Plugged in

On the heels of its recently concluded year-long presidency of the United Nations Conference on Climate Change (COP16), Mexico is soldiering on with its sustainability policy blitz.  In late November, the Federal Regulatory Improvement Commission (Cofemer) issued its approval of proposed new regulations under which independent entities generating power from renewable sources may connect to the national electricity grid.  Last year, we reported with great satisfaction that the Energy Regulatory Commission (CRE) had created a contract that allowed independent producers of energy for their own consumption to connect to the grid via a net metering system.    The new regulatory document, under the nimble title “General Rules of Interconnection to the National Electric System for Generators or Permit-holders with Renewable Energy Sources or Efficient Cogeneration,” is intended to streamline the process and lower the overall cost of grid integration for independent producers.  The administrative, legal and technical requirements, formerly distributed among various prior documents published by different agencies, will now be incorporated into the single regulatory document.  The Energy Ministry (Sener) may now publish the new regulations in the Official Gazette, with the hope that facilitating the process will hasten the contribution of new and more environmentally friendly generating plants to the country’s energy supply.  If you feel you must, you can read the Cofemer’s final opinion on the new regulations here (oh go on, we did).

On another front, not content with the success of the incandescent-for-CFL light bulb exchange program we told you about a few weeks back, energy authorities have now hatched a new scheme to promote the use of LED lamps.  Under a pilot program set to begin January 1, 2012 in the Mexico City, Monterrey and Guadalajara metropolitan areas, residential electricity customers in good standing will be able to obtain LED lamps at subsidized prices.  Federal Electricity Commission (CFE) customers will receive an eligibility notice on their electric bill that they can take to selected stores and present in exchange for an LED lighting product, which will be charged to their electric bill at a discounted rate.  Sener is looking to popularize LED technology not only for its energy saving virtues but also with the hope of developing a domestic market appealing enough to attract investment to manufacture the lamps in Mexico.

In the throes of an energy saving frenzy, the federal government also announced last month the creation of a new multi-million dollar fund to assist businesses in replacing older and less energy efficient equipment.  The program, called CFEfectvo, will provide technical evaluations of the energy efficiency of industrial operations and access to subsidized credit for the acquisition of current technology.  Sener has set the lofty goal of achieving energy savings of 30% in the country’s industrial sector through full implementation of the program.

Read about our participation in the Mexico Today program here.

As Mexico’s year-long presidency of the 16th edition of the United Nations Conference on Climate Change (COP16) drew to a close, ProMéxico hosted the Green Solutions conference and exposition November 23 – 25, 2011 in Mexico City.   The event consisted principally of three days of panel discussions on public policy related to climate change, amidst an exposition area featuring innovative products and services aimed at reducing greenhouse gas emissions and overall depletion the world’s natural resources.   The first edition of the Green Solutions conference took place during the COP16 international conference held in Cancun one year ago.

The conference provided an excellent opportunity for those involved or interested in climate change mitigation to exchange perspectives on the outlook for greenhouse gas reduction and learn about projects and initiatives taking place in various parts of the world.  With the COP17 conference kicking off in Durban, South Africa today, at the forefront of discussion is the question of what will happen once the Kyoto Protocol expires at the end of 2012.  The agreement currently establishes ostensibly binding greenhouse gas reduction targets for participating developed nations, and key signatories such as Japan, Russia and Canada are showing little enthusiasm for re-upping once the current period concludes.  

Green Solutions provided a welcome focus on the role of the private sector in the development and implementation of measures to mitigate climate change.  Important players such as Mexican multinational cement producer Cemex and Mexico’s state-run oil and gas monopoly Pemex participated in the forum, sharing their experiences in areas such as strategic environmental planning and carbon credit markets.  Individual panels took on the nuts and bolts of implementing environmental policies in industries such as automotive manufacturing and construction, and others walked participants through project finance and public-private partnerships.

A panel discussion on carbon markets called attention to the uncertain outlook for financing environmentally friendly development through emissions permits.  Between plummeting prices for carbon credits in Europe and concerns over the viability of the market for certificates should the Kyoto Protocol collapse in 2013, an existing source of project finance for Mexico may be at risk.  Mexico has the second largest number of development projects financed by carbon credits in Latin America, according to the Monterrey Technological Institute’s Global Sustainability Institute.  Nonetheless, at least one industry consultant speaking at the panel on carbon markets expressed optimism on the future of the mechanism based on current demand.

