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NAMA Design Concept for Energy-Efficiency Measures in the Mexican Residential Building Sector

This presentation discusses the development of a supported NAMA concept for energy efficiency in residential housing in Mexico. The aim is to enhance the impact of the Mexican CC Programme and attract donor support. The presentation explores existing support programs in the housing sector and proposes scaling up options for achieving greenhouse gas emissions reductions.

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NAMA Design Concept for Energy-Efficiency Measures in the Mexican Residential Building Sector

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  1. NAMA Design Concept for Energy-Efficiency Measures in the Mexican Residential Building Sector Presentation at UNEP-WB-UNFCCC Workshop 14 March 2011 Sonja Butzengeiger Perspectives GmbH *a project of Thomson Reuters Point Carbon Global Advisory

  2. Our clients • The Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales, SEMARNAT) • The National Housing Commission (Comisión Nacional De Vivienda, CONAVI) Project team: Stefan Wehner, Matthias Krey, Axel Michaelowa, Fernanda Gusmao (PCA), Nelson Sam (PCA)

  3. Objectives Aim of the assignment Develop a supported NAMA concept for EE in residential housing in Mexico that can enhance the impact of Mexican CC Programme (PECC) that takes into account Mexican development priorities that is attractive for donors to support further Present at the UNFCCC level as a pilot NAMA Scope NAMA Up-scale existing support programmes in housing sector Supportive actions Mexican ambition: Implementation and operation of NAMA from 1st half 2012 onwards

  4. Approximately 50 million Mexicans live in poverty…

  5. …of which 80% have no access to sufficient funds to build appropriate homes and houses

  6. Mexico has a considerable challenge to address • Mexico’s population growth and demography creates pressure to expand housing construction rapidly • Population will increase from 103.1 million in 2005 to 127.2 million in 2030 and 129.6 million in 2050. • 0.5-0.6 million new houses to be constructed annually until 2020/30 • 70% expected to live in urban areas • Mexico committed to reduce its greenhouse gas (GHG) emissions by 50.65 MtCO2e until 2012 under the Mexican Programa Especial de Cambio Climático 2009-2012 (PECC) • Additional emission reduction of 30% reduction with respect to BAU until 2020 are committed conditional to support 5.53 Mt reduction by 2012 are attributed to the residential, commercial and municipal sectors

  7. Status and trends current programmes „Ésta es tu casa“ Programme Subsidiy programme by CONAVI Minimum EE requirements => subsidy for house owner (<4 mw) Goal: 95,000 households annually until 2030 Green Mortgage (Hipoteca Verde) Use of CONAVI requirements Goals: 6% of existing housing stock by 2020 2 million new houses by 2020 (= 10% increase per year) Extension plan: Extension to higher income classes Minimum energy cost saving goal depending on wage class Model for technology choices depending on cost saving goal in preparation Impact: 0.96 t CO2/house/year (based on INFONAVIT* survey) *Instituto del Fondo Nacional de la Vivienda para los Trabajadores (Infonavit)

  8. NAMA could enhance GHG impact • The NAMA aims to enhance GHG emissions reductions through the “Green Mortgage” and "Ésta es tu casa" . • Following steps define the incremental enhancement through NAMA: • increased penetration (more houses covered during the same time) and/or • technology up-scaling (more ambitious efficiency standards and/or inclusion of technologies that are currently not covered).

  9. Scaling-up options from 2012-2020 under NAMA Scenario 1 – increased penetration 2020 Broader participation with 100% saturation in 2020 with Green Mortgage Scenario 2 – increased penetration 2013 Rapid broader participation with 100% saturation in 2013 with Green Mortgage Scenario 3 - Technology up-scaling Potential contribution of technology options (individual and in total) Refrigeration, AC/insulation and PV Scenario 4 Combination of Scenarios 1 and 3: 100% saturation by 2020 and technology up-scaling

  10. Technology options for scaling up I Solar water heating (SWH) Already required in CONAVI’s minimum requirements Limited potential for up-scaling EE water use appliances Already required in CONAVI’s minimum requirements Limited potential for up-scaling (covered by SWH) Lighting Compact fluorescent light (CFL) already required in CONAVI’s minimum requirements Limited potential for up-scaling (LED not market ready world wide)

