation Product Presentation

powder candy dehydrated

Achiote – seed Guanábana powder Quinua - natural
annatto quinoa
dye juice organic

dehydrated natural Ratania – ground

Hercampure
organic filter bags Peruvian rhatany pieced
Aguaymanto –
Golden berries natural Huito – marmalade box juice oil
candy natural Sacha Inchi snack
Kiwicha – amaranth
powder organic cosmetic
Algarrobo –
Mesquite syrup Oje latex extract natural
Barbasco extract pulp Sangre de grado - gum
Lúcuma Dragon’s Blood
frozen powder extract
Caigua –
Slipper gourd powder powder natural
Maca Sauco –
dehydrated extract pulp
elderberry
powder Maíz gigante – giant corn natural jam
jam natural gum
Camu camu
extract Maíz morado – powder Tara – powder
purple corn spiny holdback
capsules extract Tanning agent
ground crafts seeds
Chancapiedra – natural Butterflies jewelry Tagua – craftss
gale of the wind ivory nut
powder desiccated jewelry
natural leaves Tumbo – banana pulp
passionfruit
Chirimoya – frozen Molle – Peruvian seeds natural
custard apple peppertree Tuna –
pulp natural prickly pear extract
natural ground powder
Muña –
Chuchuhuasi powder Andean mint seeds Uña de gato – bark
cat’s claw
extract natural extract
Cochinilla – cochineal dye Nuez de Brasil – organic cosmetic
Brazil nut
natural peeled dehydrated
Cocona
dehydrated alive powder
Yacón – Peruvian
natural Paiche ground apple syrup
frozen
Copaiba
oil powder extract
natural natural
Granadilla Pasuchaca
candy capsules
powder Ornamental fishes alive

36
Table 3:
Diverse presentations of biodiversity products

Aguaymanto –
Uña de Gato – cat’s claw Golden berries
Copaiba
Oil extract / juice
Yacón – Peruvian ground
Sacha Inchi apple organic Kiwicha - amaranth

Aguaymanto – golden Nuez del Brasil – Brazil

Butterflies berry nut
Crafts / jewelry
Tagua – ivory nut candy Quinua – quinoa
Granadilla

Camu camu Guanábana Achiote - annatto

Capsules
Pasuchaca Algarrobo – mesquite Algarrobo – mesquite

Sangre de grado - Caigua – slipper

Achiote - annatto gum / syrup Dragon’s blood gourd
Dye Cochinilla – Cochineal Tara – spiny holdback Camu camu

Chirimoya – Custard Yacón – Peruvian Chancapiedra – gale

apple ground apple of the wind

Frozen Caigua – slipper gourd Camu camu Chuchuhuasi

jam
Paiche Sauco – elderberry Granadilla

Aguaymanto – golden
Sacha inchi berry Guanábana
Cosmetic Uña de Gato – cat’s Chancapiedra – Lúcuma
claw gale of the wind
Chirimoya – Custard
Tanning agent Tara – spiny holdback apple flours / powder Maca
/ ground
Aguaymanto – Chucchuhuasi Maíz morado – purple
golden berry corn – purple corn

Camu camu Cocona Muña – Andean mint

Dehydrated Cocona Copaiba Pasuchaca

Quinua – quinoa Granadilla Ratania – Peruvian

rhatany
Yacón – Peruvian Hercampure
ground apple Tara – spiny holdback
Uña de Gato –
Barbasco natural Kiwicha – amaranth cat’s claw
Maiz gigante – Yacón – Peruvian
Camu camu giant corn ground apple
Maíz morado – Chirimoya – Custard
Chuchuhuasi purple corn apple
Molle – Peruvian
Guanábana peppertree Lúcuma
Huito – marmalade Nuez del Brasil Pulp
box – Brazil nut Sauco – elderberry
Extract / juice Tumbo – banana
Oje latex Pasuchaca passionfruit
Maca Quinua – quinoa Achiote - annatto
Maíz morado – Sangre de grado - Molle – Peruvian
purple corn Dragon’s blood seeds peppertree
Sangre de grado Muña –
- Dragon’s blood Sauco – elderberry Andean mint
Tuna – prickly pear Tuna – prickly pear Tagua – ivory nut

Source: MINCETUR

37
 Business opportunity
Innovation:
animal feed with spirulina produced from farming waste

Before writing this business opportunity in detail, we must mention the possible applications that algae production generally presents.
Algae, in themselves, are not plants, but single-celled organisms, that belong to the protist kingdom. They absorb a lot of light energy.
They only require CO2, nutrients and sunlight to generate their own food. In addition, algae have a rapid growth rate and grow ten times
faster than sugarcane. Algae can be used to absorb carbon dioxide and also to generate biofuel. Therefore, algae can be allies to manage
climate change. (Paul, 2011 page 193)

How is this possible? Algae grow rapidly with an intense supply of CO2, so they absorb this gas that affects climate, like a real sponge. In
addition to releasing oxygen, they have a high oil content and can produce fifty thousand liters of oil per hectare / year, compared to
six thousand liters of palm oil.

It must be remembered that the production processes of oil generate brackish water which, when filtered in the surrounding land, makes
it barren. Hence, storage tanks are usually built for these brackish liquids. These ponds could be used to grow algae and thus produce
low-cost biofuel. Another case is the use of carbon dioxide from thermal power plants in combination with algal culture to create
biofuels. However, this is not all. Once the oil is extracted, the resulting matter is a combination rich in protein and micronutrients that
is highly quoted for human consumption, especially vegetarians, and also for animal consumption. Even the residual cell membranes
contain esters that can be transformed into natural polyesters.

Alimenta Algae, pertaining to Grupo Alimenta, is a start-up with the mission of transforming the coastal desert of Peru into a large scale
algae production area. Feed will be produced at a very low cost with high nutritional impacts and without environmental impact.

Why algae? They are rich in protein and also contain a number of minerals that result in better animal health. Additionally, algae grow
fifteen times faster than soy.

Good for animals Good for the planet

High in proteins >60% It grows in the desert with salt water

Rich in healthy bioactive elements The most productive organisms

Rich in minerals Less diseases and use of antibiotics

Peru is ideal for algae growth due to its high levels of sun radiation, moderately warm temperatures, desert lands at low prices along the
coast and an excellent balance between labor costs and qualification.

38
 «We will answer fundamental questions about
this crop at year-start 2017»,
Vasco Masías, Grupo Alimenta Manager

Alimenta Algae is evaluating the biological, technical and economic Partnership opportunity: currently the company's own liquidity is
parameters that are required for the massive production of algae in used for the pilot project but it wants to go beyond. Soon the group
desert land with saline water, establishing hundreds and thousands will seek to associate with other interested parties to reach the bold
of hectares of surface production. To grow, algae require carbon that objective of being the first large-scale global producer of algae and
is injected into the growth pools in the form of CO2 and serves as to make Peru a superpower in the production of this input.
a powerful fertilizer that algae absorb. Carbon is obtained via the
pyrolysis of agricultural residues, following the principle of circular Contact information:
economy.
www.grupoalimenta.com /
vasco@grupoalimenta.com
Grupo Alimenta is a Peruvian food supplier that built its business
around the production of eggs (Huevos La Calera). It serves the
national and international market and is known as an innovation
company. The first twenty tons of algae production per day will be
consumed by the hens of the group's companies.

Business opportunity
Innovation:
Land recovery through natural fertilizers

This Project is managed by the Tierra Viva8 social corporation that
belongs to Grupo Alimenta.
The goal is to market at a minimum cost a product formulated
from bird guano, bio-carbon, biol (biol is the result of fermenting
manure and water in an anaerobic environment; after leaving
the bio-digester, biol no longer smells and does not attract
insects once used in the soil) and beneficial bacteria to recover
lands eroded by informal mining, indiscriminate logging or
desertification. Due to its structure and nutrient composition, it
works as an "organic matter seed" that soon multiplies by itself
(thanks to the effect of the bacteria used).
It solves three specific problems: (a) makes efficient use of waste,
(b) helps forest recovery, and (c) develops regenerative agriculture.
In addition, it reduces logging by migratory agriculture, captures
carbon by increasing the organic load on land and improves the
economy of the treated areas by increasing the soil's agricultural
capacity. The cost of treatment is much lower than the cost of
using imported traditional fertilizers (agrochemicals).
For Tierra Viva, it is important to recognize that Peru is a
megadiverse country, where agricultural value is not going to
come from mass production at low cost (GMOs) but to value
natural, sustainable, diverse, socially inclusive agriculture and
products that are nutritionally and functionally superior. This is
achieved with modern regenerative agriculture, returning life to
the earth, replacing inorganic fertilizers used nowadays.
The first demonstration plots have already been developed in
Ica (pecans in 1 ha), Pichanaqui, Satipo, Madre de Dios, and other
regions. Currently, good results are obtained mainly in coffee
(to combat rust and improve productivity and flavor), corn,
cocoa, lima beans, potato, etc. It is estimated that -in addition
to increasing income for the farmer- each regenerated hectare
captures and fixes about 65 MT of CO2 in the atmosphere.
According to Tierra Viva, there are more than 1.4 million hectares
likely to be reclaimed or regenerated only in Peru.
Tierra Viva seeks to conduct interviews with individuals and
institutions interested in the use of soils, as well as with others
who wish to co-finance more experimental plots.
Contacto:
vasco@grupoalimenta.com
yngrid.stephani.ev@gmail.com

8
Social corporations are those which, while being profitable, also generate an extraordinary contribution to society or the environment.

39
 Prepared by María Elena Gutiérrez – Libélula.
Business to be developed: intelligent management of nitrogen in fertilizers

Description There is currently inappropriate use of fertilizers in the main agricultural crops, because a greater application of nitrogen to the soil is mistakenly
considered to increase crop yield per hectare. However, there is evidence that over fertilization does not generate changes in yield; on the
contrary, one incurs in unnecessary expenses and the emissions of nitrous oxide has negative consequences on the environment.

In Peru's National Contribution to the UNFCCC, mitigation regarding fertilizers mitigation was proposed as an option. This consists of training farmers in good
agricultural practices in crops where there is nitrogen use. In addition, this activity will be accompanied by permanent soil analysis to identify nitrogen requirement
per crop and make appropriate use of it. Cumulative mitigation at 2030 is 1.63 MtCO2eq.

Typical Project Duration: 14 years $ 21 958 749 Net present $ 252 938 208
Capital investment S/ 65 876 247 value (NPV) S/ 758 814 624
It includes the cost of training extension
workers who will work in pre-determined areas. Internal return Discount rate
rate (IRR) --- 4%
It includes technology transfer, soil analysis and technical
monitoring of the agricultural campaign, which occurs Investment recovery
during the first year of intervention. period (IRP) As from 1 year

Prepared by María Elena Gutiérrez – Libélula.

Intelligent water management: training for better rice yields on the coast

Description In Peru, rice is the first product in terms of planted and harvested area above other products such as coffee, potatoes and yellow corn. It is
approximately planted on 380,000 hectares on average and has become one of the essential components of the basic Peruvian family basket
(INIA).

In Peru's National Contribution, "Training to improve rice yield on the coast" was proposed as a mitigation option- It consists of training farmers in technological
packages for high-yield rice in irrigated systems with the objective of reaching the estimated production, under the BAU scenario. This allows for reducing areas
planted to this crop. Cumulative mitigation to 2030 is 0.48 MtCO2eq.

Model project Duration: 14 years $ 95 926 397. 33 Net present $ 362 770 263.33
Capital investment S/ 287 779 192 value (NPV) S/1 088 310 790
It includes the cost of training extension
workers in pre-determined areas Internal return Discount rate
rate (IRR) --- 4%
It includes the implementation of good agricultural
practices, which occurs during the first year of intervention Investment recovery As from 1 year
principle (IRR)

40
 Energy
Hydropower, bioenergy, wind, solar and geothermal energy, as well as tidal power are considered as green businesses in the energy sector.
The same goes for energy and management distribution. Nuclear energy, uranium mining and power plants for oil or coal are not considered
green businesses.

However, the energy sector is not only electricity generation, it is also the use and consumption of fuels where energy efficiency plays a
fundamental role, as we will see below in the successful case of Uruguay.

