Status of project components Country: Mexico Grant Executed By: World Bank 3,000,000 Grant Amount (USD): Project Component Status Est. date of completion Component 1: Urban NAMA Pending Dec. 2019 Component 2: Support to ETS Ongoing Dec. 2019 Design & Piloting Roadmap • Development of Emissions Pending 2019 Reductions Registry • Regulatory development for the ETS Pending 2019 offset program • Capacity building: ETS Simulation Finished June 2018 Exercise with Private Sector • Proposal to expand Capacity Building Ongoing 3rd Qrt 2019 (Second Phase of ETS Simulation)
Key achievements since last ISR Climate Change Law Amendments • Published on July 13th, 2018 • Harmonization to Mexico’s NDC targets • SEMARNAT (Ministry of Environment and Natural Resource) shall implement a mandatory ETS • 36 month pilot
Key achievements since last ISR ETS Regulation (Pilot Phase) – To be published on November 2019 ETS Design • Mandatory • Energy and Industry (facility level) • Scope • Absolute CAP • Threshold for participation • CO 2 (direct emissions from fuel • Compliance periods consumption and industrial • Flexibility mechanisms processes) • Annual verification • Allocation: free based on • CAP, allocation plan (individual grandfathering to all participants regulation) (to be reduced after pilot) • Rules and guidance for ETS • Offsets limit usage for compliance registry (up to 10%)
Key achievements since last ISR First Developing Country to implement an ETS (National Level) !!!!
Key achievements since last ISR CC Law Amendments ETS Simulation ETS Pilot Phase
Key achievements since last ISR Key Achievements - PMR Project (ETS Simulation) • The first simulation exercise in the Latin American region gathered over 100 companies • Participant sectors: energy, power generation, aviation, chemical, iron and steel, mining, car manufacturing, cement, pulp and paper, glass, construction, food and beverages, finance and others. • Three exercises that simulated 12 calendar years in total • Training introduction workshops, call center for participants • Active engagement from all participants • Final exercise included award ceremony for top performers
Key Challenges Going Forward Registry for Implementation reductions /ETS Offset Program of the Pilot Phase
Key Challenges Going Forward Key Challenges • Implementation of ETS in a Pilot Phase. • The Pilot will run for three years, from 2019 to 2021 as the work plan indicates. • The offset program will be developed during the pilot, to work together with project developers to have it ready during the Pilot Phase (PMR Support) • Registry for reductions (ETS offsets, with PMR Support)
Key Lessons Learned ETS Simulation • The PMR support to the Simulation Exercise opened the door for more direct and technically focused exchanges with private sector representatives • An opportunity that led way to creation of a Working Group, and as stated in the regulation an ETS Committee Consultation Process • The ETS Simulation exercise and the Working Group helped in finding common ground on usually divergent positions. • Through this engagement, both parties, government and private sector, were able to discuss their interests when drafting the ETS regulation. • It helped create a Speak & Listen environment
Key Lessons Learned • Consultation process developed with stakeholders from the private sector. • The PMR support to the Simulation Exercise opened the door for more direct and technically focused exchanges with private sector representatives, an opportunity that led way to a Working Group. • Through this engagement, both parties, government and private sector, were able to discuss their interests when drafting the ETS regulation. • The ETS Simulation exercise and the Working Group helped in finding common ground on usually divergent positions, and positioned the ETS as a feasible option for GHG mitigation in Mexico.
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