The project is being implemented in twelve Indigenous communities in Mexico, where extensive grazing and deforestation for firewood are causing severe land degradation, water scarcity, and soil loss, resulting in low agricultural productivity. This IKI Small Grants project includes ecosystem restoration, agroforestry systems, and the strengthening of territorial governance structures.
Objective
Improve the capacities of local farmers through field schools, strengthening the innovations and traditional knowledge of Indigenous Mixtec producers.
Areas of work and impacts
Establish agricultural plots and monitor the agroecological practices implemented in cooperation with a local university. In addition, organized field trips promote the exchange of experiences and make the project results accessible to a wide range of local stakeholders.
Given their contribution to greenhouse gas (GHG) emissions and their vulnerability to the effects of climate change, cities are key actors in addressing its impacts. Local authorities are beginning to develop climate action plans. However, community awareness and engagement are often not sufficiently considered in these processes.
This project focuses on implementing pilot projects in two vulnerable neighborhoods in medium-sized Mexican cities, with the aim of demonstrating the feasibility of resilient, low-carbon, inclusive, and easily replicable urban solutions. The project will address the climate vulnerability of communities from a cross-sectoral perspective, enabling a bottom-up approach to the assessment, design, and implementation of identified solutions through the use of a mapping tool and a methodological framework. A training and dissemination strategy will enable local authorities and grassroots organizations to independently replicate the approach using the products developed by the project.
Objective
This project focuses on implementing pilot projects in two vulnerable neighborhoods in medium-sized Mexican cities, with the objective of developing, supporting, and strengthening participatory processes and methods for inclusive and replicable climate action at the community level, framed within municipal and national climate action plans. The main beneficiaries are local communities, organized civil society, municipalities, and state and national governments.
Areas of work and impacts
I. Improvement of the urban environment in vulnerable neighborhoods through locally developed, resilient, and low-carbon urban solutions co-designed with the community.
Development of a comprehensive assessment framework and a digital community mapping tool.
Community participation and leadership in assessment, design, and implementation processes.
II. Implementation and evaluation of two pilot EcoZones based on existing initiatives and taking the local context into account.
Lessons learned, shared knowledge, and strengthened capacities.
Global multiplier effect of the project: A roadmap will be developed with the communities and municipalities of the two selected neighborhoods for subsequent implementation and scaling after the project ends. The methodology, recommendations, and lessons learned, together with the community mapping tool and its user guide, will be open and freely available, allowing replication in any neighborhood. Widespread use will be promoted through training events so that local authorities and grassroots organizations can replicate the approach.
Initial situation
The objective of the project is to create the necessary institutional preconditions and technological capacities in the public and private sectors to establish and implement an Emissions Trading System (ETS) in Mexico. First, the project informs and supports decision-making processes in Mexico through scientific analyses and policy recommendations, for example on sectoral scope, the emissions cap, and potential economic impacts.
In addition, it supports relevant stakeholders, including ministries, private companies, and financial institutions, in assuming their roles and responsibilities in the market through capacity building and stakeholder management. Finally, it promotes international dialogue and exchange with jurisdictions that already operate an ETS in order to facilitate learning. At the same time, it supports the systematization of lessons learned in the Mexican context for dissemination at the international level.
Implementing climate targets through an Emissions Trading System: the case of Mexico
Starting point
In the context of the Paris Agreement, countries have defined national targets to reduce greenhouse gas emissions and keep global warming below 2°C. Mexico set a target to reduce greenhouse gas emissions by 22% by 2030 compared with a business-as-usual scenario without climate action. With international support and financing, Mexico could reduce its emissions by up to 36%. These targets were confirmed in the update of Mexico’s Nationally Determined Contributions (NDCs) submitted in December 2020.
The country is currently defining appropriate strategies and measures to achieve this objective. The energy and industrial sectors play an important role in reducing greenhouse gas emissions, so identifying cost-effective mitigation instruments for these sectors is crucial to promoting low-carbon development, reducing emissions, and at the same time fostering economic growth—in other words, decoupling emissions from growth.