Read about our participation in the Mexico Today program here.

Let's get busy

Mexico’s construction industry is currently in a growth period, but the past three years have been difficult for the sector.  By August of 2010 the industry had posted 24 straight months of contraction.  As the U.S. economy rebounded in 2010 and investment plans in Mexico were gradually reactivated, construction returned to growth in August 2010 and registered robust expansion through December, balancing out at en even 0.0% growth for the year.  After a strong January, the rate of growth has slipped through the first half, most recently posting a tepid but nonetheless somewhat improved 2.4% annual rate in May.  The National Statistics Institute (INEGI), however, reported overall growth of 4.6% in June 2011 with respect to the previous year, resulting in increased demand for inputs such as electrical materials, paints and coatings, cement, metallic structures, sand and gravel, asphalt, concrete and other steel and iron materials.

Despite apparently slowing growth rates for the overall economy, however, various key regions in Mexico are projecting improved second halves for construction.  Local representatives of the national construction chamber CMIC in areas such as Quintana Roo, home to Cancun and other leading tourism sites, the Monterrey industrialized metropolitan area, the Matamoros border zone and the economically important states of Jalisco and Guanajuato predicted improved outlooks for the rest of 2011.  The optimistic predictions are based largely on expectations of increased government spending on infrastructure projects in their areas.  Construction in Monterrey and the surrounding state of Nuevo León is expected to be boosted by state resources freed up to carry out reconstruction projects in areas such as bridges, roads and water management infrastructure.  Quintana Roo is expecting similar outlays for highway and school construction.  The awarding of tender contracts for such projects to local construction contractors in turn spurs demand for materials and specialized equipment.

Housing and other building construction appeared to be slowing following growth earlier in the year, according to industry reports.  An increase in public housing projects in 2010 that carried over into early 2011 boosted the industry, however it appears that current demand has not yet caught up with the resulting additional inventory.  INEGI reported year-on-year growth of 4.7% in the “edification” subsector for June, though, so the tide may be turning.  Although the housing market is currently faced with excess supply in some areas, some industry reports project that building will rebound in the second half due to activation of state funds for subsidized housing, as in the case of infrastructure.  Overall, BBVA Bancomer is projecting that the construction industry will grow at a pace ahead of the GDP rate through the end of the year.

One area now garnering increasing interest in Mexico is ecological or green building materials and technologies.  The sector received an important boost in the past year with the introduction of the state-run lending agency Infonavit’s “Green Mortgage” (Hipoteca Verde) program.  The program offers increased credit to mortgage recipients who purchase homes that include certain types of green technologies.  Enhancements that qualify under the program include energy-saving lighting and appliances, reflective coatings for walls and roofing, solar water heaters, water-saving plumbing fixtures and water purifying devices, among others.  While Infonavit loans largely target working and middle class home buyers, more expensive developments are incorporating green components as well.  Upscale eco-tourism resorts as well as well appointed retirement communities targeting foreigners are increasingly leveraging eco-friendly construction materials and technologies in their pursuit of clients.  While some recycled materials and solar water heaters, for example, are produced domestically, other more advanced and innovative products for these developments must be sourced from abroad.

For more information on Infonavit’s Green Mortgage program, go here:

For information about our participation in the Mexico Today program, go here.

Yuck

On July 26, 2011, Mexico City’s Department of the Environment (SMADF) published new guidelines for the production and consumption of plastic products in the city.  The guidelines are scheduled to enter into effect in July 2012 in order to provide affected parties time to prepare for compliance.  The legislation’s lengthy official title could probably be reduced to “the plastic bag law,” as it serves largely as the next step in the ongoing process of trying to figure out how to reduce the volume and degradation time of all the plastic bags discarded daily in the vast metropolis.  The new guidelines were eagerly awaited — so eagerly, in fact, that members of three opposition parties in the city’s legislative assembly (ALDF) called for Environment Secretary Martha Delgado’s removal over the delay.

