Sunday, 28 November 2010 20:47

Mexico’s Carbon Quandaries Featured

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By Adam Kotin and Guy Edwards With the Cancún Climate Change Conference kicking off today, the eyes of the world turn anxiously toward the Mexican beach resort where this year’s host seems prepped to glimmer in the spotlight.  Boasting one of the most impressive low-carbon plans among developing nations and several large-scale mitigation projects already underway, the country offers a much-needed illustration of how to put your carbon where your mouth is. But even with the best-laid plans, Mexico faces a rising tide of obstacles, including a lack of investment, archaic legal and regulatory architecture, and rowdy social groups vexed by government plans to push its low-carbon development agenda upon them. To top things off critics fear the Cancún Conference  may fail to fully engage the world’s leaders, as memories of Copenhagen coupled with diminishing confidence in the UN system pervade the global debate. Mexico’s ambitious and progressive plans may not gain the international platform they desire while Cancún’s grandest hotels may avoid having to dust down all the red carpets.
Talking the Talk Despite a free pass on emissions reduction obligations under Kyoto, Mexico has voluntarily set an ambitious mitigation target —a 50% decrease by 2050, based on year 2002 levels. Mexico’s Special Climate Change Program 2009 - 2012(PECC) outlines specific actions to decarbonise the economy that would slide emissions within sight of 2002 levels as early as 2020. Actions range from hydroelectric power generation and green building projects to increases in forest protection and installation of efficient wood-burning stoves. But there is the distinct possibility that many plans may not get off the ground in the near future. Capital Concerns Last year the World Bank released a study on low-carbon development in Mexico (MEDEC). MEDEC examines climate change program implementation options with a focus on developing the country’s low-carbon economy through 2030. It estimates about $3 billion in required new investment each year to achieve the desired reductions while also prioritizing economic growth. With insufficient funding from government, the international finance community has thus far been tentatively confident enough to invest in Mexico’s low-carbon future despite some serious questions of instability. The state-owned oil giant Pemex has endured a terrible run of bad luck, piling a tragic refinery explosion and sabotage by drug cartels on top of chronic indebtedness. But that has not halted plans for construction of a 300 MW Pemex cogeneration facility in Tabasco following an injection of $180 million of capital from subsidiaries of Spain’s Abengoa and GE Energy Financial Services. Cogeneration recycles residual fuels from the refining process to produce heat and power, sending electricity to utilities at lesser cost and environmental impact. There are 3,700 MW of cogeneration potential in existing Pemex facilities, which could provide more than 6 percent of Mexico’s current installed power capacity, but current policies limit the company’s actions outside of oil production. MEDEC suggests that cogeneration will not become a reality without significant, constant pressure from private sector investors. Powering Up the Private Sector Most independent renewable energy production is stifled by domineering government policies. Laws, regulations—even the Mexican Constitution—have traditionally favored government-owned power providers, but restrictions are slowly being relaxed. The government is nevertheless cautious in letting Pemex face private sector competition as its profits provide more than 1/3 of the federal budget. Private companies have a huge role to play in the renewables market, jumping in where government has shied away. Wind power generation in Oaxaca is projected to sextuple by 2014 if planned projects go through, reaching 3,000 MW in production. The country’s full potential is estimated at 40,000 MW, allowing extensive opportunities for further wind development. But so far only 20% of those planned wind projects are state-sponsored. This has encouraged wealthy foreign companies to stake claims to the wind market, rankling domestic suppliers with less investment capital. Overall, though, policies and incentives are lining up in favor of a largely private wind market, and the government appears to be okay with that prospect. This may well become a theme across the renewables sector, with private companies developing new low-carbon infrastructure while the government clings to the fading vestiges of its oil and gas legacy. Social Obstacles Low-carbon projects are not without their detractors, however. Oaxaca residents near planned wind farms claim they were duped out of their lands without proper compensation. Earlier this year there was an uproar in Mexico City over plans to build a streetcar line and highway that officials claim would eliminate traffic and reduce emissions. These disputes highlight the little-acknowledged fact that Mexico’s low-carbon growth will be an intrusive and contentious process with seized lands and destructive dams becoming part of the growing pains. Most agree that the top-down, money-fueled approach to mitigation is working, despite obstacles, to slowly push Mexico’s carbon reduction. A new climate bill is currently in development which could push more money towards ambitious government projects, theoretically with a greater degree of public input and local involvement. And while this may be the most obvious and impressive path to lower carbon, some wonder if it’s the only way. Which is why it’s inspiring to see a group of indigenous communities in Oaxaca take charge of a locally-based carbon-trading reforestation program. With the assistance of the National Forestry Commission, this mechanism has created jobs and reforested depleted agricultural lands since 2004. What’s more is that the government sees great potential in such programs. It invites COP16 visitors to offset their conference footprint by giving to the project, thereby propelling the actions of 590 indigenous families to the consciousness of the international climate community. Mexico’s Special Climate Change Program is precisely the kind of effort that could lend the COP16 the optimism it needs to get things done. The government has made no bones about its desire to restore confidence in the conference process, and its own actions, observed up-close, may deliver just the jolt the international community needs. Mexico is also driving for a successful outcome, as its own voluntary target can only be met, if there is a massive increase in financial and technological support from developed countries. Mexico dreams big. Its track record is impressive and its plans are ambitious. How quickly, effectively, and equitably the country can reduce its emissions remains to be seen, but one thing is for certain—even after the delegates have left Cancún, Mexico will remain the place to watch for low-carbon development.
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Guy Edwards

Guy Edwards is a Research Fellow at the Center for Environmental Studies, Brown University, where he manages a research project on the politics of climate change in Latin America. Along with co-author, Professor Timmons Roberts, he is currently writing a book on Latin American leadership on climate change for MIT Press. He has also written various academic papers, policy briefs and op-eds for a number of different publications. As co-founder of Intercambio Climático and formerly co-editor of the website, Guy has worked closely with the Latin American Platform on Climate and the Latin American office of the Climate and Development Knowledge Network. He has also worked for the Overseas Development Institute, the consultancy River Path Associates and as the resident manager of the Huaorani Ecolodge in the Ecuadorian Amazon.