Final Market Readiness Proposal MEXICO - the PMR · Mexico ‐ Final Market Readiness Proposal...

Mexico ‐ Final Market Readiness Proposal March, 2013

Final Market Readiness Proposal MEXICO

Ministry of Environment and Natural Resources

March 2013


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I.  IntroducGon: MRP Focus and ObjecGve II.  Process of Revising MRP

III.  Update on Context IV.  Market Readiness Proposal

1.  Summary of Building Block (BB) 1

2.  Summary of BB 2 3.  Summary of BB 3

4.  Summary of BB 4 5.  Summary of BB 5

6.  Summary of Total PMR Funding Request for ImplementaHon Phase

Outline of PresentaGon


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I. IntroducGon: MRP Focus and ObjecGve


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MRP ObjecGves and Focus

1.  Contribute to reach the voluntary pledge of Mexico regarding GHG emissions reducHon

2.  Create addiHonal miHgaHon intervenHons to what its ongoing or planned

3.  Prepare 3 NAMA proposals with robust MRV and baselines in relevant sectors for their implementaHon, generaHon of emission reducHons for crediHng

4.  EsHmate their implementaHon cost, miHgaHon potenHal & co‐benefits

5.  Develop a Tracking Tool for transparency and avoidance of double counHng


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Selected areas

3 CrediHng NAMAs proposed by Mexico for PMR assistance:

1. Urban Transport 2. Appliances – domesGc

refrigerators 3. Housing‐Urban

IniGal NAMAs porRolio Interested donors & sectors: 1. Appliances (refrigeraHon) 2. Appliances (washing machines) 3. Housing‐Urban 4. Urban Transport 5. Freight Transport 6. EE in SMEs 7. Cement 8. Chemical Industry 9. Mining 10. Municipal waste to energy 11. EE oil and gas 12. Solar energy in industrial sites 13. Leaks in gas transport Interested donors plus government and sectors under negoGaGon phase: 14. Steel Industry 15. Pulp and Paper Industry Plus 23 NAMA projects sponsored by the Ministry of Economy (FINNOVA)


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Integrated Urban mobility NAMA

ObjecGves MiGgate GHG through opGmizaGon of public transport systems in high density urban centers based on 2 exisHng programs: UTTP & PROTRAM

•  PROTRAM (Federal Mass Transit Program) ‐ promotes investment in mass transit through federal financial grants and fostering the private sector parHcipaHon

•  UTTP (Urban Transport TransformaHon Project ) – offers concessional financing for infrastructure and low carbon rolling stock. This program can finance projects of less than 500,000 inhabitants and complementary infrastructure


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DomesGc refrigerators NAMA

ObjecGves

Accelerated penetraGon to the Mexican market of HFCs‐free and energy‐efficient domesGc refrigerators and destrucGon of R134a recovered from in‐use refrigerators


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Urban NAMA

ObjecGves

•  Reduce demand for delivered services •  Improve emissions efficiency of delivered services •  Achieve credited GHG emissions reducGons through deployment

of sustainable urban communiGes at naHonal scale •  Reinforce the framework towards the construcGon of sustainable

and intelligent housing developments


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II. Process of Revising MRP


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Process of Revising MRP

•  Feedback from PMR parHcipants was received and organized into a matrix to address all comments •  Specific comments handled by the relevant leading

insGtuGon •  Appropriate modificaHons or clarificaHons were made to the

MRP to reflect feedback received •  A detailed budget table was included in BB6 to show:

o  Immediate acHviHes for design (phase 0 and phase 1) o  Total budget for design, piloHng and full scale implementaHon o  Requested budget to PMR to undertake phase 0 and phase 1

acHviHes

•  SEMARNAT coordinated the work between the implemenHng insHtuHons and served as the focal point with the PMR Secretariat


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Main quesGons from PMR ParGcipants