Any Mexico City resident can tell you that local grocery store baggers are generous to a fault with the plastic bags.  Most of these grocery bags go right in the trash once the purchases are put away at home, contributing to the more than 1,000 tons of plastic garbage the city produces daily.  With the municipal dumps overflowing, in 2009 the city government formed a working group of plastics producers, retailers, academics and other specialists to develop policy recommendations for reducing the volume of plastic bags flowing into the landfills.  But for the city fathers, the plastic bag problem has turned out to be rather like Borges’ aleph: the closer they look at it, the larger and more complex it becomes.

The deliberations of the original working group produced mostly frustration and perplexity.  The ALDF took a stab at the problem in August 2010 by summarily prohibiting stores from providing non-biodegradable plastic bags to shoppers free of charge.  After about two days of absolutely nonpareil confusion at checkout counters across the metropolis — not to mention a hue and cry that would wake the dead — the city threw up its hands.  The measure was abandoned and the status quo was restored, but the problem, of course, remained.  One year later, the new guidelines appear to be more thoroughly pondered and represent progress, but still resemble a set of exhortations rather than specific regulations.  For example, the legislation calls upon plastic bag makers to:

• Orient their processes toward sustainable production that minimize environmental impact throughout the product’s life-cycle
• Give priority to the optimization of the use of renewable natural resources, minimization of emissions, avoidance of toxic components and use of efficient design

Retailers providing bags to customers are asked for slightly more concrete concessions:

• Define the type of bag that best promotes responsible and moderate use for their type of product
• Provide training for their baggers in the efficient distribution of bags
• Clearly label their bags with details on the material of which they are made
• Contribute to the dissemination of environmentally friendly practices in the consumption and use of plastic bags
• Plastic bags provided free of charge must be made of at least 10% recycled plastic
• Plastic bags made of materials that include ingredients to enhance biodegradation must be documented with the SMADF verifying that the material’s life-cycle is no greater than five years or that the bag material is suitable for recycling

(NOTE: English translation is for reference only, see original text of law for direct interpretation)

The complete text of the law is far more extensive and detailed than described above, but nonetheless the Ecologist Green Party of Mexico (PVEM) has already criticized the guidelines for lacking specific criteria to which producers and retailers may be held accountable.

Fair enough, but we’re still pleased that modest progress continues to be made in this regulatory environment.  We feel, however, that the most interesting and salient aspect of the law may be the subtle shift toward an emphasis on recycling rather than biodegradation.  If our interpretation is correct, this appears to be a win for the plastics manufacturers, who lobbied strongly for a recycling focus and against a push toward bioplastics.  Their interest, of course, is to maintain the high production levels of conventional plastics and avoid an erosion of their market share at the hands of alternative materials now being developed.

See the complete official text of the new law here.

To find out about our participation in the Mexico Today program, please go here.

To be or not to be?

The Secretaría de Energía’s lofty proposed goal that 25% of Mexico’s installed electricity generation capacity be provided by renewable energy sources by the end of 2012 looks to be just a touch out of reach.  But unachieved goals notwithstanding, there is no question that topics related to renewable energy and clean technology in general are enjoying unprecedented levels of attention right now.  The surge of interest in bio-ethanol a couple years ago not only fanned the flames of the local food vs. fuel debate but also stimulated the proposal or development of a number of experimental bio-fuel projects in Mexico.  The initial frenzy over bio-fuel seems to have cooled somewhat since 2007, fortunately, but interest in well grounded projects and the potential for alternative fuel production in the country remains.  This week three events are being held at the María Isabel Sheraton here in Mexico City:  Carbon Markets Mexico & Central America, Biofuels Markets Mexico and Central America, and Jatropha Markets Americas, information on which can be found at www.greenpowerconferences.com .

Other upcoming events related to sustainability topics include:

V Congreso Internacional de Transporte Sustentable
October 12 – 14, 2009, World Trade Center, Mexico City
Info: www.congresotransportesustentable.org

XVI Border Energy Forum
October 15 – 16, 2009, Houston, Texas
Info: www.glo.state.tx.us/energy/border/forum/16/

Tercer Congreso Nacional de Suelo Urbano
October 28 – 30, 2009, Mérida, Yucatán
Info: www.cmq.edu.mx/documentos/Convocatorias/prourba/convocatoria_Suelo_2009.pdf

1er Congreso Internacional sobre Ciudades Sustentables
October 25 – 26, 2009, Morelia, Michoacán
Info: www.ciudadessustentables.org