2010 Final Clean Energy & Climate Change Opportunities Assessment for USAID/Mexico John L. Garrison Task Order: 523‐O‐00‐10‐00005‐00 April 30, 2010 Task Order: 523‐O‐00‐10‐00005‐00 Acknowledgements This assessment was funded by the U.S. Agency for International Development (USAID) Mexico Mission under Purchase Order: 523‐O‐00‐10‐00005‐00 and was prepared by John L. Garrison. The report builds on and, in some instances, incorporates background material from an initial assessment prepared by Luis Velazquez and John L. Garrison with the USAID Latin American and Caribbean Bureau’s Office of Sustainable Development in January, 2010. The author wishes to acknowledge the contributions of Salvador Sanchez and Susan Wofsy from the USAID/Mexico mission who participated in meetings with the Government of Mexico (GoM) and provided invaluable comments and edits to earlier drafts of the document. Disclaimer The opinions expressed herein are those of the author and do not necessarily reflect the views of USAID. Reference to any specific commercial product, process, or service by trade name, trademark, or manufacturer, does not necessarily constitute or imply its endorsement by the United States government or any agency thereof. John L. Garrison, Esq. Environment and Climate Change Consultant 13791 Lambertina Pl., Rockville, MD 20850 Tel: (301) 279‐8989 Cell: (240) 688‐0260 [email protected] Task Order: 523‐O‐00‐10‐00005‐00 FINAL DRAFT: April 30, 2010 USAID/Mexico Clean Energy and Climate Change Opportunities Assessment Table of Contents Table of Contents List of Pie‐Charts and Tables List of Abbreviations, Acronyms and Units of Measurement Executive Summary 1. Introduction 2. Overview of Mexico’s Greenhouse Gas Profile and Power Sector 2.1 GHG Emissions 2.2 Mexico Energy Supply and Demand 2.3 Mexico Electricity Market Structure 2.4 Climate Change Policies and Cooperation 2.4.1 Mexico’s Climate Change Commitment 2.4.2 U.S.‐Mexico Bilateral Framework on Clean Energy and Climate Change a. Renewable Energy b. Energy Efficiency c. Climate Change & GHG Monitoring 2.4.3 North American Leaders Summit Declaration 2.4.4 Energy and Climate Partnership of the Americas (ECPA) 3. Clean Energy and Climate Change in Mexico 3.1 Potential for and Barriers to Clean Energy in Mexico 3.1.1 Renewable Energy and Energy Efficiency Potential in Mexico a. Wind Energy b. Small Hydro c. Geothermal Energy d. Solar Energy e. Biomass and Biogas f. Energy Efficiency 3.2.2 Barriers to Renewable Energy and Energy Efficiency in Mexico a. Renewable Energy Barriers b. Barriers to a Cross‐Border California‐Baja California Renewable Energy Market Task Order: 523‐O‐00‐10‐00005‐00 i April 30, 2010 USAID/Mexico Clean Energy and Climate Change Opportunities Assessment c. Financial, Market and Institutional Barriers to Energy Efficiency 3.2.3 Mexico’s New Renewable Energy and Energy Efficiency Laws and Policy Reforms 3.2 GoM Renewable Energy, Energy Efficiency and GHG Programs and Initiatives 3.2.1 GoM Renewable Energy Policies and Programs 3.2.2 GoM Energy Efficiency Policies and Programs 3.2.3 GoM Climate Change and GHG Emissions Monitoring Programs 3.3 Donor and International Clean Energy and Climate Change Programs in Mexico 3.3.1 USAID Past and Present Work on Clean Energy and Climate Change in Mexico (1992‐2010) a. USAID Mexico Renewable Energy Program (MREP) (1992‐2004) b. USAID/EGAT Energy Efficiency Programs in Mexico c. USAID/Mexico Clean Production and Renewable Energy (CP/RE) Program (2005‐2009) d. USAID/Mexico Competitiveness Program (2009‐2012) e. USAID/Mexico University and Capacity Building Programs (2001‐Present) 3.3.2 Clean Technology Fund (CTF) Investment Plan for Mexico 3.3.3 Inter‐American Development Bank (IADB) a. Sustainable Energy and Climate Change Initiative (SECCI) b. Climate Change and Clean Energy Policy‐Based Loans c. Clean Technology Fund – IADB Mexico Renewable Energy Proposal d. CTF – IADB Energy Efficiency Funding to Support FIDE Programs e. Other Clean Energy IADB Programs 3.3.4 World Bank Clean Energy and Climate Change Programs in Mexico a. Clean Energy and Climate Change Policy b. SEMARNAT Climate Change Support c. SENER Clean Energy Policy and Regulatory Support d. Efficient Lighting and Appliances Program e. Renewable Energy Financing Activities f. Energy Efficient Cities Initiative (EECI) 3.3.5 German Cooperation Task Order: 523‐O‐00‐10‐00005‐00 ii April 30, 2010 USAID/Mexico Clean Energy and Climate Change Opportunities Assessment 3.3.6 British Embassy Mexico Climate Change Initiatives 3.3.7 Other Donor and International Programs 3.3.8 Capacity Building and Educational Exchanges 3.4 Clean Energy and Climate Change Funding Mechanisms 3.4.1 National Development Bank for Public Works and Services (BANOBRAS) Clean Energy Program 3.4.2 GoM Energy Transition and Sustainable Energy Use Fund 3.4.3 FIDE Energy Efficiency and Renewable Energy Loans 3.4.4 NAFIN and JBIC 3.4.5 Mexican Carbon Fund (FOMECAR) 3.4.6 Carbon Markets in Mexico 4. USAID Global Climate Change Funding and Congressional Earmarks 4.1 