Adoption of Clean Technology Practices by Micro, Small and Medium Enterprises

Challenge

In Guatemala, the tourism and agriculture sectors involve a number of operations that consume resources and generate waste and emissions, affecting health, worker safety and rational resource use. Guatemalan MSMEs are particularly significant sources of pollution in these industries, making them ideal candidates for adopting clean production technology. Cleaner production can cut costs, reduce emissions, improve the quality of products or services, enhance the competitiveness of enterprises and enable participation in new markets in which environmental management is a prerequisite.

Solution

The World Bank-supported Promoting Clean Technology with Value Chains Project focused on developing a clean production value chain prioritization model to identify 20 value chains within the tourism and agribusiness sectors that had good potential for adopting clean production technologies. The project also supported two pilots in the tourism and agribusiness sectors to improve adoption of clean technology practices by MSMEs.

This project was linked to the US$32 million Enhancing MSME Productivity Investment Project, which could incorporate clean practices in its selection criteria for MSMEs.

Results

During the first semester of 2013, the project helped more than 20 MSMEs adopt clean production and logistics practices, reduce water consumption and increase energy efficiency. Through the pilots, 17 MSMEs from the agribusiness and tourism sectors received training and technical assistance to incorporate clean production practices into their businesses. Each company defined an environmental baseline and prepared an action plan to improve its business through clean production practices.

As examples of clean production practices the project team recommended the following:

• Investing US$210 to replace 56 incandescent light bulbs with compact fluorescents could cut energy costs by 80%, save US$900 per year and reduce emissions by 1.74 tons of carbon dioxide equivalent (CO₂e) per year.
• Investing US$1,500 to replace 32 fluorescent lamps with LED tubes could cut energy costs by 84%, save US$2,600 Per year and reduce emissions by 3.5 CO₂e tons per year.
• By decreasing maximum water temperatures, a hotel with an average of 62 guests per day could cut fuel costs by 40%, save US$20,000 per year and reduce emissions by 56 CO₂e tons per year.
• Reducing the number of times a cold room is opened could cut energy costs by 30%, save US$3,500 per year, and reduce emissions by 4.5 CO2e tons per year.
• For every US$1 invested in clean production practices, participants could save approximately US$0.70 per year.
• By implementing their action plans, pilot MSMEs could reduce water consumption by 5,742 m3 (equivalent to 2.3 Olympic swimming pools) per year and cut emissions by 156 tons of CO2e (the amount of carbon sequestered by 3,676 tree seedlings grown for 10 years) per year.

Partners

This initiative was funded by a Norwegian Trust Fund for Private Sector and Infrastructure (NTF-PSI). The Guatemalan Clean Production Center (CGP+L) implemented the pilots.

The Guatemala Development Foundation (FUNDESA) collaborated with consultants on the value chain prioritization exercise. The Clean Production Technology Committee, which is made up of ministries, associations, and universities, and the Guatemalan National Congress supported activities implemented by the project.

In addition to the project-sponsored activities, the Korean Ministry of Knowledge and Economy (MKE) supported the complementary Creating Green and More Competitive Value Chains Project. The Korean Energy Management Corporation (KEMCO) conducted energy audits for the leather and textile value chains. 

Moving Forward

The Center of MSME Development and its regional offices will disseminate the results (investment needed, economic benefits for the firm and environmental benefits for the country). The project includes a subcomponent for strengthening and increasing the number of business development services providers so that MSMEs can access services similar to those received by beneficiaries of the pilot. In addition, the Bank could expand the lessons learned from the Promoting Clean Technology with Value Chains Project by integrating clean production practices into the criteria for selecting value chains for the US$32 million Enhancing MSME Productivity Investment Project.

Beneficiaries

According the Guatemalan Tourism Agency (INGUAT), 2,690 hotels and lodging places were registered in 2012. According to the national census, there are more than 1,000 MSMEs in the agribusiness sector. Consequently, about 4,000 MSMEs could benefit from this pilot, either directly (as beneficiaries of the MSME project) or indirectly (through learning about these results via the Centers of MSME Development and being enabled to replicate their experiences).

Luis Rey, General Manager of Hotel Ajau, said, “For the Hotel Ajau, the training and technical assistance provided by the Guatemalan Clean Production Center through the project funded by the World Bank was very beneficial. Learning about the importance of adapting clean production practices was very important. We have implemented some changes in our hotel in order to save energy and water consumption without affecting the comfort of our clients. We have benefitted from these changes by reducing our costs and also because we promote them among our clients as part of our marketing strategy; we want to let our clients know that we care about the environment as well as to encourage them to adopt clean practices at home.”