Exchange of experiences between Germany and Mexico
The project “Preparation of an Emissions Trading System in Mexico” (SiCEM), implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for the Environment (BMU), has supported SEMARNAT in designing the pilot phase of the ETS, taking Mexico’s national context into account. On October 1, 2019, SEMARNAT published the Preliminary Bases of the ETS Pilot Program. This program will make a key contribution to meeting Mexico’s sectoral climate commitments and advancing low-carbon development.
Germany has more than 10 years of experience in emissions trading and reporting, so the objective of German-Mexican cooperation is to benefit from lessons learned in Germany and Europe. This helps identify best practices and avoid repeating mistakes made in Europe.
Why emissions trading in Mexico?
An emissions trading system is a market-based instrument based on the so-called “cap-and-trade” principle. Each year, a cap or maximum limit is established for the total amount of greenhouse gases emitted by one or more economic sectors, and this cap is gradually reduced over time. Within the established cap, companies can buy and sell emission allowances. These allowances ensure compliance with the overall emissions limit. Through this mechanism, companies can minimize the costs associated with reducing emissions. The instrument therefore influences the behavior of producers, consumers, and investors by creating incentives to reduce emissions. At the same time, the market mechanism gives participants the flexibility to decide which measures to adopt and when. The emissions cap, in turn, helps ensure that a country such as Mexico achieves its climate targets.
The European Emissions Trading System is the largest scheme in the world and, as one of the first, has served as a reference for the development of other national and regional schemes. Mexico is not alone in pursuing this initiative. There are currently 21 Emissions Trading Systems worldwide, regulating around 9% of global greenhouse gas emissions. Jurisdictions with an emissions trading system in place account for 42% of global GDP[1].
Results to date
Previously, Germany supported Mexico in implementing the National Emissions Registry (RENE), a database that collects greenhouse gas emissions information from facilities emitting more than 25,000 tonnes of CO2eq in sectors such as energy, transport, and industry. Mexican companies have been required to report their emissions annually since 2014. RENE has been a key platform for designing Mexico’s ETS, as it provides the data needed to make informed decisions on elements such as scope—sectors and gases to be covered—and threshold levels, meaning the amount of emissions above which companies are required to participate in the system.
For the development of Mexico’s ETS pilot program, training sessions, workshops, and study tours were carried out, always promoting knowledge exchange between experts and government representatives, including the German Federal Ministry for the Environment (BMU), the German Emissions Trading Authority (DEHSt), and relevant Mexican stakeholders, to learn from their experience in implementing an ETS. Other international experiences, such as that of California, were also incorporated into Mexico’s implementation process. This exchange became a guide that helped Mexico establish the steps needed to create its own system.
A very important element in the design of the ETS was the early involvement of the private sector, which participated in the various training activities organized by the project. Under SEMARNAT’s leadership, representatives from the private sector formed a Working Group that met regularly to discuss ETS-related issues, particularly the regulatory framework.
Impacts
Since its launch in September 2017, the project has achieved the following impacts:
A regulatory framework for the pilot phase of the Emissions Trading System has been created [DOF].
More than 30 legal and technical studies have been prepared to support SEMARNAT in designing the ETS regulatory framework and implementing the pilot program.
Technical knowledge has been strengthened in leading companies from different sectors. For example, representatives from companies responsible for approximately 70% of the country’s total steel and cement production have received training, including Ternium, Cemex, and Holcim.
A book on the ETS in the Mexican context is expected to be published soon.
Project details
Commissioned by: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) under the International Climate Initiative (IKI) Counterpart: Ministry of Environment and Natural Resources (SEMARNAT) Total duration: 2017 to 2023
The mountain cloud forest of Veracruz, Mexico, is an ecosystem of great value due to its biodiversity and hydrological function. In recent years, it has progressively deteriorated as a result of human activities and the expansion of urban areas, leading to significant biodiversity loss. For this reason, this IKI Small Grants project aims to identify sites with reforestation potential in order to connect forest fragments, conserve biodiversity, and mitigate the impacts of climate change. Reforestation will also be accompanied by an awareness campaign on the importance of cloud forests for biodiversity conservation, as well as a standardized system for monitoring the reforestation process.
