BORDER STATES CLIMATE CHANGE WORKSHOP AND MEXICO'S CLIMATE

UNCLAS SECTION 01 OF 03 MONTERREY 000175

SIPDIS

E.O. 12958: N/A
TAGS: SENV ENRG EPET ECIN ECON PGOV MX
SUBJECT: BORDER STATES CLIMATE CHANGE WORKSHOP AND MEXICO'S CLIMATE
CHANGE STRATEGY

REF: A) 07 MEXICO 2784 B) MEXICO 0421

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1. Summary. The Mexican state and federal governments
reaffirmed their commitment to combating climate change at the
Border States Climate Change Workshop held April 22-23 in
Monterrey, Mexico. The conference, sponsored by the Border
Environment Cooperation Commission (BECC),was the first ever
border-area gathering to bring together federal and regional
climate change experts from the United States and Mexico.
Mexico is currently undertaking greenhouse gas inventories on a
state-by-state level, and the Calderon administration's Special
Program for Climate Change has over $1.1 billion USD budgeted
for 2009 to help reduce climate change. The program, with
specific targets to reduce greenhouse gas (GHG) emissions, will
be formally announced when Mexico hosts the UNEP World
Environment Day on June 5. While climate change is a priority
for President Calderon, Mexico will require additional financing
and technical assistance in order to achieve significant
reductions in GHG emissions. End Summary.



Border States Take Lead in Climate Change




2. The Border States Climate Change Workshop organized by the
BECC was held April 22-23 in Monterrey, Mexico. The workshop
was the first regional conference on climate change between the
two countries. Cooperation along the border is vital because
the area is highly vulnerable to global warming and also the
area most affected by trans-boundary contamination. The
conference featured presentations on existing environmental
efforts by the border states such as those by the BECC, the
U.S.-Mexico Environmental Program (commonly referred to as
Border 2012),Methane-to-Markets, U.S. SmartWays, and individual
state case studies. Many of Mexico's federal programs were
discussed as well. Though planned for months, the event was
energized by the April 16 White House press release announcing a
U.S.-Mexico Bilateral Framework on Clean Energy and Climate
Change. Also well received was the EPA's April 17 proposed
finding that GHGs contribute to air pollution and may endanger
public health and welfare.



Monitoring Greenhouse Gas Emissions




3. Under Border 2012, the U.S. and Mexican border states have
begun GHG inventories but there is limited progress on the
Mexican side because of a lack of resources and technical
expertise. Reliable inventories are necessary to develop
comparable emissions monitoring, establish integrity of credits,
set cap levels and create cost-containment mechanisms. On the
United States side, California, Arizona, and New Mexico have
completed full GHG inventories and Texas has completed a partial
inventory. On the Mexican side, Baja California, Sonora and
Nuevo Leon have advanced their inventories; Chihuahua, Coahuila,
Nuevo Leon and Tamaulipas are all pending. According to Juan
Marin Gracia, Nuevo Leon's Director of Environmental Protection,
Nuevo Leon expects to complete its inventory by August 2009.
The state's inventory was only made possible by a $615,000 USD
grant by the British Embassy. The process for creating
inventories and developing action plans is complex and requires
at least a year of analysis and a budget of up to $750,000 USD.
SEMARNAT's Institute of Ecology (INE) has provided some training
courses to local research centers and universities so that
states can develop their GHG inventories . Eventually, all
Mexican states will be required to create similar GHG
inventories and action plans including measures for climate
change mitigation and adaptation. Twenty-two Mexican States
have already submitted proposals to fund established by the
federal government for up to $150,000 USD in funding. In the
past funds from EPA supported the development of Mexico's GHG
federal inventory.



Mexico's Federal Programs to Combat Climate Change




4. Addressing climate change has been a priority for President
Calderon. As explained by Jose Antonio Urteaga, Deputy
Director General for Climate Change Projects, the importance of
climate change in the administration is reflected in the

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creation of an inter-agency Commission on Climate Change (CICC)
which includes representatives from seven ministries - the
ministries of Agriculture, Transportation and Communication,
Economy, Social Development , Energy, and Foreign Relations -
all coordinated by the Secretariat of Environment and Natural
Resources (SEMARNAT). The CICC's Special Program on Climate
Change (PECC) will be formally announced on June 5, when Mexico
hosts UNEP World Environment Day. The PECC will include
specific targets for GHG reductions by the end of President
Calderon's administration in 2012 and a goal of a 50% reduction
in GHGs by 2050. (See reftel A)




5. Elias Freig from the Secretariat of Finance and Public
Credit previewed the PECC and explained how the administration
will use the $1.1 billion USD budgeted for 2009 to mitigate the
effects of climate change. The money is split into four current
projects: 1. The electrical appliance replacement program; 2.
Green housing construction; 3. The planting of trees to reduce
greenhouse gases (known as ProArbol); and 4. A fund to invest in
renewable energy projects. The funds under the PECC do not
include money spent by the Mexican government to create
energy-efficient government buildings, mass transit, vehicle
modernization and, more importantly, upgrades by PEMEX and CFE's
efforts to reduce greenhouse gas emissions (energy production
accounts for 28% of all emissions). The figures for these
projects were unavailable.




6. The electrical appliance replacement program has been the
most popular of the climate change programs. Accounting for
over half of the total budget, the program replaces appliances
such as air conditioners, and refrigerators over 10 years old
for lower income families. The recipients of the new appliances
enjoy better quality of life while saving over 315 GWH per year,
the equivalent to 210,000 tons of carbon dioxide emissions per
year. Since the government subsidizes up to 98% of electricity
costs, the energy savings also directly impact the bottom line
of the government owned electrical company (CFE). Additionally,
this program has the added benefit of being a counter
recessionary measure since the appliances purchased are made in
Mexico. The ProArbol project, on the other hand, has been more
controversial. After 18 months, the government has reforested
more than 714 hectares of land but has been involved in
overpayment schemes and embarrassed by poor management. An
October 2008 report by the National Forestry Commission showed
that 42% of the trees planted by ProArbol have already died and
many more trees are unlikely to survive another year.



Cap and Trade in Mexico




7. Mexican companies are already participating in a cap and
trade program as outlined by the Kyoto Protocol. However, the
market remains small because of a lack of liquidity and
uncertainty over how the post-Kyoto framework and reduction
targets will function. The news that the Obama administration
is working on proposing a cap and trade system in the United
States was well received by speakers at the conference since it
will help to advance the local market (See reftel B). However,
if a comprehensive U.S.-Mexico cap and trade program is not
established, BECC officials envisioned creating a voluntary
program in the border region modeled after the Western Climate
Initiative, an environmental collaborative effort between
western U.S. states and four Canadian provinces. A cap and
trade system will encourage reductions in GHGs and also create
financing opportunities for solar and wind projects in the
region.



Comment: On the Right Track but They Need Financing




8. Comment. The initiative and enthusiasm shown by the Mexican
participants at the conference was encouraging. President
Calderon has made the fight to reduce emissions one of the
highlights of his presidency. Mexico will double its wind
generated energy by the end of the year to over 330MW and
another 3,000MW of additional capacity is planned to go online
in the next couple of years. Calderon is on track to achieving

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his target of 26% of electrical power produced from renewable
energy by 2012 however this is only largely because of existing
hydroelectric capacity. Generally, the lack of financing was a
common theme brought up by many of the Mexican speakers at the
conference. Many climate change programs in Mexico are still
modest and any future project financing is at risk due to the
slowdown in the Mexican economy. Mexico will require
significant assistance to finance and acquire technical
knowledge in order for it to substantially reduce its GHG
emissions. End comment.
WILLIAMSON