  11. Technology options for scaling up II Refrigeration Currently NOT covered under CONAVI’s minimum requirements ER potential on (i) electricity use (ii) HFC-134a refrigerant replacement ER potential can be determined based on INFONAVIT survey and own calculation Electricity use: 0.2 tCO2/house/year HFC-134a replacement: 0.04 tCO2/house/year Air-Conditioning Currently NOT covered under CONAVI’s minimum requirements ER potential on energy use/interdependent with thermal insulation for reduction of cooling demand ER potential can be determined based on recent INFONAVIT survey and own calculation Electricity use: 0.26 tCO2/house/year HCFC-22 to HC refrigerant change: 0.05 tCO2/house/year

  12. Technology options for scaling up III Photovoltaic (PV) Currently NOT covered under CONAVI’s minimum requirements ER potential through own power generation (deemed as savings through net metering) ER potential can be determined based on own model 0.23 tCO2/house/year assuming 200 W installed capacity per house = +25% ER compared to current 0.96 tCO2/house/year

  13. Abatement costs for technology scale-up options Abatement costs estimation based on current costs €/tCO2 99 €/tCO2 -13/-15 €/tCO2 -22/-26 €/tCO2 AC Refrigerator PV with refrigerant change without refrigerant change Incremental investment costs, O&M, 8% interest rate

  14. Marginal cost curve and NAMA elements NAMA crediting alone may not be sufficient for financing PV

  15. All scenarios show substantial emission reduction benefits over time MtCO2 Emission reduction potential until 2020 27 MtCO2 16 MtCO2 8 MtCO2 5.5 MtCO2 Graph shows ER that are additional to baseline roll-out (11.7 Mt CO2 until 2020)

  16. Comparison of ER to the baseline under each scenario

  17. Supportive and administrative actions Supportive actions Buildings codes: Promotion of adoption and enforcement; pilot with a state Capacity Building Marketing campaign Linking the urban planning programme “DUIS” and subsidy progr. “Ésta es tu casa” and Green mortgage requirements in order to achieve a more holistic approach Institutional design

  18. Financial requirements I • Scenario 1 would require a cumulative incremental subsidy volume for the Green Mortgage of USD$ 3.1 billion until 2020. • Scenario 2 would require US$ 7.4 billion until 2020

  19. Financial requirements II • For Scenario 3, the total incremental financial requirement is in total US$ 2 billion until 2020 • Scenario 4 would require cumulative investment needs until 2020 of US$ 6.7 billion • 40% would be necessary for PV and about 47% for the broader participation

  20. Associated monetary benefits and investments estimations under scenarios 3 & 4 • Long term savings possible • Monetary benefits on two levels: • the house owner (electricity costs, assumed net-metering), and • the Mexican government (saved subsidies on electricity tariffs) • Current price/cost ratio for household electricity tariffs in Mexico approximately 0.41, i.e. government subsidises roughly 60% of electricity costs • Monetary benefits under the NAMA concept could be shared differently and used to finance the investments

  21. Financing opportunities • Multilateral financing of the NAMA concept rather unlikely in the short term due to the time-requirements for finalizing NAMA rules on UN-level • Finance through bilateral cooperation for the next steps of NAMA implementation should be sought • Due to the ambitious timeline for NAMA implementation and operation (start 1st half 2012) • As long as uncertainty prevails on the multilateral level • Several financing mechanisms and actors involved with different interests • Creation of a NAMA fund which will centralize all the financial resources from donors, the private sector and the Mexican government

  22. Overview of the proposed NAMA fund i.a. Donors, CONAVI, institutions

  23. Monitoring, reporting and verifying (MRV) • MRV framework for the NAMA should be based on direct GHG emissions monitoring • introduction of energy performance benchmarks and/or minimum appliance standards based on whole-building energy performance • boundary should be the houses through the whole building approach • whole building approach would also allow inclusion of renewable energy technologies (e.g. SWH and PV) • benchmarking is the most appropriate approach to the whole-building

  24. Key data requirements for the Mexican NAMA [1]http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-07-v2.pdf.

  25. Possible MRV indicators for supportive actions

  26. Next steps • “Phase 2”: 2011-2012 • NAMA concept and the underlying GHG reduction programme will need be further detailed, refined and developed into a full and implementable programme • encompassing final legislative, institutional, financial and GHG accounting frameworks • Programme Office for implementation needs to be dedicated • NAMA implementation and operation, possibly before the end of 2012. • Mexico will require further support from donors to enter into “Phase 2” of the NAMA development.

  27. Thank you! Sonja Butzengeiger Perspectives GmbH butzengeiger@perspectives.cc +49 179 457 36 16 www.perspectives.cc

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