Peru is said to have a clean energy matrix because of the majority presence of hydropower and natural gas in the generation of electric energy.
This is relative because although our electricity has basically a clean origin, final energy consumption is not clean in the same proportion.
Electricity is approximately 18% of energy consumption and 61% is hydrocarbons (including transportation, gas for various uses, etc.). Likewise,
demand for energy will at least triple by 2030 and we do not know what the proportion of hydropower and renewables will be then.

Uruguay:
94% renewable energy
Uruguay has become a pleasant surprise worldwide for the use of renewable energy. It has attracted significant amounts of private
investment. In 2014, 94% of its electricity came from clean energy sources: hydropower, wind, biomass and solar. They got included
without any subsidies. On the contrary, renewable energy allowed for a 40% reduction in generation costs. It has exported electrical
energy to Argentina at a power rate that at times reached the equivalent of 50% of Uruguayan domestic consumption. By 2016, it is
estimated that its installed capacity will reach 1200 MW of wind energy (Uruguay, 2011, p.20).

This structural transformation allowed to have 94% of the electricity consumed in the country from a combination of renewable sources in
an innovative process at country level, through a public-private partnership in 2014. How did this happen? Uruguay is a country without gas
and oil or coal reserves and has no more space for hydropower plants. Its imports of electrical energy were very high.

The main change factors were:

1. In 2008, an energy policy to 2030 was adopted and ratified by all political parties aiming at achieving energy sovereignty,
reducing costs, activating the national energy industry and reducing dependence on oil.
2. As a result, the sector invested more than USD 7 billion in six years, which is equivalent to 12% of its 2014 GDP. One third of
the 7 billion was contributed by the State and the rest was private investment. Each time a new technology is used, the State
assumes the costs of knowledge. The first wind plant was a debt that Spain wrote off. Throughout the process there was
support from multilateral organizations (CAF, IDB, World Bank) and loans to State enterprises. The Global Environment Facility
(GEF) was in much of the process.
3. Building technical capacity to implement policies. Maps were made for wind, small hydro and geothermal, etc. Postgraduate
studies, master's degrees and techniques for the various renewable energies were started.
4. State oil companies with a business vision that granted sovereign guarantees.
5. A special fund in the National Research and Innovation Agency (ANII) for energy research applied to the country and for
private sector participation.
6. Demand for energy was intervened by advocating for energy efficiency with concrete targets for energy savings. An
energy efficiency fund and certificates were created, as well as efficient equipment labeling, including for light vehicles.

Uruguay ranked fifth worldwide in relation to the level of investments in renewable energy as a percentage of GDP in 2014. In
particular, the incorporation of wind energy into the grid is highlighted. According to the International Renewable Energy Institute
(IRENA), in 2014, Uruguay was the country with the highest per capita wind capacity.

41
Measures detected by Plan CC for energy

Peru: Mitigation in the energy sector to 2050 (Savings in Soles /tCO2eq)

600

500

400

300

200

100

0
s

ses

uses

aters

rvices

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e rs

o rs

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Energ

↓e Potential
Mitigation Measure (tCO2eq BAU – tCO2eq MM)
Renewable energy combination 386,55

More participation by hydropower stations 266,58

Electricity inter-connection with Brazil 158,43
Electricity inter-connection with Andean countries 59,46
Loss reduction in the SEIN 41,24
Energy audits in the industrial and service sectors 27,1
Replacing obsolete boilers 5,27
Optimizing boilers 3,18
Energy efficiency labelling system 2,87
Replacing fluorescent lamps in the commercial, industrial and service sectors 2,84
Replacing electric water heaters for solar ones 2,18
Replacing street lighting 1,81
Engine efficiency (pumps, fans, air compressors and conveyor belts) 1,59
Replacing old electric engines 1,23
Replacing fluorescent lamps in the residential sector 0,77
Replacing incandescent lights in the residential sector 0,5

Figure 12: Fuente: Plan CC (2014).

42
 Business to be developed:
Distributed generation market
It is a new type of business that is being developed in recent years, following the example of Germany, where farmers sell their remaining
photovoltaic energy to the national electricity grid. Such dispersed supply requires training and renewable energy technology as well as
advanced use of information and communication technologies to reduce costs (Gamio and Eisman, 2016).

Peru’s National Contribution estimated that an installed capacity of 74.58 MW could be reached with 990 generators. Electricity is
generated with solar panels on building roofs. Industry and service companies would operate in the capital cities of provinces that have
a greater solar radiation: Arequipa, Ica, Huancayo, Trujillo, Chiclayo, Tacna, Pucallpa, Puno, Piura, Cajamarca, Cusco and Moquegua. For
this purpose, regulation of Law 28832, by the Ministry of Energy and Mines, is needed to regulate distributed generation at small and
medium scale, as well as tariffs and requirements for its incorporation and operation in the national electricity system.

Business to be developed:
Energy efficiency in Peru
According to the International Energy Agency, the technology available for energy savings could bring down consumption to 10%
of what is currently used. This is an important fact to consider not only for environmental consequences but also for economic ones.
Carbon Trust, the international consulting company, has estimated that Peruvian companies spend USD 9.1 billion on electricity and
fuel each year. Energy efficiency can generate economic growth, increase productivity and improve competitiveness, with the benefit
of significantly reducing emissions of gases that affect the climate, at low cost. According to Carbon Trust, the most important barriers
for energy efficiency in Peru are lack of business knowledge, capacity and skills to identify and implement opportunities, limitations of
market skills and lack of access to financing.

Some 41 clusters have been identified in Peru, which make up half of the country's export capacity and could lower its logistical
costs with energy efficiency (Metis, 2013). National intervention is needed to create the demand, knowledge and skills needed to
improve energy efficiency.

If we consider the costs of the southern energy node, which are beginning to be noticed in the companies' electricity bills, now is the
right time to act.

If electricity is to be interconnected with Chile, energy efficiency should be maximized. The reason is that, according to conservative
calculations, in the 2021-2024 period Peru would not have surplus energy. According to Carbon Trust estimates, some 50,000 companies
could be involved, which together would save USD 665 million while reducing 4.2 million tons of carbon dioxide equivalent. The proposal
considers Cofide's intervention through commercial banking.

In addition, a national energy efficiency program could make the following activities and projects come true:

Cogeneration in the private sector Replacing diesel and gasoline vehicles for hybrid, electric and CNG

Replacing old equipment (engines, pumps, etc.)

Introducing low-emission buses, trucks and taxis
with new and efficient equipment

Low-consumption lighting in the private sector Training for efficient and safe driving

Energy-efficiency labelling Energy efficiency in passenger and cargo transportation

Energy-efficiency audits for industry and Energy efficiency in prioritized clusters

services

43
 Table prepared by María Elena Gutiérrez – Libélula.
Business opportunity: replacing fluorescent lamps in the commercial sector

Description Efficient fluorescent and LED lamps are more cost-effective as the light output of the lamp and hours of use per day increase. The lamps of
greater use for interiors are estimated to be the 40 / 36W linear fluorescent ones (75%) and 32 / 22W circular fluorescent ones (25%). Potential
replacement of 7 million conventional fluorescent lamps -equivalent to 3 million linear 2x36W and 1 million circular 1x32W- is estimated.

Peru's National Contribution proposed to promote the replacement of 3.25 million T12-40W, T8-36W, 20W and 32W circular fluorescent lamps and 22W linear
fluorescent lamps with T5-28W-14W long-life electronic ballast and/or luminaires with 2x20W linear and 14W circular LED lamps. Estimated cumulative mitigation
is 1.56 MtCO2eq to 2030.

Model project Duration: assessed at 10 years $ 178 333 NPV $ 60, 333
Capital investment S/ 535 000 S/ 181 000
Replacement of lamps in 230 malls, 4
anchor stores and 180 smaller premises
IRR 21.5% Discount rate 13.4%
Replacement of 4172 fluorescent lamps by 28W fluorescent
lamps and 30W, 50W and 150W LEDs Investment recovery
period 4 years
Annual electricity savings by using efficient fluorescent
lamps and LEDs: 802,455 KWh

Juan Coronado Lara

Auster Energía Director
jcoronado@auster.com.pe

Why is it important to invest in non-conventional renewable energy in Peru if we have abundant hydropower and gas?

An energy matrix based on only two sources is absolutely risky. Peru has abundant resources that are sources of renewable generation
that could be used in electricity generation. Hydropower, which is now 50% of the electricity matrix, is under permanent threat of
scarcity due to climate variability and climate change. Natural gas, the other 50%, is an exhaustible resource that can serve as a bridge
to migrate to new sources of renewable generation because the stock of resources in Peru is limited to 20 or 25 years. In practical terms,
wind and solar energy are cheaper than hydropower at current prices, their development is faster, they do not require subsidies and
they help the country in its contribution to preserving the global climate. An additional advantage of wind energy generation is that it
complements hydraulic generation very well with, because there is more wind in the highlands' dry season.

Is it financially profitable to invest in non-conventional renewable energy in Peru?

The capacity factors that can be achieved in Peru allow for greater efficiency or production of return per invested dollar. In the case of
wind generation, capacity factors are among the highest in the world, and so is the case in solar energy. A big problem that investors
have is market restrictions imposed on renewables. This establishes a dependence on State bids for 5% of the demand. With a small
market and market distortions (e.g. subsidized gas) and a large supply of projects for the abundant resources, the prices awarded in the
auctions are falling to levels that reduce profitability, withdraw appeal for investors and are unsustainable.

What regulatory reforms would be necessary to go along with this investment?

It is necessary to level the playing field for the different generation sources. Renewables should be allowed in contracts with clients. In
order for this to happen, power would have to be recognized for wind and solar generation, so they could market their energy in the
contract market and participate in tenders for energy distributors.

I believe that the premium - created by executive order 1002 - is no longer justified given that the prices achieved in the last auctions
allow renewable energy to compete with other generation sources.

44
 At technical level, the need to modify the economic price equation in the electrical system is discussed as a consequence of rethinking
this system. The resulting rationality of the long term would imply different pricing policies based on a different optimization. Energy
prices could be restructured based on a combined equation of hydropower, natural gas and non-conventional renewables. What is your
opinion about this?

It seems to me that we must try to return to a competition and market scheme: to remove subsidies or not create them in the future. If
this equation raises the share of renewable and clean energy in the matrix, it seems coherent.

Forests
Any forestry activity that substantially avoids or reduces carbon loss or emission can be considered as a green business. Also, substantial
carbon sequestration.

The following have the green business category:

Certified forest plantations and managed forests. For example, those managed
by the Forestry Stewardship Council (FSC) or the Verified Carbon Standard
(VCS)

Afforestation on non-forest lands

Reforestation on forest lands

Reduction of emissions due to forest degradation or deforestation

Tree cutting activities for timber removal are not considered green by completely removing the trees to a diameter of less than 20 cm. The
effects are devastating and do not allow for sustainable forestry that balances perpetual growth and harvesting trees with environmental
protection criteria.