Objective
Establish agreements with private landowners to collect seeds for seedlings and reforest a total of ten hectares of land. Identify sites with reforestation potential to connect forest fragments, conserve biodiversity, and mitigate the impacts of climate change.
Areas of work and impact
This IKI Small Grants project focuses on biodiversity conservation and aims to restore ten hectares of mountain cloud forest through the use of threatened native tree species that are also useful to local communities. Most remaining forest areas are privately owned, but they can serve as seed sources for native tree species in the target region. Therefore, the project seeks to establish agreements with private landowners to collect native tree seeds for reforestation.
Context
Rapid urbanization and the impacts of climate change are increasing the pressure to accelerate climate adaptation measures in fast-growing secondary cities in Mexico and South Africa. Adaptation efforts in both countries are constrained by limited municipal capacities and urban development instruments that need improvement. In this context, the project works with two cities to support their transformation toward more climate-resilient and pro-poor urban development through capacity building, improved integration of climate change adaptation into planning processes, and the implementation of small-scale, easily replicable adaptation measures in public spaces in disadvantaged neighborhoods. The project enables strong peer-learning and scaling-up mechanisms among the project’s partner cities, mentor and transfer cities, as well as the relevant national ministries responsible for climate change adaptation and urban development.
Objective
The project works with two cities to support their transformation toward more climate-resilient and pro-poor urban development through capacity building.
Improve the integration of climate change adaptation into planning processes and implement small-scale, easily replicable adaptation measures in public spaces in disadvantaged neighborhoods.
The project provides tools to develop robust and ambitious Long-Term Low Emission Development Strategies (LTS), aligned with Article 4.19 of the Paris Agreement and the Nationally Determined Contributions (NDCs), facilitating their submission to the United Nations Framework Convention on Climate Change (UNFCCC).
The project also supports the development of a long-term vision and work programmes adapted to the conditions and needs of each country. This is achieved through direct engagement, close coordination with partners — including the NDC Partnership (NDCP) — and the development and dissemination of knowledge products.
Objectives
Strengthen Mexico’s capacities for the design, development, and implementation of Long-Term Low Emission Development Strategies (LTS).
Since 2012, Mexico has established a comprehensive climate change policy framework, but despite many efforts, energy intensity has remained stable and emissions have continued to rise steadily. In November 2015, Mexico established ambitious INDCs, committing to reduce its greenhouse gas (GHG) emissions by 22% by 2030 compared with business-as-usual (BAU) levels.
Small and medium-sized enterprises (SMEs) are often described as the backbone of the Mexican economy, as they account for 98% of all businesses, 75% of employment, and generate 50% of the country’s GDP. They are responsible for approximately 12% of Mexico’s total GHG emissions, with a total emissions reduction potential of close to 6.91 MtCO2e per year. However, they are rarely recognized as an important target group by those promoting Mexico’s transition toward a low-carbon economy. Energy efficiency (EE) has been identified as a mechanism for reducing costs in SMEs and clearly demonstrates that companies can directly influence their energy costs by optimizing production processes, thereby increasing their competitiveness and reducing GHG emissions. However, to fully harness their mitigation potential, it is crucial that SMEs understand the potential and benefits of EE and are provided with appropriate mechanisms to ensure its maximization. Likewise, financial institutions, especially commercial banks, need to better understand the risk profile of SMEs and the technical aspects of clean technologies in order to manage their investment risk. This is key to leveraging more private capital for climate finance.
Photo: Hannes Kraft. Small-scale bakery “Panadería Sauces” in Mexico City, Mexico.
