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
www.perspectives.cc · info@perspectives.cc
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)
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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
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Approximately 50 million Mexicans live in poverty…
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…of which 80% have no access to sufficient funds to build
appropriate homes and houses
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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
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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)
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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).
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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
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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)
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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
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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
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Abatement costs for technology scale-up options
€/tCO2 120
Abatement costs estimation based on current costs
99 €/tCO2
100
80
60
40
20
0
-20
-40
-22/-26 €/tCO2
AC
-13/-15 €/tCO2
Refrigerator
with refrigerant change
without refrigerant change
Incremental investment costs, O&M, 8% interest rate
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PV
Marginal cost curve and NAMA elements
AC,
refrigerators
Mitigation
cost
Supported
NAMAs
Credited
NAMAs
Credit
price
PV
Supported
NAMAs
Unilateral
NAMAs
Mitigation
volume
NAMA crediting alone may not be sufficient for financing PV
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All scenarios show substantial emission reduction benefits
over time
MtCO2
Emission reduction potential until 2020
30
27 MtCO2
25
20
16 MtCO2
15
10
8 MtCO2
5.5 MtCO2
5
0
Scenario 1 Scenario 2 Scenario 3 Scenario 4
Graph shows ER that are additional to baseline roll-out (11.7 Mt CO2 until 2020)
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Comparison of ER to the baseline under each scenario
Scenario 1 - increased penetration
100% saturation rate by 2020
Scenario 2 - increased penetration
100% saturation rate by 2013
Cumulative
MtCO2/a
4.50
4.00
MtCO2/a
0.80
0.70
3.50
3.00
0.60
0.50
2.50
0.40
2.00
0.30
1.50
0.20
1.00
0.10
0.50
0.00
0.00
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
0.80
8.00
0.70
7.00
0.60
6.00
0.50
5.00
0.40
4.00
0.30
3.00
0.20
2.00
0.10
1.00
0.00
0.00
2011
2012
2013
2014
2015
2016
2017
2018
Scale up (million tCO2/a)
Scale up (million tCO2/a)
Baseline (million tCO2/a)
Baseline (million tCO2/a)
Cumulative reduction (million tCO2/a)
Cumulative reduction (million tCO2/a)
Cumulative
MtCO2/a
MtCO2/a
2019
2020
Scenario 4 - Technology up scaling
and increased penetration (100% saturation 2020)
Scenario 3 - Technology up scaling
0.40
3.50
0.35
3.00
0.30
2.50
0.25
Cumulative
MtCO2/a
7.00
MtCO2/a
1.20
6.00
1.00
5.00
0.80
4.00
2.00
0.60
0.20
3.00
1.50
0.15
0.40
2.00
1.00
0.10
0.20
1.00
0.50
0.05
0.00
2011
Cumulative
MtCO2/a
MtCO2/a
2012
2013
2014
2015
2016
2017
2018
2019
Refrigerators (energy efficient and HFC free)
Air conditioning (energy efficient and HCFC free)
Photovoltaic (PV)
Baseline (million tCO2/a)
Cumulative reduction (million tCO2/a)
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2020
0.00
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Baseline
Scenario 1 up scale (million tCO2/a))
Photovoltaic (PV)
Air conditioning (energy efficient and HCFC free)
Refrigerators (energy efficient and HFC free)
Cumulative reduction (million tCO2/a)
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
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
Scenario 1 would require a
cumulative incremental subsidy
volume for the Green Mortgage of
USD$ 3.1 billion until 2020.
Investment needs (million pesos)
Financial requirements I
Scenario 1 - Increased penetration
100% saturation rate by 2020
10,000
40,000
35,000
8,000
30,000
25,000
6,000
20,000
4,000
15,000
10,000
2,000
5,000
0
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Scale up green mortgages
Cumulative

Scenario 2 would require US$ 7.4
billion until 2020
Investment needs (million
pesos)
Scenario 2 - Increased penetration
100% saturation rate by 2013
12,000
100,000
10,000
80,000
8,000
60,000
6,000
40,000
4,000
20,000
2,000
0
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Scale up green mortgages
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Cumulative
Financial requirements II
For Scenario 3, the total
incremental financial requirement
is in total US$ 2 billion until 2020
3,000
30,000
2,500
25,000
2,000
20,000
1,500
15,000
1,000
10,000
500
5,000
Cumulative
(million pesos)