Peru has 17 million hectares of permanent production forest. Of these, 7 million hectares have been granted in concession and only 2 million
are operational. Some 700,000 ha have forest management certification.14

14
Conversación con Erick Fischer, director de Relaciones Interinstitucionales de Maderera Bozovich.

45
 80°0'0"W 76°0'0"W 72°0'0"W

ECUADOR COLOMBIA

2°0'0"S
2°0'0"S

TUMBES LORETO

AMAZONAS
PIURA
6°0'0"S

6°0'0"S
LAMBAYEQUE
CAJAMARCA MAPA DE UBICACION

SAN MARTIN

BRASIL
LA LIBERTAD
OC

ANCASH HUANUCO
E AN

UCAYALI
10°0'0"S

10°0'0"S
O

PASCO
PA

JUNIN
CIF

LIMA
ICO

MADRE DE DIOS

HUANCAVELICA
CUSCO

APURIMAC
14°0'0"S
14°0'0"S

AYACUCHO
ICA PUNO

LEGEND
COLOR DESCRIPCIÓN
BOLIVIA

Permanent Production Forests

BPP Biabo Cordillera Azúl
AREQUIPA

PERMANENT PRODUCTION FORESTS 2016

DPTO AREA TOTAL (ha) %
Ayacucho 145765.91 0.82
PERMANENT PRODUCTION Cusco 171644.00 0.97
FORESTS Huánuco 617486.85 3.49 MOQUEGUA

ESCALA : 1 / 2.500.000 Loreto 9321147.03 52.66

0 30 60 120 180 240 300 Madre de Dios 1935162.00 10.93
Km
Puno 24998.00 0.14
SISTEMA DE COORDENADAS GEOGRAFICAS TACNA
ELIPSOIDE: WGS 84 San Martín 1122131.00 6.34
OCTUBRE 2016 Ucayali 3461469.93 19.56
Biabo (*) 899422.00 5.08
18°0'0"S
18°0'0"S

Source: Digital Perú (DATUM Horizontal WGS 84), escala 1:250 000; Ministerio de Transportes (MTC) y
Registros de la Base de Datos de la Dirección de Catastro, Zonificación y Ordenamiento de la DGIOFFS.
TOTAL 17699226.72 100.00
CHILE
80°0'0"W 76°0'0"W 72°0'0"W

46
 Innovation:
Forest regeneration and productive
center in Las Gaviotas (Colombia)

In what was 8000 hectares of land without trees, without drinking
water, with a soil unfit for agriculture, valued at USD 3 per ha,
today, twenty-five years later, the Colombian Paolo Lugari receives
visitors in a tropical rain forest with 250 species of tropical flora in
La Vichada.
It all started by inoculating the fungus Pisolithus tinctorius with
the small Caribbean pine (Pinus caribaea Hondurensis), which
created a discrete protection space from ultraviolet rays for the
soil and roots. Although the heat stress remains high and causes
a dry carpet of pine debris, pines grow to maturity thanks to the
nutrition ensured by the fungus. This mat improves soil moisture
by simultaneously trapping compost.
Las Gaviotas employs 200 people in direct jobs and 1800 in
indirect ones. In 1997, Paolo Lugari received the World Prize of
Zero Emissions by the United Nations University. In 2006, William
B. Harrison Jr., CEO of JP Morgan, led the offer to expand Las
Gaviotas from 8,000 ha to 100,000 ha, offering a $ 300 million
investment package to President Álvaro Uribe. The expansion of
this initiative would have generated 100,000 jobs and at the same
time would store a large amount of carbon dioxide. Apparently
the Government of Colombia did not react on a timely basis to
this offer. It has slightly increased up to 11,000 hectares.

This pine species, in addition to being suitable for the recovery

of degraded soils, has the particularity of distilling turpentine.
Turpentine and rosin oil have multiple applications in the chemical
industry. Rosin is extracted from these pines, planted in thousands
of hectares, and then it is processed in a bio-factory within the
same forest. Its production process means zero emissions and
it yields the highest income in the community of Las Gaviotas.
But the main benefit of this pine plantation is that, thanks to
this afforestation, the rainfall in the area increased and soon also
allowed extraction of underground water. Filtered and treated,
this water is today marketed in the Juan Valdés coffee shops in
Colombia.

The community's own ingenuity in the use of renewable energies Figure 10: Forest and productive center at Las Gaviotas, Colombia.
has been developed and this is how they now use windmills, solar
water heaters and hydraulic rams. All these inventions have no
Contact:
patent and belong to all the community. It produces100% of its
bernalzeri@gmail.com
own energy with tropical windmills. In 1979, Las Gaviotas received
funds from the United Nations to develop and disseminate its
technologies such as the deep-well sleeve pump, the compact
solar kettle, the individual solar heater, the self-closing water saver,
among others.

Potential Opportunities Typical project Employment potential

Production of water, resins and biofuel, carbon credits, exports, Applied to two million hectares, it would generate 50
Approximately 20 years
livelihood assurance thousand direct jobs (Pauli, 2011, ap. 2)

47
 Business opportunity:
Cacao without deforestation in
Madre de Dios

In 2015, the initiative Momentum for Change (UN Secretariat

for Climate Change) acknowledged this project at the Paris
conference as one of the 16 best projects in the world and one of
the two forest industry cases worldwide.

The project guarantees long-term conservation of 570,000

hectares of natural forest in the Tambopata National Reserve and
the Bahuaja Sonene National Park, as well as recovery of 4000
hectares of degraded soils in the buffer zones of these Protected
Natural Areas (ANP). The investment allows for restoring these
soils, with agroforestry systems, to produce at least 3200 tons of
organic cacao per year to be traded in the fair trade system. Cacao
will be sold by a farmers' cooperative which ensures high prices to
its members and total product traceability.

The NGO AIDER is in charge of the Administration Contract in both

Protected Natural Areas and in the buffer zone it works with 272
farmers associated in a cooperative and seeks to reach 500 more
from 22 villages by 2018. The idea is that these farmers serve as a
natural barrier to deforestation caused by migratory agriculture
and illegal activities such as illegal logging and mining. Ecotierra,
a Canadian-based Peruvian company, supports AIDER and the
Tambopata Candamo Cooperative to find a route to market by
overcoming the most recurring barriers faced by cacao farmers
in Peru.
The Althelia Climate Fund granted a US $ 7 million loan to
AIDER, collateralized by the reduction of emissions of the REDD
project in these ANPs (carbon credits). This means that carbon
leverages additional funding to support forest conservation and
Figure 11: Tambopata National Reserve
conservation activities and biodiversity, and in turn promotes
the restoration of degraded areas, benefiting small farmers who
otherwise do not have access to financing.
AIDER has spotted 40 000 hectares of degraded land along the
interoceanic highway that would be appropriate to replicate
the deforestation-free cacao model. If this expansion were to be
carried out it would imply an annual production volume of more
than USD 3 million if we consider USD 97 as the current price per
ton of cacao.

Replication potential Minimum investment amounts Potencial de empleo:

40 000 hectares of degraded land along the $ 5 092 or S / 16 500 for 3 planted hectares 4741 jobs in one year for planting the 40 000
interoceanic road (inputs + technical assistance) hectares
Potential Investment: Farmer investment: labor (22 workers per planted ha in the first year and
USD 100 million 10 workers per ha for maintenance)
Potential impact: Under a joint venture with the cooperative, the
12 000 farmers and their families investor receives 12% of the profit as from the
fourth year.

Contact: Jaime Nalvarte / www.aider.com.pe / jnalvarte@aider.com.pe

48
 Sustainable Forest Management (SFM) in forest concessions

Chart prepared by María Elena Gutiérrez – Libélula.

Description Peru has approximately 17 million hectares of forest, in which forestry use is allowed for lumbering purposes. One of the ways to access timber
resources is forest concessions. The use unit ranges from 5 thousand to 40 thousand hectares, for a4 0-year renewable term. The unit's number
of hectares is determined by technical studies carried out by the National Forestry and Wildlife Service (SERFOR) in coordination with the corresponding regional
government. Forest management refers to the characterization, evaluation, research, planning, exploitation, regeneration, replenishment, enrichment, protection
and control of the forest and other wild vegetation ecosystems, aimed at ensuring sustainable production of goods, sustainable provision of services and
conservation of biological diversity and the environment.

In Peru's National Contribution this modality is for 30% of the forestry concessions with lumbering purposes (2.2 million hectares). It includes improving wood
management and use in the forest concession and permanent production forest (BPP) areas. It is expected that, as a result of the greater value that forests granted
in concession acquire -as well as due to the greater profitability of their use- there will be greater incentives to maintain the forests in standing and to reduce the
deforestation within these areas. Cumulative mitigation to 2030 is 36.98 MtCO₂eq.

Typical Project Duration: 20 years $ 412 000 Net present value $ 242 333
Capital investment S/ 1 236 000 (NPV) S/ 727 000
Acquisition of machinery: 1 caterpillar
tractor, 10 chainsaws, 2 4x4 pickup trucks, 1 front loader Internal return Discount rate
rate (IRR) 18.9% 15.2 %
Forest Management Plan Implementation for 50 000 ha
5% of the effective concession area will be used (2000 ha) Investment recovery
each year period (PRI) 8 years

Commercial Reforestation with high input yields

Chart prepared by María Elena Gutiérrez – Libélula.

Description Peru has a potential of 10 million hectares of land suitable for reforestation in the three natural regions. It presents natural competitive
advantages for forest production such as climate, water availability and a variety of forest species with high commercial value and a great
diversity of ecosystems. In addition, wood is the only commodity whose global demand is increasing, given population growth and the nature of its use as an
inherent part of human life.

Forest plantations are crops with species that generate forest ecosystems that stem from human use of one or more species, whether native or introduced.
Plantations aim at the production of wood or forest products other than wood, protection, restoration, provision of environmental services or any other combination
of the above (Article 11 of the Forestry Law)

In Peru's National Contribution there is a proposal to sequester carbon with new forest plantations or commercial reforestations with high inputs in areas of
degraded pastures or areas without tree cover that are without economic use. Management of high inputs includes: mechanization of the soil at the beginning to
break compaction and incorporate chemical amendments; use of improved germplasm clones of high-yield species per unit of time (8-year cut period); fertilization
and weed control in years 1 and 2; tree trimming in years 2 and 4; phytosanitary control in all years. Accumulated mitigation to year 2030 is 46.17 MtCO2eq.

Duration: 8 years
Typical Project
Purchase of land: 1600 ha (only 800 ha $ 3 102 333 Net present value $ 267 000
will be planted) Capital investment S/ 9 307 000 (NPV) S/ 801 000
Purchase of seedlings Internal return
Construction of roads 15.9% Discount rate 15.2%
rate (IRR)
Plantation of 800 ha of bolaina (8 lots of 100 ha) Investment recovery
Harvest in the year 8 = 200 m period (PRI) 11 years
Products = boards and posts
Sales prices = S / 1.3 (post) and S / 2.8 (board)

49
 Coffee-agroforestry system

Description Agroforestry is a group of practices and production systems where planting of forest crops and trees is sequential and it combines with the

Table prepared by María Elena Gutiérrez – Libélula.

application of soil conservation practices.
Agroforestry allows higher economic revenues due to the combination of crops and in the medium term due to revenue from the production of timber or
non-lumberable forest products. 10
Peru's National Contribution proposed the establishment of agroforestry systems of technified coffee combined with timber trees in areas of degraded pastures and
abandoned deforested areas of the Peruvian Amazon. This system sequesters larger amounts of carbon than pastures and allows larger net profits for farmers
compared to the traditional coffee system. Cumulative mitigation to 2030 is 2.57 MtCO₂eq.
Note: These calculations do not include the benefits of reusing coffee pulp waste.

Typical Project Duration: 15 years

3 ha land plot $ 11 000 Net present value $ 4 333.33
Capital investment S/ 33 000 (NPV) S/ 13 000
Does not include the purchase of land, because it is
implemented by small coffee farmers Internal return Discount rate
(TIR) 17.7% 15.2%
Acquisition of coffee, banana and tree seedlings (bolaina).
Includes soil fertility analysis Investment recovery
Soil preparation period (PRI) 7 years
Sales price = S/ 0.5 / kg banana; S/ 6/ kg coffee and S/ 150/m
of bolaina

Cacao agroforestry system

Table prepared by María Elena Gutiérrez – Libélula.

Peru's National Contribution proposed to establish agroforestry systems of technified cacao combined with timber trees in areas of degraded
Description
and abandoned pastures. This will allow to sequester greater amounts of carbon and obtain greater net profits for the farmers, compared to
the traditional cacao system. Cumulative mitigation to 2030 is 4.06 MtCO2eq.

Duration: 15 years $ 92 014 692 Net present value (NPV)

$ 21 706 010
Model Project Does not include the purchase of land, Capital investment S/ 276 044 076 (VAN) S/ 65 118 030
because it is implemented by small cacao
Internal return Discount rate
farmers rate (IRR) ---- 4%
Does not include the purchase of land, because it is Investment recovery
implemented by small cacao farmers period (PRI) 13 years
Acquisition of cacao, banana and tree seedlings (bolaina)
Soil preparation
Soil fertility analysis
Implementation target to 2030: 19 965 ha (specifically in
Amazonas, San Martín and Ucayali)
Planted area per year (ha/year): 1331 ha

Sustainable forest management for Brazil nuts

Table prepared by María Elena Gutiérrez – Libélula.

