Climate Action Reserve offset protocol provides new opportunities for Mexican businesses to join the climate fight

November 1, 2016

Mexico boiler efficiency protocol creates financial incentives for making climate smart choices

LOS ANGELES, CA – The Board of Directors of the Climate Action Reserve, an environmental nonprofit organization and North America’s premier carbon offset registry, today approved the adoption of the Mexico Boiler Efficiency Project Protocol Version 1.0, which provides a standardized approach for quantifying, monitoring, and verifying greenhouse gas (GHG) emissions reductions from energy efficiency upgrades to boilers in Mexico. The availability of this protocol means facilities with commercial and industrial boilers now have a standardized, streamlined, and flexible way to earn offset credits that can be used in the North American voluntary carbon market.

The final protocol is the result of a transparent, stakeholder-driven development process and dedicated engagement and support from multiple Mexican government agencies, US government agencies, key energy sector companies, industry experts and other interested stakeholders. This protocol development effort was supported by funding from the Mexico’s Secretariat of Energy (SENER) through the Fund for Energy Transition and Sustainable Use of Energy (FOTEASE), as well as the U.S. Agency for International Development (USAID), who provided funding through their Mexico Low Emissions Development Program, implemented by Tetra Tech.

“The protocol is a testament to the multi-national cooperation of government agencies, businesses, and nonprofit organizations in Mexico and the United States working together to advance climate solutions,” said Linda Adams, Chair of the Climate Action Reserve Board of Directors and former Secretary of the California Environmental Protection Agency. “As the fifth protocol the Reserve has developed for use in Mexico, it further strengthens the Reserve’s collaboration with Mexican government and industry on environmental activities and commitment to advancing cross-border initiatives.”

Under the Mexico boiler efficiency protocol, facilities with eligible boilers of 9.8 MW or higher that retrofit the existing boilers or replace existing boilers with new high-efficiency boilers may earn carbon offset credits for the emissions reductions achieved from the energy efficiency upgrade. There are currently no legally required minimum energy efficiency thresholds for boilers of this size in Mexico nor a legally required retirement age. In addition to climate benefits and revenue potential, the adoption of the protocol brings co-benefits related to the boiler efficiency upgrade, including cost savings from reduced energy consumption, improved local air quality, modernized skillsets for employees, and innovations in clean energy technology.

According to the International Energy Agency (IEA), based on a study of industrial systems globally, steam systems account for approximately 38 percent of total energy usage of industrial systems, while motor systems account for approximately 15 percent. Just over one third of Mexico’s estimated 67 million tons of carbon dioxide equivalent (tCO2e) emissions from fossil fuel consumption in the industrial sector in Mexico in 2014 may be attributable to generating steam in the industry, or roughly 22.3 million tCO2e. IEA further estimates that globally the energy efficiency of steam production can be increased by at least 10 percent, and a 10 percent improvement in efficiency could reduce industrial steam boiler emissions in Mexico by as much as two million tCO2 per year.

“USAID’s Mexico Low Emissions Development Program is an important partnership forged to support low emission growth and development in Mexico,” said Donald McCubbin, Environment Officer at USAID. “By committing to concrete actions to achieve low emission development, Mexico can prosper while slowing its climate pollution. The Mexico Boiler Efficiency Project Protocol provides industries in Mexico with an opportunity to implement boiler efficiency upgrades that improve business efficiency and reduce emissions, which can be sold into the carbon market. It is encouraging to see our cross-border collaboration in pursuit of the best options of low emissions growth result in the Climate Action Reserve’s adoption of this protocol.”

“We recognize the significant opportunity for greenhouse emissions reductions due to improved energy efficiencies at boilers in the commercial and industrial sectors,” said Mtro. Santiago Creuheras Díaz, Director General for Energy Efficiency and Sustainability at SENER. “The Government of Mexico is a leader among developing nations in pursuing climate change goals, policies, and regulatory action at both the national and international levels. Fostering greater energy efficiencies for boilers in Mexico is in line with our General Law on Climate Change and our international commitment under the Paris Agreement. We are committed to promoting the best energy efficiency practices and developing low carbon technologies that will help our local businesses while also helping mitigate climate change.”