•  Importance of baselines and addiHonality o  These are criHcal aspects for credibility of NAMAs and will form, along with

development of associated MRV procedures, the key work in the MRP ImplementaHon phase

o  Mexico is acHvely parHcipaHng in PMR baselines working group, proposing to offer Mexican case studies and revisiHng the naHonal baseline

o  All 3 NAMAs build on previous programs or infrastructure, but add components that did not exist previously

•  NaHonal pledge and accountability o  Mexican internaHonal pledges are also dependent of internaHonal

cooperaHon and market mechanisms, as clarified in the PECC 2009‐2012, in the NaHonal Climate Change Law and in the pledges. Technology transfers, market mechanisms, internaHonal grants and loans may be used to achieve the pledges

o  Emission reducHons will be carefully and properly accounted and transparently reported to give certainty to stakeholders


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Issues arisen by PMR ParGcipants •  Governance and insHtuHonal structure for the NAMAs

o  There is a need for insHtuHonal structure designed for NAMA governance. Instruments and funcHons are currently being developed (“NAMA Office”, “NAMA Registry”).

o  Third party verificaHon and validaHon must be used to provide certainty

o  ImplemenHng MRV provisions (foreseen in CC Law) will provide important foundaHon for elaboraHon of NAMAs supported by PMR.

o  Legal status of NAMAs and definiHon of “carbon credits” needs special thought.

All these issues are currently being studied and some developed by SEMARNAT (not through PMR)

o  During implementaHon phase of the MRP due ahenHon will be given to address all relevant observaHons and issues on methodologies raised by PMR ParHcipants.


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III. Update on Context


TEMPERATURE ANOMALIES 2011 VERSUS AVERAGE 1951-1980

Degrees, Centígrade

Source: NOAA, 2012. National Oceanic and Atmospheric Administration

0


GDP & GHG EMISSIONS GROWTH, MEXICO 1990-2010

Crisis Econó

mica

Recesión

econó

mica

Crisis

econ

ómica

500

600

700

800

900

1,000

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

9,500

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

GDP Billions, 2003 pesos Emissions, GHG

MtCO2e

GDP CO2


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Update on Context

•  A new Federal AdministraGon started on December 1st, 2012

•  There is full commitment to impulse Mexico as a leader in CC miHgaHon and adaptaHon

•  New CC System (SINACC) involving all sectors of society, a CC Fund and Inter‐ministerial Commission for CC (CICC) established

•  CICC is preparing the new NaGonal Strategy for CC (ENAC due in June 2013); a new Special Program for CC (PECC due in Sep 2013) will follow. Rules for an Emissions Registry must be published (June 2013)

PMR activities are complementary and in synergy

NaGonal Policy on CC

Instruments

LGCC INECC CCC States CICC MunicipaliGes Congress

CC Fund (Favors adaptaHon and most vulnerable

municipaliHes)

•  Inventory •  Registry •  Standards (NOMs) •  State Risk Atlas

PenalGes

INECC’s Assessment CoordinaGon

•  Economic Instruments (fiscal, financing, markets)

•  CC InformaHon System •  Risk Atlas

PMR PMR

PMR

PMR


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Update on Context

•  Mexico is building today the instruments to support a transiHon for low emissions growth, aiming for a more equitable, compeHHve and resilient naHon.

•  At present Hme SEMARNAT is working on: •  developing a NAMA Office that will be in charge of the NAMAs’ MRV

system,

•  developing OperaGon Rules for an Emissions Registry that will include gases, sources, sectors, thresholds and gradual compliance as well as Voluntary ReducGons, and

•  developing a NAMA Registry that is currently being tested and will be officially launched in the coming weeks. Will “talk” to Emissions Registry and Tracking Tool.(Pilot being tested with Gas Transport and Freight Transport)

•  Climate Change Fund created, OperaHonal Rules under design for specific objecHves as defined by CC Law


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Update on Context

•  Specific efforts are conducted to build capacity and solid MRV systems, for example: •  Next Climate Change Program (PECC 2013‐2018) will be

designed with stronger MRV to reduce uncertainHes

•  Pormolio of NAMAs supported through bilateral and mulHlateral cooperaHon have all specific MRV development.

