15 October 2017
The Mexican economy has traditionally been strongly driven by revenues from fossil fuels. The Paris Climate Agreement and a realisation in Mexico that new and clean sources of energy and energy savings will reduce volatility and enable a more precitable domestic energy system have triggered a fundamental transformation of the Mexican energy sector, writes UNEP FI’s Martin Schoenberg.
The Mexican nationally-determined contribution to the Paris Agreement promises a 25% reduction in greenhouse gases and short-lived climate pollutants by 2030 compared to business as usual. Given the significant growth of energy demand in the country, this translates into a 22% reduction of greenhouse gases and a 51% reduction of black carbon. This has led to the formulation of ambitious targets for renewable energy and energy efficiency in the country’s energy transition law which entails a substantial liberalisation of the Mexican energy sector.
The G20 Energy Efficiency Finance Task Group (EEFTG), for which UNEP FI forms part of the secretariat, has for all these reasons been delighted to count Mexico amongst its founding co-chairs. Since the first in-country workshop conducted by the G20 EEFTG in Mexico during the Clean Energy Ministerial in May 2015, not only has the Mexican government passed its energy transition law, a long-term policy framework for energy efficiency has been developed, and economy-wide energy intensity targets up to 2050 have been defined.
When representatives of the Mexican energy sector, policy-makers from Mexico and further afield, as well as representatives of international organisations gathered for DEMEX 2017 (and there were more than 4,000 of them), there was thus much to discuss on energy efficiency finance. The G20 Energy Efficiency Investment Toolkit provided the frame of reference for presentations by SENER (the Mexican Energy Secretariat), the German Ministry for the Economy and Energy, and the International Partnership for Energy Efficiency Cooperation. This was complemented by presentations from private financial institutions and development banks, such as UNEP FI members CitiBanamex and the European Bank for Reconstruction and Development (EBRD).
As International Energy Agency numbers show, the rate of global energy efficiency investment has been increasing rapidly:the energy efficiency investment and financing market now amounts to more than USD 230 billion. Mexico has been spearheading this development through the right mix of private financial instruments and incentives, development bank support, and policy interventions such as energy efficiency standards and certification. Mexico’s progress proves that when private capital, technological innovation and policy interventions work together they can accelerate the energy transition necessary to deliver the long-term objectives of the Paris Agreement, and further unlock the investment opportunities of this fundamental long-term restructuring of a more resilient global economy.
Find out more about financing energy efficiency at a parallel session at the UNEP FI Regional Roundtable on Sustainable Finance in Europe on 17 October. View the agenda here.
Read the G20 Energy Efficiency Investment Toolkit here.