Non-timber products are goods of biological origin other than timber produced in the forest or in non-forested plant associations, or they are
Description
produced in forest plantations or agroforestry systems. Brazil nuts (Bertholletia excelsa) can be highlighted among non-timber products.
In Peru, commercial Brazil nut forests are located only in the eastern strip of the department of Madre de Dios and cover a total area of 1 443
185 hectares. Brazil nut trees are large; they can measure up to 60 m. high, with a diameter of 14 m at the stem base. They produce from the eighth year and fruits
take fifteen months to mature; 70 kg can be harvested from each tree every year (Macroconsult, 2013).

The National Contribution of Peru proposed this modality which seeks to reduce deforestation within Brazil nut concessions through the implementation of a
program for the sustainable management of Brazil nut natural growth areas within the framework of the new forest law (management improvement and
extraction technology improvement). Cumulative mitigation to the year 2030 is 1.20 MtCO₂eq.

Typical Project Duration: 20 years $ 6666.66 Net present value $ 4 333.33

General Forest Management Plan and Capital investment S/ 20 000 (NPV) S/ 13 000
Annual Operative Plan Preparation Internal return
27.4 % Discount rate 15.2%
rate (IRR)
Consider all the previous work necessary to start operations
(extraction, processing and commercialization) Investment recovery
period (PRI) 4 years

10
According to the National Forestry and Wildlife Service, agroforestry systems are a kind of land use system consisting of practices of integration, preservation and management of perennial woody
species in annual or perennial agricultural production systems, being both activities conducted in a competitive and sustainable way. Production areas in an agroforestry business are transformed
ecosystems located in forest or protection lands, in which sustainable permanent production systems have been installed, including both forest or woody vegetation and domesticated plants, as well as
agricultural, fruit crops or with pastures. Retrieved from http://www.serfor.gob.pe/bosques-productivos/servicios-forestales/agroforestales

50
 INTERVIEW

Felipe Koechlin Arce,

Reforestadora Amazónica
General Manager
felipe.koechlin@ramsa.pe

Why is it important to promote commercial reforestation in Peru?

Because we must enhance 60% of the national territory, that is, the Peruvian Amazon. In this region, where normal activities are subsistence
agriculture and livestock, freight costs are high and people cannot capitalize. Reforestation has competitive advantages because, thanks to
the rain and the sun, growth is achieved two or three times faster than in other countries. People, by planting forest species on 1, 10 or 100
hectares, have very interesting returns that take them out of poverty, as long as they have an industrial plant nearby. Therefore, it would be
ideal to have one in each district or province of the Amazon for the processing of wood. The forestry sector also generates what is most
needed in Peru, which is jobs for unskilled labor. A permanent and formal job is generated for each two hectares of planted timber trees.
Commercial reforestation will contribute significantly to the fulfillment of Peru's climate commitment as the implementation of this activity
involves a drastic reduction of deforestation.

Is it financially profitable to invest in reforestation in the Amazon? Why isn’t there more investment?

Yes, it is profitable. The profitability goes from 8% to 10% if standing trees are planted and only sold. The profitability is 15% or more if they are
added value in an industrial plant. There has not been investment because there were no minimum conditions. There are now clear rules for
forest plantations and this is very important for investors. In the last decades, forest plantations have proven to be better protection against
inflation, even more so than gold. That is why the world's largest pension funds and insurance companies invest in them.

What reforms are needed to go along with this investment?

There is a lot to do. I mention three bottlenecks in the sector: (1) it is necessary to start granting concessions for both plantations and
permanent production forests. A concession for plantations has never been granted and concessions for permanent production forests have
not been granted for twelve years now; (2) titling of land not titled in the Amazon region; and (3) the elimination of the illegal timber market
in Peru.

A simple first step is to make government purchases of legal timber. The BCR does not buy Mazuco gold, for example. It is what is happening
now with wood. The ministries of Education, Housing and others, carry out public tenders for the purchase of timber without checking its
origin, then illegal wood, which is the cheapest, is the one that is always awarded the contracts.

In addition, alliances could be made between mining and forest plantations for the development of the Peruvian highlands. With the current
mine closure regulations, a guarantee letter or a trust should be established for twenty years or more. With this capital, which at some point will
have to be disbursed anyway, the area around the mines could be reforested or planted with plantations, creating wealth and employment.
This reforestation could be done anywhere in Peru, but would normally be in the mines' area of influence.

51
On the other hand, the SME Fund, managed by Cofide, has 120 million dollars to promote forestry. The idea is to have private banks venture
in the plantation industry without assuming 100% risk. This gives them long-term credit lines that banks do not have. The idea is to replicate
the experience with the Mi Vivienda Fund to promote small and medium-sized forestry companies with 8 to 10 year loans to be paid against
the tree harvest, both capital and interest.

Commercial banks want to be paid annual interest. This is why the Fund has not yet worked. Cofide has prepared a proposal for the new
government and I understand that the solution is for the Fund to pay interest to the banks and after the trees are harvested, the entrepreneurs
pay interest to Cofide. Here it is important to negotiate the payment of interest to private banks; at the moment it would be 9% per year.

In Chile, $ 550 million was subsidized between 1968 and 2013, and in the same period, exports were generated for 60 billion dollars. In Peru it
was decided not to give any type of subsidy, but the long-term financing line should work to boost the sector.

Is a forestry boom coming in Peru?

I think it is. Several international funds are coming and showing interest in the changes made. I am referring to legislative changes, minor
rules that hampered the sector, deregulation of many things. There is also interest among Peruvian companies and economic groups.

In Pucallpa, the forestry Center for Technological Innovation (CITE) promotes innovation and productivity. While constructing forest
infrastructure, they are already leading projects with existing machines for producing high value added with the wood of forests and
plantations. This will be much greater when the new machines arrive in about two years.

The CITE has four components:

1. machines and experts who teach to manufacture products with high added value, that is, to move from wood to boards, to
plastified wood. Structured floors are made in China with Peruvian wood;
2. certification with the US Forest Service to seal quality timber products;
3. field research, plantation genetics, improvement of forest roads for plantations;
4. communication of findings to Peruvian society.

In the climate commitment context, it would be interesting for the State to buy carbon credits from the forestry industry or to have a
right of first refusal. The forest entrepreneur should not have to bear the costs of finding these markets.

52
 Industry
The following are considered green industrial businesses:
 elimination of fugitive emissions
 cleaner industrial processes: e.g. cement with less amount of clinker
 recovery of unused heat
FF Cogeneration, tri-generation and the combination of heat and generation are important green businesses.
FF Energetics in processes and systems. For example, control and monitoring of compressed air system, reuse of membranes,
network safety, speed controls, insulation of distribution systems, etc.

Those that seek to make emission-intensive fossil fuels -such as coal and oil- more efficient are not considered to be green industrial
businesses. Reducing emissions requires rapid elimination of the use of these fuels. What can extend their useful life will be excluded in
the coming decades.

Business to be developed
NAMA11
for the cement industry

The objective is to develop a framework to promote competitiveness in the Peruvian cement industry, reducing production costs and
emissions of greenhouse gases while generating co-benefits.

It includes the following measures:

 Co-processing: the use of waste as a substitute for fossil fuel in clinker production kilns.
 Replacement of clinker: achieved by decreasing the clinker / cement ratio producing cements with additives.
 Energy efficiency: adoption of good practices and technology improvements.

It also involves the following enabling activities:

 Include co-processing and Producer Extended Responsibility (REP) into Law 27314, General Law on Solid Waste, and support the
development of the respective regulations.
 Include the possibility of using cements with additives in the Technical Code of Sustainable Construction and in infrastructure
and housing projects.
 Develop skills in co-processing and prioritize the environmental evaluation of projects.

An investment of around USD 5 million has been estimated to be able to achieve the described enabling framework, which will allow
private investment to implement the emission reduction measures that have been determined. As for the costs themselves, we have
gathered the following information, considering the results of Plan CC first phase:

Marginal Cost Mitigation

Mitigation Option
(Soles/Tc02 eq)/Tc02 eq) MT CO2eq to 2030

Replacing Clinker for pozzolan in cement -54.71 1.577

Replacing clinker for steelworks slag in cement -22.18 0.777

Replacing clinker for lime filler in cement -88.50 0.877

Replacing coal for natural gas in cement kilns -0.37 0.905

Note: MTCO2eq – Millions CO2eq tons. Source: Adapted from de Proyecto Plan CC (2014) and Michaelowa, and others (2015).

11
Nationally Appropriate Mitigation Actions (NAMAs). A NAMA is usually a sectoral action plan to limit emissions.

53
 Business Opportunity Potential Typical Employment
Innovation: Opportunities Project Potential
Production of stone paper with mineral dust and
Any kind of paper and
plastic waste carbon credits USD 150 million Up to 1000 jobs

The inventor of stone paper is the Chinese machine builder

Liang Shih Huei. After more than ten years of hard work he
was able to produce stone paper by mixing fine mineral dust Contact:
- very similar to the size of the dust particles generated in the Stone Paper Manufacturer
extraction of copper or gold - with high density polyethylene. www.taiwanlm.com
It would take him ten more years to make the machinery that Add: No.75, Zhongzheng 5th St., YongKang
could produce this paper at industrial level. The first factory was Dist., Tainan 71066, Taiwan (R.O.C)
installed in Shenyang in 2013, and there are two more factories Tel: +886-6-2423888#509
in China today. It is an ecological paper not only because it does Fax:+886-2-81926176
Email: gaby@taiwanlm.com
not use water or cellulose but also because it can be recycled
Gaby Chiu
to infinity.

It is a highly standardized production process that allows

you to produce 17 types of paper according to customer
specifications. The starting point is the supply of rocks rich in
calcium carbonate and a variety of minerals can be used as
long as the material reaches the standard fine powder size. The
crushing facility provides the material to be transported through
a duct to prevent the generation of dust in the production of
pellets. The powder is mixed with 20% polyethylene which can
be replaced by recycled polyethylene (PE) and finally by a PE
of biological origin, this generates more value to farmers and
creates a larger beneficial impact in the region. Agriculture is
connected with mining at industrial production level.
Figure 13
Pellets feed the production of paper film. Investment in the
equipment is approximately USD 150 million, 40% lower than
the cost of a traditional paper mill. There is also a considerable
difference in the process, because no water or water treatment
is required, which reduces energy use by 67%. The factory in
Benxi City (near Shenyang) began with a production capacity
of 120,000 T / y, but is designed for one million tons and fit for
a thousand jobs.

Rolls of paper are sent to companies that produce notebooks,

paper bags, children's books, packaging materials, including
medicine boxes and even humidifiers. Paper production
Figura 14
matches market need. It can produce any type of paper
because it is an extrusion process. Up to 2015, 17 types of paper
had been produced. It is ideal for Kraft paper bags for cement
or food, beverage packaging (tetra pak) and food packaging,
such as for fresh fish, and as a substitute for polystyrene. Not
suitable for newsprint or toilet paper. Exxon Mobil has recently
committed to using only stone paper.

Mining companies are the biggest investors in this plant.

Figura 15

54
 Business opportunity: the brick NAMA

Heading Description

Measures with direct impact GHG
emission reduction
Industrial brickyards:
Promoting conversion to improved kilns of greater capacity and efficiency, as well as use of less carbon-intensive fuel,
such as the change to natural gas according to availability in the country's regions.
Artisanal brickyards:
Introducing energy-efficient technology for the production of bricks, such as the use of fans and the construction of
more efficient kilns (inverted draft kiln). Technology change is encouraged through a market approach and adopted
in a step-by-step fashion.

These correspond to support actions for implementing the NAMA, within the framework of its operation and
support for a broader transformation process in the sector:
• Formulating norms that regulate emissions of local pollutants to the atmosphere.
Measures with indirect impact GHG • Coordinating with local authorities for the brick manufacturers to operate according to the rules for
emission reduction using clay quarries, territorial reorganization, among others.
• Promoting technological and financial demand and supply, capacity building for brick producers,
dissemination of experiences.

Type of support required under the NAMA Financial, technical and for capacity building

Economic
• Economic growth of other players around the brick subsector.
• Improvement of producers' livelihoods.
• Increase in family income.
Social
• Improvement of gender relations at work and in households.
• Fairer wages for women.
• Promoting school attendance for children.
Co-benefits Environmental
• Improving local air quality.
• Lower solid waste generation.
• Efficient use of water resources.
Climate resilience
• Reducing soil erosion.
• Reducing deforestation and forest degradation.
• Less use of non-renewable resources.

