Mexico: A Competitive Platform for Clean Energy Projects. Resulting from the approval of the General Climate Change Law (2012) in Mexico, an internal emission trading system is planned, possibly linked to other international initiatives, as a tool for the country to
achieve its goal of reducing carbon dioxide (CO2eq) emissions by 30% in 2020 and by 50% in 2050.
This article was first published at: Negocios ProMéxico | 14 May 2013 in Guest Opinion
Mexico: A Competitive Platform for Clean Energy Projects
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Negocios ProMéxico |
14 May 2013
| Negocios ProMéxico
May 2013
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Mexico:
ACompetitivePlatform
for Clean Energy Projects
Mexico’s commitments towards reducing emmisions
and using cleaner energy sources represent an important
business niche.
The rapid growth of emerg-
ing countries has caused an
increase in the energy demands
of their population, a demand
that has already surpassed
the current supply of energy
generation and use. That im-
balance has created a window
of opportunity around energy-
efficient systems worldwide.
Cities are significant ener-
gy consumer nodes. They are
suitable for potential micro-
generation and use of energy
efficient devices on the side
of demand. In urban areas,
the services, building and
industrial sectors have crucial
opportunities in solar thermal
power generation and utiliza-
tion, while the public services
sector can also leverage water
pumping, public lighting, wa-
ter and waste treatment and
massive public transportation
by enrique rebolledo*
systems. On the supply side,
Latin America has important
manufacturing clusters that
could incorporate technolo-
gies which are common in
industrialized countries but
non-existent in the region,
mainly due to a lack of infor-
mation about their benefits,
technical knowledge and com-
mercial efforts.
In the international arena,
Mexico has made commit-
ments to reduce emissions
and use cleaner energy
sources, setting goals to those
ends. Companies with high
energy consumption or large
CO2
emissions are search-
ing for proven technology
options that enable them
to reduce both their energy
consumption and the risks
associated with greenhouse
gas emission regulations. The
evermore obvious opportuni-
ties include the integration of
renewable energies, co-gen-
eration, energy assessment of
waste and a new approach to
processes that increase en-
ergy efficiency.
According to Ernst &
Young’s Renewable Energy
Country Attractiveness Index
for 2012, Mexico has the
highest rates for solar power
(18th globally) and the second
(25th globally) for wind power
in Latin America, only after
Brazil. In 2012, installed wind
capacity came to 1GW, with
investment growth estimates in
the industry at 20 billion usd
for the next decade. Mareña
Renovables has launched the
most ambitious project in
Latin America, with more than
396 MW in wind power, and a
value of 961 million usd. For
its part, Gamesa has installed
more than 74MW with an
investment of close to 160 mil-
lion usd. Finally, by the end
of 2012, the framework for
small-scale renewable energy
tender offers (<30MW) was
created to promote invest-
ments by allowing installations
to contribute to the power grid
through the use of technolo-
gies such as solar photovoltaic
and thermal, co-generation
and small hydro.
Mexico is committed to
generating 35% of its electric-
ity through renewable sources
by 2024 (currently at 12%).
In order to do so, several laws
and regulations have been
passed, above all to facilitate
interconnection to the power
grid. Wind power potential is
estimated to reach a capacity
of 12 GW by 2020, while in
thermal solar energy, more
than 1.66 million square me-
ters have been installed with
a potential for a further 23.5
million square meters by 2020.
Since 2011, every new house
built with Esta es tu casa gov-
ernment housing grants must
incorporate ecological criteria,
such as solar water heaters,
efficient lighting, thermal iso-
lation and low-consumption
appliances, based on the cli-
mate and region in which they
are built or remodeled.
Furthermore, and result-
ing from the approval of the
General Climate Change Law
(2012) in Mexico, an internal
emission trading system is
planned, possibly linked to
Resulting from the approval of the General Climate
Change Law (2012) in Mexico, an internal emission
trading system is planned, possibly linked to other
international initiatives, as a tool for the country to
achieve its goal of reducing carbon dioxide (CO2eq)
emissions by 30% in 2020 and by 50% in 2050.
other international initiatives,
as a tool for the country to
achieve its goal of reducing car-
bon dioxide (CO2
eq) emissions
by 30% in 2020 and by 50%
in 2050. That system would
define a method to distribute
emission rights at facility level,
defining a cap for regulated
sectors and promoting trade
between installations that
show different cost structures
to improve their energy and
environmental performance.
Trade arises from the options
offered by regulated entities,
either by assessing costs of an
onsite reduction, or through
the acquisition of reduction
certificates in the market as a
more convenient option. Enti-
ties with lower emissions than
those assigned will be able to
sell their excess certificates to
other entities that find purchas-
ing certificates more profitable
than reducing emissions on an
internal level. Exchange would
be made through a mechanism
similar to the stock exchange.
In addition, that market
could be linked to the Cali-
fornian market through the
Climate Action Reserve (an ex-
perienced, trusted and efficient
offset registry to serve the car-
bon market), and to the North
America 2050 (NA2050)
partnership in the long term (a
group of US states and Cana-
dian provinces committed to
policies that move their juris-
dictions toward a low-carbon
economy), creating an impor-
tant opportunity for technol-
ogy transfer and investment in
the Mexican industry.
Within that context, the
Mexican energy sector accounts
for close to 67% of greenhouse
gas emissions (CO2
eq) and en-
ergy consumption is expected to
increase by 3.3% annually until
2030. In other words, this mar-
ket could reach a value of 2.295
billion usd by 2020 (equal to
153 million of tCO2
eq) associ-
ated to the energy sector alone,
based on prices of emission
reduction certificates observed
in California during the first
tender of 2012. Even more
interesting is the possibility of
approaching international mar-
kets in other sectors that require
investment –such as agriculture
and transport– which could
improve its financial and envi-
ronmental performance through
sustainability practices.
In short, the closeness and
availability of supply chains
related to trade with North
America and the Asian Pa-
cific Corridor make Mexico a
potential partner to leverage
knowledge, manufacturing and
export in the energy efficiency
and renewable energies market.
Between 2005 and 2011, more
than 4.77 trillion usd were
invested in clean energies in
Mexico (92% in wind power).
Mexico is a competitive
destination for strategic alli-
ances with American compa-
nies. The country’s growth po-
tential also demands technical
skills and specialized training
which, combined with poten-
tial energy and tax reforms,
natural growth in consump-
tion and technological ad-
vances, make Mexico a place
of operations and growth. But
most importantly, this land-
scape illustrates an important
niche in the area of renewable
energies and energy efficiency
management that hasn’t been
tapped into as yet. N
* CEO of Bajo en Carbono.
www.bajoencarbono.com
Guest Opinion