•  Inventories and Financial Support MRV are also considered

•  PMR acGviGes are complementary and in synergy

Thus, PMR work is in line with Mexico's overall climate

change strategy


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IV. Market Readiness Proposal


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Summary of Building Block 1 (BB1)

•  BB1 presents the policy and regulatory context of Mexico and the new developments following the promulgaHon of General Law for CC (LGCC) •  Mandate to the Federal Government to design and implement permanent

planning and programmaGc instruments to tackle CC

•  Provisions for a NaGonal Registry of Emissions & for MRV

•  Legal possibility of a voluntary trading scheme.

•  Climate Change Fund (CCF) to be sourced of public and private financing naHonal and internaHonally

•  Analysis and Rulemaking process is ongoing for CCF, ETS, Emissions Registry

•  Funds from PMR are not requested under BB1


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Summary of BB 2

•  Mexico has built an important capacity for seeng up and implemenGng unilateral large scale NAMAs with a sectoral approach, i.e. the PECC 2009‐2012 and MRV iniHaHves

•  The country is already developing a porRolio of NAMAs supported through bilateral and mulHlateral agencies and based in naHonal budgeted programs or infrastructure •  This pormolio includes miHgaHon acHviHes with large industry

(mining, chemical, cement), small and medium industry (energy efficiency), municipal waste, transport, and oil and gas sector


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Summary of BB 2

•  CrediGng, through market mechanisms (NMM) will enhance the scale and scope of miGgaGon acGviGes (wider set of acHviHes and parHcipants), addressing enHre sectors of the economy, while also contribuHng to important co‐benefits

•  Funds from PMR are not requested under BB2


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Summary of BB 3

Mexico is designing a NaGonal Office for NAMA management

•  To be hosted at SEMARNAT as evoluHon of the current DNA office (Studies are held to assess legal criteria, funcHons and framework needs)

•  Designed to coordinate stakeholders to align NAMAs development with sustainable development, naHonal policies and financial resources

•  AhribuHons for quality assurance and environmental integrity, including operaHon of a NAMAs Registry for monitoring NAMAs development, and a Tracking Tool tracking desHny of credits issued from NAMAs and other projects eligible for markets. All related to Emissions Registry.

•  Will also assist NAMA developers with guidelines, capacity building and diffusion of acHviHes for NAMAs design, and market readiness preparaHon


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Summary of BB 3

The NAMAs Registry and the Tracking Tool (RTT) will facilitate accountability of emission reducGons sold in markets through the NAMA crediHng figure

•  Mexico’s voluntary miHgaHon pledges are condiHoned to internaHonal financial assistance (including market mechanisms)

•  RTT will be the tool to prevent double counGng by the customer and Mexico; separately accounHng unilateral or supported NAMAs

•  The registry plamorm is intended to have also linkage to donors and financial insGtuGons


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•  ObjecGve ‐ ensure project tracking, avoid double counGng & funding

•  To be developed & operated by SEMARNAT

•  Being reliable & naGon‐wide data base (projects and transacHons)

•  Includes projects in voluntary markets, bilateral schemes & future NMM

•  Criteria for register •  CrediHng acHon •  Developed in/for Mexico

Tracking Tool characterisGcs


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AcGvity Deliverable Timing Funding (USD)

Detailed conceptual design, development, tesHng and setup of the sooware of the Registry and Tracking Tool (RTT)

The Registry and Tracking Tool installed at SEMARNAT

9 months

Overall Budget 300,000

Request to PA 300,000

List of ImplementaGon Phase AcGviGes, BB3


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Integrated urban mobility NAMA

General DescripGon and fronGers

•  Focus on 29 metropolitan areas with more than 500,000 inhabitants – covers 78% of urban populaHon

•  Enhance and complement exisHng financing to develop new projects & ensure conGnuity of exisHng projects