Source: Swisscontact

Technological mitigation options for the brick subsector

Brick subsector Industrial brickyards Artisanal brickyards

Technological option Tunnel kiln Mobile kiln Inverted draft kiln Fans

Technical characteristics related to energy Continuous kiln Semi- continuous kiln Semi-continuous Kiln Device
consumption 2 to 4 HP
CEE : 1,4 MJ/Kg per CEE: 1,8 MJ/Kg per product CEE: 2,4 MJ/Kg per product 1 800 / 3 600 rpm
product 01; 02 or up to 04 ducts

Technology cost (unit) 1800 000 $ US dollars 180 000 $ US dollars 13500 $ US dollars 1350 $ US dollars
(base) (base) (base)

Operational cost reduction (%) Reduced costs at different process stages depending on each technology

Revenue increase (%) Revenue increase depending on each technology’s IRR

Source: Jon Bickel Swisscontact

Contact
Jon Bickel
jon.bickel@swisscontact.org

12
Specific energy consumption

55
 e Potential
Peru: Mitigation in the industrial production sector to 2050 Mitigation
(tCO2eq BAU –
(Savings in Soles /tCO2eq) measure
tCO2eq MM)

300 Replacing clinker with lime 127,81

filler in cement
250 Replacing clinker with 127,81
pozzolan in cement
200
Replacing clinker for 82,95
150 steelworks slag in cement
Replacing coal with NG in 52,63
100 cement kilns
Replacing clinker with rice 44,94
50
husk ash in cement
0 Replacing coal with biomass
21,48
Replacing coal Replacing Replacing Replacing Replacing Replacing Replacing Replacing waste in cement kilns
with biomass Clinker in coal with Clinker in Clinker in Clinker in coal with NG coal with NG
residues in cement with biomass in cement with cement with cement with in iron and in cement Replacing coal with NG in iron
21,29
cement kilns filler iron and steel pozzolan steel slag rice husk ash steel kilns kilns and steel kilns
limestone kilns
Replacing coal with biomass in
12,19
iron and steel kilns

Source: PlanCC, 2014 Figure 16: Source: Plan CC, 2014.

Elaboración: Sofía Castro

Business opportunity: replacing old engines in mining and industry

Table prepared by María Elena Gutiérrez - Libélula.

Description It is estimated that there is a national stock of electric engines in 730,000 units whose average power per unit is estimated at 25HP. A potential
replacement of 110 000 engines with more than 25 years of age has been detected. The replacement of engines to other high-efficiency
engines translates into an improvement in operating costs which in turn translates into savings that make the investment attractive.
"Replacing old engines" was proposed in the analysis of the National Contribution. Progressive replacement of 30,000 engines from the old engine stock in the
mining and industrial sectors nationwide should be carried out in two stages: First (2017-2022) in which 10 000 units of improved efficiency IE2 / IE3 types would
be installed; then, (2023-2030), 20,000 units with IE3 / IE4 premium efficiency would be installed. Cumulative mitigation at 2030 is 0.29 MtCO₂eq.

Model project Duration: assessed at 10 years $ 1 447 000 NPV $ 645 333.33
Capital investment S/ 4 341 000 S/ 1 936 000
Replacement of 1573 electric engines
with power lower than 100 hp by
IRR 24.5% Discount rate 13.7%
high-efficiency engines (HEE)
Savings for operating and maintenance costs (% of initial Investment recovery
investment): 3.5% period 4 years
Scrapping of old engines (% of new prices): 2%

Table prepared by María Elena Gutiérrez - Libélula.

Business opportunity: replacing boilers in industries

Description Peru is estimated to have a stock of more than 4000 boilers, so there is a current and future replacement potential of old for new boilers.
Replacing boilers has a greater efficiency in fuel consumption and opens the opportunity to implement other improvements such as
mitigating pressure and steam leaks that should increase process efficiency. The analysis of the National Contribution proposed the replacement of 1095 boilers
with a power lower than 800 BHP, in the 2017-2030 period. Cumulative mitigation to 2030 is 1 MtCO₂eq.

Model project Duration: assessed at 30 years $ 72 666.66 NPV $ 121 666.66

Capital investment S/ 218 000 S/ 365 000
60 BHP steam boiler fueled with natural
gas. Includes recalculation of steam demand and loss and IRR 36.5% Discount rate 13.2%
leak mitigation
Old boiler scrapped at 2% of the price of the new boiler Investment recovery 3 years
Steam demand of 300 kg / hour period

Business opportunity: Co-generation in industries

Co-generation consists of combining the electricity consumption of the grid and the steam produced by a boiler through simultaneous
tiérrez - Libélula.

Description
co-generation of electricity and steam. Co-generation improves energy efficiency and security of electrical and thermal energy supply. In
addition, it has priority electric power dispatch in case there are surpluses for sale to the interconnected system.
56
The analysis of Peru's National Contribution proposed the implementation of co-generation projects in 116 industries.
The technology used to co-generate is of high- efficiency reciprocating engines and gas turbines, fueled with natural gas, distributed by pipelines and by virtual
pipelines. Estimated cumulative mitigation is 3.9 MtCO₂eq by 2030.
 Model project Duration: assessed at 30 years $ 72 666.66 NPV $ 121 666.66
Capital investment

Table prepared by Ma
60 BHP steam boiler fueled with natural S/ 218 000 S/ 365 000
gas. Includes recalculation of steam demand and loss and IRR 36.5% Discount rate 13.2%
leak mitigation
Old boiler scrapped at 2% of the price of the new boiler Investment recovery 3 years
Steam demand of 300 kg / hour period

Business opportunity: Co-generation in industries

Co-generation consists of combining the electricity consumption of the grid and the steam produced by a boiler through simultaneous

Table prepared by María Elena Gutiérrez - Libélula.

Description
co-generation of electricity and steam. Co-generation improves energy efficiency and security of electrical and thermal energy supply. In
addition, it has priority electric power dispatch in case there are surpluses for sale to the interconnected system.
The analysis of Peru's National Contribution proposed the implementation of co-generation projects in 116 industries.
The technology used to co-generate is of high- efficiency reciprocating engines and gas turbines, fueled with natural gas, distributed by pipelines and by virtual
pipelines. Estimated cumulative mitigation is 3.9 MtCO₂eq by 2030.

Model project Duration: assessed at 30 years. $ 746 000 NPV $ 1 044 666
Capital investment S/ 2 238 000 S/ 3 134 000
A 1500 kW electricity generator is
installed that uses the exhaust gas from a 600 BHP boiler IRR Discount rate
33.3% 13.6%
that generates steam for productive processes.
Annual 10.17 GWh consumption electricity from the Investment recovery
interconnected network is replaced, at a cost of S / 0.22 per period 4 years
kWh.

Transportation
In the transportation sector, green businesses are related to the operation, manufacture and maintenance of infrastructure for passenger
and freight trains, urban train systems, integrated transportation management, and infrastructure for multimodal transport. Also included
are bus rapid transit systems, transportation logistics, and cycling mobility. Low emission vehicles and electric vehicles, etc. Nothing
contributes more to the fluidity of urban transport than an integrated transportation management. However, the most important thing
is reducing displacement demand. Telework helps to reduce travel, but proper land use planning is what most influences to avoid it.
Carbon-neutral developments are successful examples for sustainable transport and mobility.

e potential
Peru: Mitigation in the transportation sector to 2050
Mitigation measure (tCO2eq BAU –
(Savings in Soles /tCO2eq)
tCO2eq MM)
4000
3500 Introducing light electric vehicles
3000 Introducing light hybrid vehicles
2500
2000 Eco-efficient driving training program for
1500 professional drivers
1000 Introducing new light vehicles with CNG
500 engine
0
Energy efficiency in transportation of
CNG cars Replacing Training on Energy Introducing Introducing
passengers and goods by road
retrofit combis, eco-efficient efficiency in new light hybrid light
minibuses driving for transporting vehicles with vehicles Metro network for the city of Lima
and taxes professional passengers GNV engines Integrated transportation system based on
with drivers and BRT buses and standard buses in Lima and
low-emis- merchandise Callao
sion buses through
highways Limiting emissions for light vehicles
Introducing low-emission buses replacing
vans, minibuses and taxis
Source: Plan CC, 2014
Converting vehicles from gasoline to CNG
Prepared by: Sofía Castro

Figure 19: Source: Plan CC (2014).

57
 Business to be developed
South intermodal station
The first intermodal station in Peru. The main idea is to connect interprovincial transport with mass transportation, significantly reducing
congestion in southern Lima, displacement times, fuel expense and, in addition, air pollution and greenhouse gas emissions. The huge
flow of people will generate large spaces for shopping malls, offices, etc.

The expansion of Vía Expresa to the South Pan American Highway favors the creation of a centrality in the south of Lima. The 2035
Metropolitan Urban Development Plan for Lima and Callao (PLAM) proposes the construction of the Atocongo intermodal station as
a meeting point between the Metropolitano (a BTR system), the metro and interprovincial transportation buses, as well as the future
suburban train. The zone will have new green areas, multipurpose buildings and a large shopping center.

Integrated Transportation System

The intermodal station. The existing Line 1 of the Metro is in Independencia. Although the project focuses on mobility, this
the Tomas Marsano and Los Héroes axis. At that point it will large flow of people will require the incorporation of other
have two stations near the node: Atocongo Station (San Juan de services within the same building (commercial, administrative,
Miraflores, east side) and Jorge Chávez Station (Surco, west side). cultural and other), creating a new center that will be at a
shorter distance and will provide services that were previously
Intermodality, in a first stage, will consist of the exchange unavailable to the surrounding districts. The intermodal station
between Line 1 with its Complementary Corridor 3 (included will consolidate the area as a financial, commercial, cultural
in the Metropolitan Municipality of Lima transportation reform and institutional center. Through concessions, road sections
and the interprovincial buses going south that circulate along can be used either at a higher or lower level, and urban voids
the Pan-American axis. In a second stage the Metropolitano can be used as residual areas for roads, berms, lateral or central
will arrive to that point thanks to the expansion of Via Expresa. exchanges, public spaces.
Finally, the suburban train will arrive to the Atocongo-Vía Expresa
knot that will connect Pucusana to Ancon. In addition, taxis Finally, the idea is to promote the consolidation of mixed uses
and private vehicles plus local bus lines (feeders) will circulate and building density to generate a poly-functional city with
through the central part, which will share the space with cycle more services and commerce through changes in zoning and
paths and pedestrian paths. transformation of uses in the axis of Panamericana-Via Expresa. It
would occupy an area of approximately two hectares. It includes an
Maximum passenger demand will be 220 thousand people per underground urban hall between Node 1 (Station Line 1) and Node
day, a figure equivalent to five times the capacity of the National 2 (terrestrial terminal, Metropolitan station and suburban train).
Stadium or equal to the current population of the district of

Intermodal Station – Atocongo

Multi-purpose building

Electric train
Multi-purpose
building

Metro station

Complementary corridor

Pedestrian bridge

Multi-purpose
building

Multi-purpose
building

Suburban train

Figure 20: Atocongo intermodal station.

58
 Potential opportunities Pending studies Construction period

Charge to transporters; real estate business
connected to the big mall; institutional and
cultural offices and premises; carbon credits
Architectural design: plants, floor distribution and Approximately 24 to 36 months.
architectural elevations
Topographic survey and soil study
Metering and budget
Market study for the tariff to be charged to
carriers and real estate market study
Financial structuring that would lead to the
execution modality: private or public-private
investment

Business opportunity
Teleworking
Telework is ideal for companies that want to boost productivity
while taking concrete actions to reduce greenhouse gases and
promote a good working environment.
Telework increases work performance and is an appropriate
measure to reduce traffic congestion because it reduces the
movement of workers who work from home or elsewhere.
Law 30036, Law that regulates teleworking (2013) and, on this
subject, the report on the Economy of Low-Carbon and Climate-
Resilient Cities, Lima-Callao, has identified telework promotion
as one of the measures that can contribute more to reducing
emissions from displacement demand in the transportation
sector. The project is designed as a campaign to promote work
from home once a week.
According to the Institute of Peruvian Studies (2012) the
penetration rate of teleworking in Lima-Callao could be 26%.
The transnational company CISCO has reported annual savings
of USD 277 million in productivity (Ángel, 2012). The advantages
are clear:
1. Reconciliation of the personal, family and work environment
2. Prevention of diseases and accidents at work
3. Productivity stemming from use of time and better quality of
work
4. Equality, due to the inclusion of vulnerable groups
5. Savings by reducing costs for companies and individuals

Business to be developed
Replacing combis for buses
Scrapping 50% of all the combis (vans for public transportation) in Lima and Callao, and its replacement by buses in five years, 10%
each year. It is assumed that the buses would be on gas with Euro IV buses, for an approximate value of USD 670 000 each (Gouldson,
2014, p.107). This implies implementing enabling measures such as continuing the restructuring of routes in Lima-Callao. Transportation
concessionaires as a result of this process would enjoy clear profitability.

