Latin America special report: Mexico’s flimsy raft of climate change measures

No public commitment to the environment is complete these days without a tree-planting photo op. Felipe Calderón did not disappoint.

At a high-profile ceremony back in May, the Mexican president announced a new national strategy on climate change by putting on his gardening gloves.

And he’s not alone. Over the next 10 years, Mexico has promised to plant 250 million trees across the country. The 2007-2012 plan also incorporates moves to expand sustainable forestry by 2.6million hectares a year, reduce fossil fuel use and increase clean energies.

“The strategy defines various possibilities to reduce global warming gases produced by transport, industry, agriculture and the generation of power, among others,” President Calderón said.

High emitter

Latin America’s second largest economy is the world’s twelfth largest greenhouse emitter. Its annual emissions of carbon dioxide equivalent reach 525.8million tonnes per year, according to the World Resources Institute.

One of the biggest sources of Mexico’s greenhouse gas emissions is the use of fossil fuels, such as oil and coal, to generate power. Traffic-related pollution and illegal deforestation are also cited as major contributors to climate change.

Overall, the government hopes the strategy will assist in reducing Mexico’s overall carbon emissions equivalent by 126million tonnes (24% of total emissions) by 2014. This target comes (perhaps conveniently) two years after the end of Calderón’s administration.

Energy efficiency

Central to the new policy are moves to improve energy efficiency, particularly in the transportation and power-generation industries. Given Mexico’s large reserves of fossil fuels, many of its power plants are fuelled by oil. Moves to increase the capacity of gas-powered plants are envisaged.

Among the plan’s additional objectives are specific commitments to phase out all buses and trucks more than a decade old and to increase goods transportation by rail by 10% before 2012.

Calderón, a former energy minister, also said he envisioned a tenfold increase in the capacity of Mexico’s 100-megawatt “La Venta” wind farm over the next six years. Plans are already underway to build more than 3,000 turbines at the site, located on the Isthmus of Tehuantepec, in the southern state of Oaxaca.

As for vehicle-generated emissions, the package commits to reducing the percentage of pollutants, such as nitrogen oxides, in standard petrol to 30 particles per million.

An extension of a successful residential solar power initiative in the northern Mexicali region is also envisioned. The houses use solar water heaters and solar batteries to provide electric energy.

Call to state companies

Calderón admitted that the government’s “biggest challenge” centred on mitigating the carbon emissions of state-run companies, particularly in the energy sector. Under Mexican law, power generation and distribution remains in government hands.

He called specifically on public power companies, such as the electricity companies CFE and Luz y Fuerza, to develop their own strategies to improve energy efficiency. No firm targets were set, however. At present, technical and non-technical leaks account for up to a third (32%) of all energy losses.

The government hopes to save 21 million tonnes of carbon dioxide equivalent by installing a liquid natural gas terminal on the Pacific coast to generate low carbon energy, as well as modernising existing electricity plants.

Special attention was reserved for the state oil and gas company Pemex. The strategy sets a 5% improvement target for the efficiency of the company’s refineries.

Also endorsed were Pemex’s current plans to develop combined heat and power facilities at several of its largest refineries to improve energy efficiency. Energy not used by Pemex itself will be passed on to the national grid. The move is expected to result in emissions savings of 7.7million tonnes of carbon dioxide per year.

Promise from the private sector

Calderón praised the business sector for its initial efforts to measure its carbon footprint. Companies have accounted for around 90million tonnes of carbon dioxide so far.

The figures are derived from a greenhouse gas accounting pilot programme involving the World Business Council for Sustainable Development, the World Resources Institute and the Mexican Ministry of Environment and Natural Resources.

The pilot programme has been adopted by more than 150 companies, as well as associations representing the pulp, paper, aluminium and cement industries. Among the first companies to report on their emissions are Ford, Altos Hornos de Mexico, Grupo Cementos Chihuahua, CEMEX, Cementos Portland Moctezuma, Grupo Modelo, Holcim Apasco and Mittal Steel.

President Calderón indicated that investing in environmental technologies must become a priority for the private sector.

Business response

Industry groups broadly welcomed the strategy, which reflects the non-mandatory approach so far adopted by leading Mexican businesses.

With 367 signatory companies Mexico is the best-represented Latin American country in the Global Compact, the United Nation’s flagship voluntary corporate responsibility initiative. The Global Compact commits signatories to adopting a precautionary approach to environmental challenges and to communicating their progress in doing so.

The strategy also picks up on specific market-led projects already underway in Mexico. Wind energy is the obvious case in point. Several firms are already taking advantage of a Mexican law that allows private companies to generate electricity for their own commercial use.

Earlier this year, for example, Mexican retailer Organizacion Soriana and joint venture partner Vientos del Istmo announced plans to invest $300million in a wind-driven power plant in the state of Oaxaca. Cement-maker Cemex, meanwhile, is scheduled to build a similar 250-megawatt plant.

Clean development

The private sector is also driving the growth of United Nations Clean Development Mechanism (CDM) projects in Mexico, and wind energy is a popular source of investment.

Iberdrola provides a recent example. The Spanish engineering multinational has invested in a 102-megawatt plant in Oaxaca, scheduled to come on stream next year. The La Ventosa plant will provide electricity for the national grid and is expected to reduce carbon dioxide emissions by 1.2million tonnes over the next seven years, the duration of its initial crediting period under CDM.

Mexico currently has 90 registered CDM projects, more than a tenth of all such projects worldwide. Other popular CDM projects, apart from wind, include methane sequestration and improvement in animal waste disposal.

Mexico has signed agreements with the governments of Spain and the Netherlands, as well as the Japan Bank for International Cooperation, to develop more offsetting initiatives under the CDM system.

Goal-less

Calderón’s plan has come in for criticism for its lack of firm targets, however. Environmental groups are particularly critical of the strategy, saying that it lacks a clear commitment in terms of overall greenhouse gas emission reduction goals.

“Unfortunately the plans are very ambiguous,” says Greenpeace spokeswoman Cecilia Navarro. “There is no concrete methodology, no measurable goals. It is not enough.”

President Calderón has reaffirmed his administration’s commitment as a non-Annex 1 country to the Kyoto Protocol, which Mexico signed in 2000. This agreement did not require non-developed countries like Mexico, to reduce emissions, however.

Beyond 2012, as a high polluter nation, the pressure is on Mexico to pledge to cut its emissions. Calderón meanwhile maintains that any expansion of existing commitments should be “gradual” and focused primarily on improving measurement of carbon dioxide emissions.

In terms of commercial opportunities, the new strategy confirms Mexico’s support for market-based mechanisms, especially the “pioneering role” of the CDM. For the CDM to continue to grow, the Calderón government would like to see the creation of a genuinely global market for carbon credits.

Companies may take heart from Calderón’s sympathy for voluntary, market-based solutions, but it seems a more joined-up approach to tackling emissions will be required if Mexico is to reach its 2014 reduction targets.


FACTS: Mexico and climate change

• Mexico is a signatory to the United Nations Framework Convention on Climate Change and its Kyoto Protocol as a non-Annex 1 Party.
• Its new national climate change strategy, announced in May, envisages a reduction or capture of as much as 126million tonnes of carbon dioxide equivalent a year within seven years.
• Mexico’s emissions amount to four tonnes per person, five times less than in the United States.