Clean Energy Definition 4.2 Clean Energy Program and Activity Areas 4.3 GCC Focused/Direct Clean Energy Criteria 5. Analysis of Existing Clean Energy and Climate Change Efforts and Potential USAID Opportunities 5.1 Renewable Energy and Energy Efficiency Regulatory and Policy Development 5.1.1 Existing Renewable Energy and Energy Efficiency Regulatory and Policy Efforts a. Renewable Energy Regulatory and Policy Development b. Energy Efficiency Regulatory and Policy Development 5.1.2 Opportunity to Support the Development of Renewable Energy and Energy Efficiency Policies and Regulations a. Support for CONUEE Energy Efficiency Standards and Product Certification b. State and Municipal Energy Efficiency and Renewable Energy Policy c. Cross Border Renewable Energy Trade 5.2 Renewable Energy and Energy Efficiency Information and Capacity Building 5.2.1 Existing Renewable Energy and Energy Efficiency Information and Capacity Building Efforts 5.2.2 Opportunities to Promote Renewable Energy and Energy Efficiency Information and Capacity Building Task Order: 523‐O‐00‐10‐00005‐00 iii April 30, 2010 USAID/Mexico Clean Energy and Climate Change Opportunities Assessment a. Support for GoM Renewable Energy and Energy Efficiency Information and Dissemination b. Renewable Energy and Energy Efficiency Capacity Building 5.3 Renewable Energy and Energy Efficiency Project Development 5.3.1 Existing Efforts to Promote Renewable Energy and Energy Efficiency Projects 5.3.2 Opportunities to Promote the Development of Renewable Energy and Energy Efficiency Projects a. State and Municipal Renewable Energy and Energy Efficiency Project Development b. Sustainable Housing and Smart Grids 5.4 Renewable Energy and Energy Efficiency Finance 5.4.1 Existing Efforts to Promote Renewable Energy and Energy Efficiency Finance 5.4.2 Opportunities to Increase Access to Renewable Energy and Energy Efficiency Financing 5.5 Climate Change and GHG Emissions Monitoring 5.5.1 Existing Climate Change and GHG Monitoring Efforts in Mexico 5.5.2 Climate Change and GHG Monitoring Opportunities a. Strengthen GHG Monitoring, Reporting, and Verification (MRV) b. Implementation and Refinements of Mexico’s PECC c. Strengthen State and City Climate Change Action Plans and Strategies (PEACCs) 6. Literature Cited and Bibliography 7. Appendices Appendix 1 List of Contacts Task Order: 523‐O‐00‐10‐00005‐00 iv April 30, 2010 USAID/Mexico Clean Energy and Climate Change Opportunities Assessment List of Pie‐Charts and Tables Pie‐Charts Mexico Greenhouse Gas Emissions Emissions from Energy Use Tables Table 1. Mexico Wind Energy Projects 2007‐2012 Table 2. Geothermal Installed Capacity in Mexico Table 3. Mexico Electricity Consumption Table 4. End‐Use Efficiency Barriers Industrial and Commercial Sectors Table 5. Summary of Mexico’s Special Program for the Use of Renewable Energy Table 6 . Priority areas and lines of action of the National Program for the Sustainable Use of Energy Table 7. Estimated potential energy savings for the priority areas of the National Program for the Sustainable Use of Energy Table 8. Mexico State, Municipal and City PEACCs Table 9. USAID/Mexico Competitiveness Program (2008 – 2012) Table 10. Clean Technology Fund Investment Plan for Mexico Table 11. World Bank Energy Sector Management Assistance (ESMAP) Mexico Renewable Energy Technical Assistance Program ‐ Indicative Plan of Activities Table 12. USAID/Mexico Climate Change Funding Table 13. Renewable Energy Regulatory and Policy Reform Table 14. Renewable Energy Transmission and Cross Border Trade Table 15. Energy Efficiency Regulatory and Policy Reform Table16. Energy Efficient Norms and Building Codes Table 17. Energy Efficiency Certification Table 18. Mexico Renewable Energy Information and Outreach Table 19. Mexico Energy Efficiency Information and Outreach Table 20. Summary of Mexico Renewable Energy Projects Table 21. Summary of Mexico Energy Efficiency Programs Table 22. Energy Efficient Buildings and Sustainable Housing and Urban Programs in Mexico Table 23. Support for Energy Efficiency and Renewable Energy at the State and Municipal Level Table 24. Clean Energy and Climate Change Funding Mechanisms in Mexico Table 25. Illustrative FY2010 GCC Budget Allocation Table 26. Priority Sectors 1 and 2: Illustrative Annual Budget Table 27. Priority Sectors 3 ‐ 5: Illustrative Annual Budget Task Order: 523‐O‐00‐10‐00005‐00 v April 30, 2010 USAID/Mexico Clean Energy and Climate Change Opportunities Assessment List of Abbreviations, Acronyms and Units of Measurement Units of Measurement CO2 carbon dioxide CO2e Carbon dioxide equivalent. CO2e is a quantity that describes, for a given Greenhouse Gas, the amount of CO2 that would have the same global warming potential, when measured over a specified time scale (generally, 100 years). K thousand U.S. dollars KW kilowatt (1,000 watts) of power KWh kilowatt hour, or kilowatt‐hour. A unit of energy measured as 1 kilowatt (1,000 watts) of power expended for 1 hour. One kWh is equivalent to 3,412 British thermal units (Btu).