•  NAMA period is 10 years

•  MiGgaGon potenGal 2010‐2025 esGmated to be 22.3 MtCO2e achieved through 5 combined components


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DomesGc refrigerators NAMA

General DescripGon and elements DescripGon

Build upon exisGng programs: •  Change old one for a new one •  Recovery of old refrigerants based on CFCs

NAMA implementaGon period of 5 years with crediGng period of 15 years

Barriers: •  No protocols to safely destroy HFCs •  There is not a Mexican Official Standard for

destrucGon of HFC •  High subsidy for domesHc tariff in electricity

Co‐benefits: •  Promote naGonal producGon and

consumpGon of high quality products •  Awareness to use energy efficient appliances •  Create jobs

Components 1.  Newer technology based on

refrigerants with lower GWP. 2.  Newer technology more energy

efficient. 3.  Recovery & destrucGon of HFCs

from old refrigerators.


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DomesGc refrigerators NAMA MiGgaGon PotenGal

MiHgaHon potenHal was updated with new dynamic emission factors for the grid, based on newest data published by the Ministry of Energy a

EsHmated miHgaHon potenHal is 2.0 MtCO2e along the crediHng period

Emission reducHon sources: •  Electricity consumpGon

(37% of miHgaHon) •  Refrigerant switch

(63% of miHgaHon)

AssumpHons: •  Market penetraHon of new technology

of 20% per year •  Market annual growth 3%

a. Program of Works and Investment of the Electricity Sector, POISE‐2011‐2025


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Urban NAMA

General DescripGon and fronGers General descripGon

NAMA builds on current green housing programs ‐ IncenGvize installaGon of energy efficient equipment

through mortgage assistance.

Leverages from current program operaHons: •  AddiGonal miGgaGon opGons •  MiHgaHon acGons include urban services •  Ahract sustainable development funding and

generates carbon credits Barriers

•  Technical – Lack of knowledge low carbon technologies

•  InsGtuGonal ‐ No insGtuGon to coordinate low carbon communiHes

•  Financial ‐Insufficient public funding & incenHves for end users

•  OperaGonal – Lack of MRV infrastructure, no collaboraGve framework between federal and local stakeholders

NAMA boundary and its components

CrediGng period is 10 years


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AcGvity Deliverable Timing Funding

INTEGRATED URBAN MOBILITY NAMA •  Phase 0 •  Phase 1

•  IniHal acHviHes •  Detailed design (incl.

crediHng baselines and MRV)

21 months

Overall Budget 920,000

Request to PA 900,000

DOMESTIC REFRIGERATORS NAMA •  Phase 0 •  Phase 1


crediHng baselines , MRV and pilot design)

12 months

OB: 900,000

R to PA: 900,000

URBAN NAMA •  Phase 0 •  Phase 1


crediHng baselines and MRV)

12 months OB

1,450,000

R to PA 900,000

Total

Overall Budget 3,270,000

Request to PA 2,700,000

List of ImplementaGon Phase AcGviGes, BB4


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INTEGRATED URBAN MOBILITY NAMA •  Phase 2

•  Co‐benefits •  PiloHng and reporHng 30 months


Request to PA TBD

DOMESTIC REFRIGERATORS NAMA •  Phase 2

•  PiloHng and reporHng •  Most funds to be

recovered by savings 24 months

OB: 22,045,000

R to PA: TBD

URBAN NAMA •  Phase 2 •  PiloHng and reporHng

incl. financial and technical provisions

36 months OB

5,000,000

R to PA TBD

Total


Request to PA TBD

Phase 2 AcGviGes (mostly piloHng)


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Summary of Total PMR Funding Request for ImplementaGon Phase 0 and Phase 1

Building Block Total Budget Request to PA

3 300,000 300,000

6 3,270,000 2,700,00

TOTAL 3,570,000 3,000,000


Final Market Readiness Proposal

MEXICO


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Detailed budget requested to PMR to iniHate the proposed NAMAs (Phase 0 and Phase 1)


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