Business opportunity
Congestion toll for cars on oil
and gasoline (outsourced)
The service to reduce traffic in downtown Lima and other downtown areas in Lima and Callao could be granted to a company in charge
of controlling areas of the city that would be cordoned off to allow the entry of private cars against the payment of a toll. Buses, taxis and
public transportation would be exempt. Vehicle circulation reduction could be almost a quarter.

59
 Business opportunity
Eco-efficient driving program
This is a training program for professional drivers aimed at fuel economy with positive driving practices. Fuel savings could be at least
10%, reduce transportation times, as well as reduce air pollution, among other benefits. It is a high-impact measure in terms of
reducing traffic congestion and pollution. It is a great business opportunity that could well be developed by the private company
under concession.

It would be a significant incentive to set eco-efficient driving as a requirement for the purchase of A3 certificates (heavy freight transport
in large-scale vehicles and local or interprovincial public transportation on large buses). Currently there are not enough drivers for this
service.

Urban
infrastructure
Commercial, residential and communal urban infrastructure built or remodeled with LEED or BREEAM standard building codes qualify as
green businesses. LEED is a voluntary international standard system based on consensus and market criteria for building high-efficiency
sustainable buildings. BREEAM is the method of building sustainability evaluation and certification.

With these standards, a building reduces energy use by 30 to 70%, from 30% to 50% water consumption, from 50% to 90% of the cost
of waste, and 35% of CO2 emissions. On the other hand, the value of real estate increases by 7.5%.

In Peru, a voluntary Sustainable Building Code has been approved and the Mi Vivienda Fund has been promoting eco-friendly buildings
with bonds to borrowers. The first case has been in the Paseo Colonial condominium. For financing values of less than 140,000 soles
the bond value is 4% (grade 1) and for homes costlier than 140,000 soles it may be 3% if it complies with grade 1 conditions, or 4% if in
addition to these conditions it counts with a sewage treatment plant (grade 2) or other treatment system for irrigation of green areas.

Innovation and business to be developed

Anti-seismic construction
with bamboo
Simón Velez in Bogotá, Colombia, and Linda Garland in Bali,
Indonesia, have been demonstrating the functionality of bamboo
to replace steel and concrete. It is an anti-seismic material that
moves with the shock waves of earthquakes. To be effective, the
angles should be 85 and not 90 degrees and as long as the bamboo
poles are free of direct sunlight and water this material guarantees
endless duration. Therefore, design must protect structures from
water and sun. Bamboo constructions of colonial times are still
standing in spite of the earthquakes in the last centuries.
If you plant the giant guadua you can get about 60 poles or
bamboo poles in three years. This would be sufficient to build a
two-story house with a large balcony and staircase that allows air
circulation. Each subsequent year the bamboo would continue
providing poles for the construction of additional houses.
Bamboo that is not used to build the house can be used
to produce charcoal. This produces polluting gases but the
Colombian Antonio Giraldo de Armenia has a method to cure
the bamboo of its own gases. The gases are channeled through
a chamber where bamboo sticks of about seven meters, under a
slight pressure, are cured with the fumes of the coal itself. Instead
of using toxic chemistry to cure the bamboo of fungi and termites,
it is cured with its own chemistry. The negative flow of pollutants
is converted into a positive flow that not only preserves bamboo
but also replaces contaminants that pose health hazards. In Peru
there is a technical standard for bamboo approved by Executive
Order 011-2012. Bamboo abounds in La Florida/San Miguel
Cajamarca, Yamango/Morropón in Piura and Yantalo/Moyobamba
in San Martín.

60
 Potential Opportunity Possible financing Construction Period

Construction of institutional and commercial Studies could be financed by the PRODUCE 8 months to 1 year, according to land plot size
premises tender funds or by tax benefits to research and
Model educational premises in the Peruvian development.
Amazon regions

Figure 17: Bamboo pavilion (Guadua angustifolia), in Manizales, Colombia Figure 18: Low-energy consumption store. Girardot, Colombia. Architect Simón Vélez.

In Girardot, architect Simon Vélez built this energy-saving structure, a model store for the French supermarket chain Carrefour. The use
of bamboo reduces the use of air conditioning to a third.

Contact in Colombia:
Carolina Salazar
carosalazaro@hotmail.com

Innovation
Eco-cities and carbon-neutral urban
developments

Neutral eco-cities and urban developments have been created be implemented in a single area, resulting in an economy of scale
in both developed and developing countries as ambitious that would reduce costs.
environmental-performance and quality-of-life projects. Important
examples of eco-cities are: Linha Verde in Curitiba, Brazil; Hammarby, The environmental results would be:
Sweden; Tianjin in China, and Masdar in the United Arab Emirates.
These include strategic areas for urban systems, such as water cycle  Reduction of emissions of 0.54 TCO₂ per person and 17.9 kt
management plans, integrated waste management, energy, green CO2 throughout the area
spaces, etc. Transportation systems together with adequate land-
 Energy savings of USD 324 per person per year or USD 10
use planning play a particularly strategic role in reducing car use to
900 000 per area
the benefit of public and non-motorized transportation.
 Water savings of 115 m3 per year per inhabitant or more
These cities usually aim at generating incentives for private than 3 800 000 m³ in the whole eco-community
investment, where residential areas are equivalent to 65-75% of the
total area allowed.

According to estimates made by the University of Leeds and the Contact:

Pontifical Catholic University of Peru, if such an urban development ARUP, Alejandro Gutiérrez
were created in an area of about 500 ha with an estimated population alejandro.gutierrez@arup.com
of 33 500 people, a number of significant mitigation actions could

61
 Potential opportunities Pending studies Construction period

Real estate business and carbon credits
Feasibility and land acquisition Two years
Summary of the project and urban habilitation
conditions
Investment evaluation and tender documents
(6 months)
Master Plan and tender process (9 months)

Business opportunity
Green construction in
commercial buildings
If green construction standards were applied to 20% of new commercial buildings, the additional cost could be from 4 to 5% and
estimated energy savings would be 25%.

Waste

Businesses are considered Green when related to:

Circular economy activities involving less energy use and less emission of greenhouse gases in the life cycle. Composting, industrial
recycling and recycled products are typical green activities.

Technologies and products that reduce and capture emissions of greenhouse gases and gasification of waste.

Landfills that do not capture methane or incineration of waste that does not capture energy are not considered green businesses.

Table prepared by María Elena Gutiérrez – Libélula.

Business to be developed: landfills that capture energy, methane burning and power generation

Description
Landfills are the final disposal centers for municipal solid waste. However, as there is a large deficit of them, waste is deposited in informal
dumps. These landfills can collect methane produced by waste decomposition that can be used for electricity generation.
Peru's National Contribution proposed the capture and burning of methane in landfills in nine cities during 2021-2030 period. Estimated cumulative mitigation is
10.5 MtCO2eq to 2030. Electricity generation was not considered in the analysis of the contributions but in the model project an example is developed including
that alternative.

Model project Duration: assessed at 15 years $ 23 058 NPV $ 816

Capital investment S/ 69 174 S/ 2448
Implementation of a landfill that
handles 1000 tons of domestic solid
IRR 15.8% Discount rate 14.5%
waste per day and 500 tons of industrial waste per day.
Revenue from disposal: S/12.5 per ton of domestic waste and Investment recovery
S / 45 per ton of industrial waste period 9 years
Electricity generators will be gradually installed for up to
4MW. There will be 25,579 MWh / year from which 1536 MWh
will be used as self-consumption and the rest will be sold to
the National Interconnected Electricity System.

62
 Business to be developed
Waste NAMA
Developed by the Center for Clean Air Policy, the study includes
regulatory and policy changes for the waste sector that ensure
long-term sustainability of expected impacts, together with the
establishment of financial mechanisms designed to promote
private sector investment funds as additional public sector
investment. It also involves technical assistance to ensure that
project implementers have the necessary capacity. Peru is about
to enact an amendment to its General Waste Law and a new
National Waste Management Plan is being prepared.
Under current law, Peru has the non-binding objective to recycle
60% of recoverable waste and ensure the adequate treatment
and disposal of 70% of non-recoverable waste by 2017. The
proposed amendment to the General Waste Law establishes
the principles of integral solid waste management (ISWM)
and minimization as key elements, and directs municipalities
to develop comprehensive plans based on the hierarchical
structure of waste management giving priority to prevention
and minimization. In addition, the law allows and encourages
local governments to establish alliances with the private sector
to optimize the implementation of waste management activities
based on these principles. The NAMA also proposes that
municipalities be required to pay an amount equal to or greater
than that paid in traditional landfills to private sector actors
who implement composting facilities and other alternative
treatments. This will improve the economic performance of
these technologies and increase private sector interest.
Also, , the municipalities and participants of the solid waste
sector will be required to submit annual reports on their GHG
emissions by implementing the NAMA.

Business opportunity
Incinerating sludge from the
Taboada wastewater plant for energy
Sludge incineration from the Taboada wastewater treatment plant, which began operating in 2014, can generate power for the
wastewater treatment plant. In addition, it avoids methane -a greenhouse gas- emissions. For the plant to incinerate 1200 tons of sludge
per day, the capital costs amount to an estimated USD 40 million. Operation and maintenance costs are USD 3.9 million per year. The
Lima-Callao study points out that this investment has a recovery period of less than one year.

63
 Water
All types of investments in water and wastewater treatment are considered green investments in existing classifications. Below is a
sample of possible green investments related to water in Peru.

Business to be developed
Investments needed to
supply Lima with water
Lima and Callao generate 51% of Peru's GDP and 84% of its tax
revenues, according to 2014 data from the National Institute of
Statistics and Informatics (INEI). Given the economic significance
of both, it is important to prevent any water deficit to 2030,
because it would have a direct impact on the national economy.
Lima, the capital of Peru, faces major challenges regarding water
supply. With an average rainfall of only 6 mm per year (WMO,
2015), it is the second largest city in the world settled in a desert
and, according to data by the National Sanitation Services
Superintendence (SUNASS, 2015), there are approximately 790
thousand inhabitants without access to the drinking water service.
According to studies (Gouldson et al., 2014, p. 69), by 2030 and
due to climate change, the city could face a 29% deficit in a
conservative scenario or a 13% surplus in an optimal scenario.
Expert recommendation is to assume the conservative scenario
and prepare for a deficit.
The deficit can be managed through two options:
1. Demand reduction by rehabilitating the distribution network,
promoting low-flow showers, pipes and toilets, and small
increases in water rates. These investments would be in the
order of USD 2 000 000 (the calculation does not include
investments made by the end user).
2. Increase in supply, with measures already considered in the
Sedapal -Lima Water and Sewerage Service- Master Plan, in
the amount of USD 856 000 000 that would include a total of
USD 259 000 000 for water treatment facilities. This investment
would be paid over a period of 10.8 years and could be
financed by an 18% increase in water tariffs for residential,
commercial and industrial users, as pointed out in Sedapal's
planning.
If the first option is prioritized, it would be necessary to change
approximately 3 million conventional pipes and 1 million toilets.
That is, much more than the 2 million considered above. This
would open a business opportunity if they give the correct signals
including tariff adjustment by consumption volumes, control and
others. Whatever the option chosen, it involves construction and
engineering contracts, among others. At this point it is important
to develop contractual terms that encourage efficiency. Most
of the tender processes use scores based only on the amount
of capital investment (CAPEX) but not on the cost of operation
(OPEX) and efficiency of contracted infrastructure.
On the other hand, Sedapal also needs to develop a comprehensive
drought management plan that will enable it to optimize available
resources and prioritize actions. Historically, Lima has addressed
scarcity and droughts by overexploitation of groundwater and
ad hoc measures. According to Sedapal, the existing system can
cushion a drought of eighteen months. If the period were longer,
the city would be in grave danger. According to the study The
Economy of Low-Carbon and Climate-Resilient Cities, Lima-Callao,
the most effective measures are:
a. Construction of reservoirs for the Chillón River
b. Damming of the Casacancha River (which would feed the
Marca IV trans-Andean aqueduct)
c. Autisha Reservoir