Investment needs
(million pesos per year)
Scenario 3 - Technology up scaling
0
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Refrigerators (energy efficient and HFC free)
Air conditioning (energy efficient and HCFC free)
Photovoltaic (PV)
Total Scanario 3 cumulative
-
40% would be necessary for PV
and about 47% for the broader
participation
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2011 2012 2013
2014 2015 2016 2017
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2018 2019 2020
Refrigerators (energy efficient and HFC free)
Air conditioning (energy efficient and HCFC free)
Photovoltaic (PV)
Scenario 1 up scale
Total cumulative costs for Scenario 4
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Cumulative
(million pesos)
Scenario 4 would require
cumulative investment needs until
2020 of US$ 6.7 billion
Investment need
(million pesos per
year)

Scenario 4 - Technology up scaling and
100% saturation by 2020
Associated monetary benefits and investments estimations
under scenarios 3 & 4
(i)
the house owner (electricity costs,
assumed net-metering), and
(ii) 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
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Overall - Scenario 3
8,000
Million Pesos
Long term savings possible
Monetary benefits on two levels:
6,000
4,000
2,000
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2019
2020
-2,000
-4,000
Total subsidies saved
Total savings households
Total investment
Net costs/benefits
Overall - Scenario 4
15,000
Million Pesos


10,000
5,000
0
2011
2012
2013
2014
2015
2016
2017
2018
-5,000
-10,000
Total subsidies saved
Total savings households
Total investment
Net costs/benefits
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
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Overview of the proposed NAMA fund
Energy
savings
Investment
decisions
Institutional
investors
/
its tes
ed t ra
r
C es
)
er
($
int
a
Lo
n
Carbon
market
($)
Credits
($)
Public -Private Fund
IC Governments
Credits
NAMA support ($)
Loans (& subsidies)
International
donors/IC
Governments
MRV
data
($)
($)
($)
($)
Housing Developers
House project
House Owners
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($)
($)
Mortgage payments/
interest rates
Coordinating
Entity
Loan ($)
“Esta es tu casa”
subsidy ($)
interest rates
i.a.
Donors,
CONAVI,
institutions
Investment
Board
Credits/
interest rates
Banks
Mexican
Government
Private
Sector
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 wholebuilding
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Key data requirements for the Mexican NAMA
[1]
Data to monitor
Type of monitoring
Electricity consumption
Direct and continuous metering of electricity consumption
(including generation from PV). If available, utility billing
records can be used.
Emission factor of the grid electricity
As per CDM Tool to calculate emission factor for an
electricity system[1], or use published data.
Transmission & distribution loss
Data from utility or an official government body.
Fuel consumption
Direct and continuous metering of fuel consumption. If
available, utility billing records or fuel purchase invoices
can be used.
Net calorific value of the fuel
Values provided by the fuel supplier in invoices, own
measurement, or regional or national default value.
CO2 emission factor of the fuel
Values provided by the fuel supplier in invoices, own
measurement, or regional or national default value.
Refrigerant leakage from refrigerators
and air-conditioners
IPCC default value or manufacturer specifications.
Gross floor area of a building unit
Building plan, or onsite measurement.
http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-07-v2.pdf.
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Possible MRV indicators for supportive actions
Supportive Action
MRV Indicator
1: Institutional set-up and
NAMA administration
- Development of data collection system for MRV (database)
- Establishment of inspection and supervision system of new houses
built under the NAMA
- Survey of house of realised GHG emission reductions (annually)
2: Enforcement of
mandatory building codes
- Number of federal states adapting and enforcing mandatory building
codes
- Performance of the Verification Units (VUs)
3: Transformation of Green
Mortgage programme into
a country-wide holistic
urban planning and
building code framework
- Number of developments and updates of norms and standards for
enhanced building codes by CONAVI (including urban planning process
integration in building codes/programme requirements)
- Number of supportive dialogues towards a policy for sustainable
housing for Mexico
4: Capacity building
- Number of certified architects, engineers, constructors and installers for
sustainable housing design and technology
- University Curriculum: Number of professors, Number of studies and
reports, Number of graduated students (Master and PhD)
- Development of technology database for the housing sector and
updates
5: Marketing &
Advertisement
- Implementation and operation of webpage
- Number of TV spots, radio spots and newspaper advertisements
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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.
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Thank you!
Sonja Butzengeiger
Perspectives GmbH
butzengeiger@perspectives.cc
+49 179 457 36 16
www.perspectives.cc
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