64
 Business opportunity
Expansion of the Graton tunnel in San Mateo
There are currently two tunnels that were completed in 1969
with the aim of draining the lower levels of the Casapalca mine
and providing access for exploiting the mineral present there.
Water comes from the other side of the mountain range. The
ancient rocks (Jumasha limestone) are very good rainwater
receptors. In the dry season, a water flow of more than 4.75 m³/s
flows through the Graton tunnel, and the water flow could be
8.74 m³/s during the rainy season. This volume of water occupies
the maximum capacity of the drainage tunnel.
This drainage tunnel has 11.72 km and a section of 3 x 3.25 m
starting in San Mateo (3120 m.a.s.l.) and entering Casapalca
(3900 m.a.s.l. According to the Sedapal Master Plan, it is feasible
to construct two parallel tunnels, which would be added to
existing ones for at least 4 km, adding 1.5 m³/s (Sedapal, 2015).
This is a work with two uses: increase water supply and generate
energy with a 5MW hydropower plant that will reduce the
emission of greenhouse gases. The company that builds this
expansion can also explore more water concessions, along the
mountain range, with a network of tunnels for coastal valleys.
Business to be developed
Wastewater treatment
The main source of water in Lima is the Rimac River, but pollution
is critical because of the wastewater discharges to this river and
to the Huaycoloro River, another source of water for Lima. It is a
serious threat to the treatment, use and distribution of drinking
water. It is necessary to increase the level of wastewater treatment
in Lima to improve the availability of water in the Rimac River.
Pollution involves greater and permanent risks for the potability
of Lima's water, and represents increasing costs for human
consumption and public health. Pollution is by metals, as well as
by high fecal contamination in the two rivers (Götz, 2011). The
technical reports state that in the direct vicinity of the main raw-
water inlet in La Atarjea, copper, chromium, manganese, lead,
zinc and, perhaps, other metals are found a long distance away
from mines, which approach or exceed the limit values for the
discharge of liquid effluents from mining-metallurgical activity
(Götz, 2011).
65
It would be a great measure to neutralize the effect of glacier
recess caused by climate change. The investment amount is
approximately USD 70 million for tunnel construction of the
tunnel, not considering investment in the hydropower plant.
In principle, it would be feasible to present a private investment
initiative to Proinversión through co-financing. The private
company would invest in supplying engine room and would
get an electricity concession for 5MW and Sedapal would
establish a trust based on the percentage of income from tariffs
and would build the tunnel. There is a history of using trusts for
environmental services. Contract conditions could be those of a
turnkey project.
Another similar case that requires more studies can be found in
La Viuda mountain range (in the province of Canta, north of Lima)
to divert two aquifers and twenty lagoons to the Chillón River.
These works would capture 4 m³ /s of water and the hydropower
potential would be 150 MW (Montoya, 2011).
Complete and safe treatment of all wastewater in the upper basin
of the Rimac River and its tributaries is of the maximum urgency.
It is also important to increase the reuse of treated wastewater
for irrigation of parks and gardens to increase the availability of
potable water. In addition, this reduces methane emissions that
generate greenhouse gases.
The 2015-2020 Optimized Master Plan has considered the
irrigation of green recreation areas and public spaces with treated
effluents from the wastewater plants or irrigation channels that
cross the city coming from the Rimac River, as a strategic axis in
the management of Sedapal.
 FLOWCHART ON THE WASTEWATER GENERATION AND FINAL DISPOSAL IN 2016 IN LIMA

Agriculture

Green areas
943 1/s (5 %)
Treatment
1°(0.5 %), 2°(15 %), 3°(1.5 %) 472 1/s (2 %)
3 487 1/s (17%)
2 072 1/s (10 %)

Lima and Callao

Wastewater Advanced Preliminary Treatment
20 267 1/s (Taboada WWTP) Pacific
(100 %) 9 580 1/s (47 %) Ocean /
Rivers

Advanced Preliminary Treatment

(La Chira WWTP - 2016)
7 200 1/s (36 %)

Figura 4: Source: Sedapal, 2015.13

Possible role for the private sector

A private environmental services company can develop several
profitable ventures with financing from a trust.
There is need to perform pretreatment of wastewater and
retention of industrial discharges. This pretreatment should be
fully assumed and financed by the companies that cause the
effluents. Current industrial wastewater is not suitable for entering
wastewater treatment plants.
Likewise, there is need for companies for the maintenance of
wastewater treatment plants (WWTP) which provide these
services. Specialized machinery is required, for example, mobile
equipment for the removal of sludge from lagoons and also
for the dewatering of sludge. Sludge removal costs should be
considered in water and sewer rates.
industrial purposes of the "New Lurin Productive City" Project of
the Metropolitan Municipality of Lima and the Municipality of
Lurín, as well as in the Irrigation of public, private and agricultural
areas located in Pampas de San Bartolo.
Likewise, it is necessary to promote the commercialization of
treated wastewater by Sedapal and to organize the first public
auction of this water, using the mechanisms established in the
Law of Modernization for the Provision of Sanitation Services. The
effluents to be auctioned could be those generated by the new
WWTP Provisur whose operation is scheduled for 2018. The clients
may be the district municipalities of San Bartolo, Punta Negra and
Punta Hermosa, the Peruvian Institute of Sports, which has a golf
course in San Bartolo with irrigation problems, as well as real
estate projects in the area, among others.

The reuse of treated wastewater from the San Bartolo WWTP, under
the management of Sedapal, could and should be considered for

13
The Taboada plant has been under operation since 2014 and the La Chira plant since 2016 (only preliminary treatment).

66
 Business opportunity
New WWTP in San Bartolo for reused water
under the –self-sustainable- PPP modality14
The San Bartolo wastewater treatment plant is located between
km 37 and 41 of the South Pan Americana highway in the district
of Lurín, and is part of the Sedapal wastewater treatment and
disposal system.
Its objective is to design, finance, rehabilitate, expand, operate
and maintain the plant and its complementary works, in order to
ensure compliance with environmental regulations for wastewater
treatment and provide a source of safe water resource for urban
maintenance activities, and industrial and agricultural use.
Its specific objectives are:
 Increase the treatment capacity in the WWTP, in stages
according to the demand, up to 5 m³/s
 Ensure the capacity and quality of wastewater treatment in
the WWTP for thirty years
 Increase the quality of the effluents in the WWTP to comply
with the current legislation of wasting and reusing, as
appropriate
 Provide a source of safe reuse water to supply agricultural
and industrial activities
14
Published in the Proinversión portal.
67
 Reduce the health risk associated with water-borne
diseases, and eliminate the environmental impact
generated by effluent discharges from the WWTP and its
effect on ecosystems
 Legal titling for the WWTP's infrastructure
Specific benefits:
 Ensuring adequate wastewater treatment for disposal and /
or reuse purposes with quality standards that comply with
current regulations
 Reducing greenhouse gas emissions
 Improving public health
 Improving treatment availability, quality and efficiency
 Improving the population's well-being
 Generating favorable conditions for economic
development in the south of Lima through the availability
of wastewater treated for reuse for urban, industrial and
agricultural purposes
 Generating new jobs, both direct and indirect.
 Ideas on Works for taxes
Watershed protection and
eco-systemic services for Lima
Aquafondo15, in coordination with Sedapal, has identified a portfolio of green infrastructure and ecosystem service projects for the
conservation and protection of the Rímac River's middle and upper watershed to protect water sources between 3200 and 4600 meters
above sea level in the province of Huarochirí.

The projects are aimed at restoring natural processes and old infiltration practices. Forests, grasslands and wetlands act as sponges that
absorb water in the rainy season and release it little by little during the rest of the year.

Rainfall

Natural ravines activated

by rains

Collection
canal Collection
canal

Volcanic rock

Infiltrating
the aquifer
Source Crops and houses
3500 msnm

Source
3200 msnm

Ravine Casma
Intrusive ravine
rock

Colluvial soil

Figure 4: Source: Alencastre, A. (2014). The Tupicocha amunas: water and territory.
Amunas or human-based recharge of the aquifer

One of the consequences of climate change is water scarcity. In view of this, there are social practices that can contribute to improve water management. A
living evidence of them is the pre-Columbian system for planting and harvesting water, called amunas in Quechua.

The system consists of capturing water produced from rainfall runoff in the altitude above 4,400 m.a.s.l. through canals and taking it to pre-determined zones
where there are fissured or fractured rocks in the mountain. By entering the rock, water runs slowly inside it to come up, months later, through the springs
(water sources or wellheads) and rivulets 1,500 or 1,800 meters down from the rocks. The community is essential for the amunas to work, because physical
work and organization are essential.

Figure 5: Alencastre, A. (2014).

15
Not-for-profit organization.

68
The following is a summary of green infrastructure projects connected with identified eco-systemic services:

Estimated costs

Total Intervention Works Cost Of Overhead Supervision Monitoreo Total Cost Total Cost
Number Interventions Unit
Quantity Cost Cost Studies (3%) (10%) (3%) (10%) In Soles (S/) In Dollars
Fences for natural
1 ha 379 2,042.00 773,284.98 23,199 77,328 23,199 77,328 974,339 300,721
pastures

2 Rotation of grazing ha 426 2,416.00 1,028,008.00 30,840 102,801 30,840 102,801 1,295,290 399,780
(puna ecosystems)

3 Wetland restoration ha 368 2,712.00 998,721.12 29,962 99,872 29,962 99,872 1,258,389 388,385

Afforestation in puna
4 systems to preserve ha 488 6,500.00 3,174,210.00 95,226 317,421 95,226 317,421 3,999,505 1 234,415
water

Micro-reservoir
5 Und 16 15,000.00 240,000.00 7,200 24,000 7,200 24,000 302,400 93 333
construction

Renewed use of
6 Km 27 33,600.00 907,200.00 27,216 90,720 27,216 90,720 1,143,072 352,800
amunas

7 Infiltration ditches ha 454 1,824.00 827,311.68 24,819 82,731 24,819 82,731 1,042,413 321,732

8 Terrace recovery ha 290 4,200.00 1,218,451.32 36,554 121,845 36,554 121,845 1,535,249 473,842

7 Training Und 33 10,000.00 330,000.00 9,900 33,000 9,900 33,000 415,800 128,333

TOTAL 2404 9,497,187.10 284,916 949,719 284,916 949,719 11,966,456 3 693,350

Figure 6: Source: Sedapal, 2015.

As pointed out in the preceding table, the total value of suggested projects is 12 million soles, but the green infrastructure investment
program is 40.5 million soles (Sedapal, 2015). See the following figure:

Program of investment in green infrastructure projects

Project name Estimated 2015 2016 2017 2018 2019 2020 Saldo Work
investments execution

1.- Eight types of interventions in green

infrastructure in the high and
mid-watersheds of the Rimac River + Training 12.00 0.80 0.40 2.16 2.16 2.16 2.16 2.16 5 years
to people in the involved communities – First
Stage (chosen by Aquafondo)

2.- Treating the bed and marginal stripes of

the Rimac River down to the Huachipa Plant 15.00 0 0.30 0.60 0.60 6.50 7.00 0.00 3 years
Inlet (5 km)

3.- Wastewater plants in rural areas of the

Rimac River high and mid-watersheds. 10.00 0 0.10 0.40 0.50 4.50 4.50 0.00 2 years

4.- Two types of green infrastructure

interventions on slopes and dammed lakes in
the Rimac and Mantaro Rivers’ watersheds 3.50 0.35 3.15 0 0 0 0 0 1 year
(Yuracmayo, Antacoto, Pomacocha)

Total in millions of soles (S/) 40.50 1.15 3.95 3.16 2.16 2.16 2.16 2.16

Total in million of dollars ($) 12.5 0.35 1.64 1.31 1.0 4.0 4.2 0.6

Figura 8: Fuente: Sedapal (2015).

69
 Conclusions
The list of green businesses described is a small sample of the green growth potential that exists in the various sectors analyzed:
agriculture, water, forests, energy, urban infrastructure, industry, waste and transportation. It is particularly interesting to see how the
cases we consider innovation do not require large studies or analyses and can generate significant numbers of jobs.

Those who are convinced of the ethical imperative to do business with a beneficial impact on the environment and society will find an
interesting range of possibilities from the sector that interests them.

In this work, financial institutions can find analysis material to undertake an initiative that joins the process of greening the global
financial system and collaborates with Peru's competitiveness.

The list of green businesses could be subject to a much more rigorous and thorough analysis. However, a number of things need to
happen to prevent the list from becoming just one more list:

1. Cutting-edge companies would need to have an explicit corporate strategy on how to collaborate with the Peruvian process of
entering the OECD, climate commitment and their contribution to the UN's sustainable development goals.
2. Approval of a green growth strategy that involves the private sector as an actor and where indicators are available. The State could
give some type of acknowledgment to companies at the forefront.
3. Leaving NAMA management and decisions to the private sector, based on minimum sectoral standards that can be passed by
the Ministry of the Environment or, depending on the case, the competent ministry. This is only part of an indispensable dialogue
that needs to take place. The model of executive round tables in the Productive Diversification Plan seems to be a very good one,
which has yielded good results.
4. Having clear guidelines to support green innovation.

Finally, it is important to note that special governmental leadership in energy policy is required since these are investments that have
long maturity periods and the average life span of power plants is between 20 and 30 years. Similarly, the forestry sector requires clear
government support to promote the industry.

The big question is: how to promote and fund the transition to green growth in Peru? Two interrelated processes should be achieved.
First, to recognize and create incentives to green investment that is profitable on its own and second, stable sectoral policies and
measures aligned with OECD and climate commitments to enhance Peruvian competitiveness. Both processes should be transparent
and negotiated with the private sector.

For the abovementioned first process, specific incentives should be implemented to green businesses that provide technical support
to small and medium size companies. Both private and public institutions should "walk the talk" showing efficiency in the use of natural
resources, water, energy and waste.This could be a good beginning. For example the public purchase of timber must not ignore the
sustainable forest certification.

The second process involves a climate change act that will turn the Peruvian commitment for the Paris Agreement as a specific legal
mandate for all. This act should also provide financial mechanisms and incentives needed for its implementation. Each sector and
ministry would need to pursue its part within the nationally determined contribution as well as the UN sustainable development
objectives towards 2030.

We should bear in mind that the global financial system is under a greening process where results will be assesed linked to the
environmental performance. China has recently established that 10% of its financial resources will be green. For this China´s Central
Bank published a green bond catalogue in 2015.

The International Capital Market Association (ICMA) has also published the Green Bond Principles (GBP) to assure the allocation of funds
for environmental purposes where the issuance of bonds should explain the process to determine the environmental benefits, along
with share of proceeds and transparent reporting.

It is for the private sector to demand the good quality of the green bonds. For climate change mitigation, the methodologies used in the
past for the clean development mechanism of the Kyoto Protocol will provide reliable and robust green bonds. However we must not
forget that green bonds are also used for pollution control, biodiversity and to tackle depletion of natural resources.

70
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 ANNEXES
ANNEX 1: Considered mitigation options for Peruvian Nationally Determined Contribution within the Paris Agreement

Code Sector Initiative name MtCO2 eq in 2030

E1 Energy Combining renewable energies 2.101

E2 Energy Distributed generation with solar panels 0.041

E3 Energy Rural electrification with social panels 0.046

E4 Energy Electric interconnection with Ecuador 0.057

E5 Reducing losses in the SEIN 0.886

E6 Energy Co-generation with refineries 0.598

E7 Energy Co-generation in hospital services 0.079

E8 Energy Co-generation in hospitals 0.713

E9 Energy Solar water heaters in households 0.028

E10 Energy Replacing old engines 0.108

E11 Energy Optimizing engines (VSD technologies) 0.049

E12 Energy Optimizing boilers (good practices) 0.187

E13 Energy Replacing old boilers 0.116

E14 Energy Replacing incandescent lamps in homes 0.150

E15 Energy Replacing fluorescent lamps in homes 0.133

E16 Energy Replacing fluorescent lamps in the commercial sector 0.081

E17 Energy Replacing lamps in public lighting 0.188

E18 Energy Energy efficiency labelling in home appliances and equipment 0.135

E19 Energy Integral energy management system in industries and services 2.324

E20 Energy Reducing fuel in transmission lines (Iquitos Region) 0.283

E21 Energy Improved stoves 1.120

E22 Energy Replacing fluorescent lamps in public places 0.034

E23 Energy Smart grid 0.057

E24 Energy Efficiency in new buildings (NAMA) 0.619

E25 Energy Energy efficiency in brick manufacturing (Nama) 0.073

T1 Transportation Modernizing public transportation vehicles: scrapping (NAMA) 0.004

T2 Transportation LNG to replace diesel in heavy highway transportation 0.555

T3 Transportation CNG in buses: engine conversion and new units 0.266

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Code Sector Initiative name MtCO2 eq in 2030

T4 Transportation CNG in vehicles: engine conversion and new units 0.269

T5 Transportation Training in eco-efficient driving 0.366

T6 Transportation Introducing efficient buses and trucks 0.542

T7 Transportation Introducing light hybrid and electric vehicles 0.072

T8 Transportation Introducing efficient gasoline vehicles 0.758

T9 Transportation Integrated transportation system (Lima Metro Lines 2, 3 and 4) 0.233

T10 Transportation Replacing clinker with pozzolan in cement 0.966

PI1 Industrial Processes Replacing clinker with pozzolan in cement 0.966

PI2 Industrial Processes Replacing clinker with slag from steelworks in cement 0.327

PI3 Industrial Processes Replacing clinker with limestone filler in cement 0.756

PI4 Industrial Processes Replacing coal with natural gas in cement kilns 0.793

PI5 Industrial Processes Replacing coal with natural gas in Iron and Steel furnaces 0.260

PI6 Industrial Processes Replacing clinker with rice husks in cement 1.341

PI7 Industrial Processes Replacing coal with biomass waste in cement kilns 0.545

PI8 Industrial Processes Replacing coal with biomass in iron and steel furnaces 0.270

A1 Agriculture Improving natural pastures in the Peruvian highlands 0.083

A2 Agriculture Reconverting rice farming into permanent crop farming 0.633

A3 Agriculture Recovering degraded soils in the jungle with silvo-pasture in 1.344

the Peruvian Amazon

A4 Agriculture Using improved fodder varieties in the highlands: ryegrass 0.619

and clover

A5 Agriculture Training to improve rice yields on the coast 0.073

A6 Agriculture Intermittent irrigation system for rice in the jungle 0.004

A7 Agriculture Alfalfa 0.555

A8 Agriculture Fertilizers 0.266

A9 Agriculture Zero tillage 0.269

A10 Agriculture Organic matter 0.366

F1 Forest Sustainable forest management (SFM) in forest concessions 0.542

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 Code Sector Initiative name MtCO2 eq in 2030

F2 Forest Re-planning permanent production forests and SFM 6.046

F3 Forest Forest conservation and conditioned direct transfers 5.231

F4 Forest Community forest management 0.691

F5 Forest Consolidation of natural protected areas 1.553

F6 Forest Appropriate territory monitoring, control, surveillance and management 24.495

(facilitating conditions)

F7 Forest Commercial reforestation with input high yields 7.686

F8 Forest Communal reforestation with medium technology 2.673

F9 Forest Coffee agro-forestry systems (NAMA) 0.357

F10 Forest Cacao agro-forestry system (NAMA) 0.533

F11 Forest Forest management of Brazil nuts 0.114

F12 Forest Brazil nuts with payment for ecosystem services 2.896

F13 Forest Natural protected areas with payment for ecosystem services 2.187

D1 Forest Capturing and burning methane in landfills 1.506

D2 Forest Capturing and burning methane in other landfills 0.289

D3 Forest Semi-aerobic technology in landfills (IDB/JICA project 0.442

D4 Forest Composting in landfills (IDB/JICA project) 0.217

D5 Forest Recycling in landfills (IDB/JICA project) 0.021

D6 Forest Methane burning in WWTPs 0.067

D7 Forest Mud treatment in WWTPs 0.009

D8 Forest Electricity generation in WWTPs 0.005

D9 Forest Building landfills with methane capture and burning and electricity 1.347

generation

G1 General Others from other sectors 1.200

Source: Technical Secretariat to the Multisector Commission for NDC (Supreme Decree 129-2015-PCM)

78
ANNEX 2: Fossil-Fuel Subsidy Reform Communiqué signed by Government of Peru

Parties to the United Nations Framework Convention on Climate Change have recognized that deep cuts in global greenhouse gas
emissions are required according to science, with a view to reducing global greenhouse gas emissions so as to hold the increase in
global average temperature below 2°C above preindustrial levels.

The elimination of fossil-fuel subsidies would make a significant contribution to this shared objective. By keeping prices artificially low,
fossil-fuel subsidies encourage wasteful consumption, disadvantage renewable energy, and depress investment in energy efficiency.
The International Energy Agency (IEA) highlights fossil-fuel subsidy reform as a key component of a set of energy measures to combat
climate change and estimates that even a partial phase-out of fossil-fuel subsidies would generate 12% of the total abatement needed
by 2020 to keep the door open to the 2°C target.1 Accelerating the reform of fossil-fuel subsidies is therefore an urgent priority.

Fossil-fuel subsidy reform has both economic and environmental benefits, thereby supporting our shared global commitment to
sustainable development. The International Monetary Fund views that fossil fuel prices should reflect not only supply costs but also
environmental impacts like climate change and the health costs of local air pollution.2 The majority of fossil-fuel subsidies are also
socially regressive, with benefits disproportionately skewed toward middle- and upper-middle income households. Reform will free
up financing for sustainable development and support both national and international environmental priorities. At the same time,
accelerated subsidy reform needs to be undertaken alongside measures that protect the poor and vulnerable groups from the impact
of higher energy prices.

Many governments have already committed to reform. The Leaders of the Group of Twenty (G20), for instance, committed in September
2009 to phase out inefficient fossil-fuel subsidies. Asia Pacific Economic Cooperation (APEC) Leaders made a similar commitment in
November 2009. Within these forums an increasing number of countries have committed to peer reviews of their fossil-fuel subsidies.
A group of non-G20 “Friends” countries3 was established to support global efforts to reform fossil-fuel subsidies, including through the
United Nations Conference on Sustainable Development and the United Nations Framework Convention on Climate Change.

There is now an urgent need to convert these high-level commitments into practical action. This should be informed by the following
three interrelated principles:

• Communication and Transparency about the merits of subsidy policies and reform timetables, including through engagement
and communications with the general public and civil society stakeholders to ensure a smooth, inclusive, bottom-up approach
to reform;
• Ambition in the scope and timeframe for implementing reforms; and
• Targeted support to ensure reforms are implemented in a manner that safeguards the poorest.

We invite all countries, companies and civil society organizations to join us in supporting accelerated action to eliminate inefficient fossil-
fuel subsidies in an ambitious and transparent manner as part of a major contribution to climate change mitigation.

1
Redrawing the Energy-Climate Map, International Energy Agency, 2013
2
Getting Energy Prices Right: From Principle to Practice, International Monetary Fund, 2014
3
Costa Rica, Denmark, Ethiopia, Finland, New Zealand, Norway, Sweden and Switzerland
* You can download this document from http://www.fffsr.org/

79
Patricia Iturregui has aimed her activity to pursue
international agreements on concrete national
policies. She is a member of the UNFCCC roster of
experts on policies and measures. She worked 7
years at the British Embassy in Lima as Climate
Security Adviser. She was the first Climate
Change and Air Pollution Director at the Environ-
mental Agency of Peru. She is an environmental
lawyer with an LLM from the U. of London. She
was a visiting fellow at research centres in
Europe. She negotiated the environment chap-
ter of the Trade Promotion Agreement between
Colombia, Peru and the US.

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