Recognizing the above, Mexico has already developed a NAMA to promote EE in SMEs. Implementation began in 2014, and so far it has provided publicly funded concessional loans to 17,501 companies for standardized EE measures, such as replacing obsolete equipment. However, given the basic technological approach adopted, it produced relatively modest impacts in terms of GHG emission reductions. Nevertheless, the initial NAMA successfully provided favorable loans to SMEs and created an extensive technical support structure financed 100% with public funds.
The proposed NAMA Support Project (NSP) will provide technical and financial assistance to the SME-NAMA mentioned above, significantly expanding its scope by launching a second phase of implementation. For this purpose, a strategy has been developed to provide financing for more complex EE measures, such as systems optimization in medium-sized enterprises (compressed air, steam generation and distribution, industrial refrigeration, among others), which will require higher investment costs but have greater energy-saving potential and therefore result in greater GHG reductions. In addition, by introducing commercial banks (second-tier institutions) as financial intermediaries, private capital will be leveraged to create significant opportunities for scaling up.
Photo: Hannes Kraft. Investments in new refrigeration equipment in Mexico City, Mexico.
The NSP will focus on developing a dynamic and robust market for EE in SMEs, with a significant contribution from private capital and the potential for replication in other sectors. For this purpose, a new technological approach will be implemented, based on optimizing the performance of energy systems in selected SME subsectors, such as hotels, the chemical industry, and the food processing industry. In addition, a qualified supply of EE services provided by certified consulting firms will be established, and financial and market barriers will be addressed to attract commercial banks to participate in EE financing.
Direct leveraging of funds: Financial cooperation will be provided to establish a guarantee fund (€7 million), as well as a small-scale grant subsidy scheme (€2.5 million) to finance EE measures in SMEs. A leverage effect of at least €70 million in private capital for clean technology financing is expected.
Technical cooperation funds will be used to make awareness of the need for and importance of EE widespread among relevant stakeholders, and to generate a significant pipeline of bankable EE projects showcasing successful cases (€4 million). This will be achieved by providing the market with a qualified supply of EE services delivered by certified consulting firms and by raising awareness among SMEs of the economic and environmental benefits of EE, with particular emphasis on how it improves SME competitiveness.
Mitigation potential: Using a conservative approach, an energy efficiency project implemented in electrical and thermal energy consumption systems can generate average individual savings ranging from 40 to 100 tonnes of CO2e per year, which is 17 to 42 times higher than the savings achieved per project during the first phase of implementation. By the end of the fourth year of implementation, the NSP aims to have implemented a total of 9,000 projects with an annual impact capacity of 360,000 tonnes of CO2e per year. During the NSP implementation period, the estimated cumulative emissions reduction potential amounts to 421,200 tonnes of CO2e.
Context
This proposal stems from the need to work at the regional level and scale up the Colombian Climate Asset Disclosure Initiative (CCADI), positioning its efforts and lessons learned in a first phase involving institutional investors from Mexico and Peru.
For this reason, through a Cooperation Agreement established between Transforma, the Mexico Climate Initiative (ICM), and Libélula, the Latin American Climate Asset Disclosure Initiative (LACADI) was created. It seeks to contribute to aligning financial flows with the objectives of the Paris Agreement, thereby facilitating the integration of climate change as a central variable in investment decision-making in Latin America.
With the support and direct commitment of insurers and pension funds (institutional investors) from Mexico and Peru, the Initiative creates and implements tools to increase transparency in climate-related financial information, develops capacities, and works to raise awareness of the importance of climate-smart investment in the sector. All of this is based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
LACADI also provides a dedicated space for peer learning and exchange among actors in the financial system. In this way, it contributes to each country’s efforts to engage the private sector in the commitments of the Paris Agreement and to the broader transition toward a climate-resilient economy consistent with the goal of limiting global temperature rise to 1.5 degrees and aligning financial flows with global climate commitments.
Objective
Facilitate the inclusion of climate change opportunities and risks in investment decisions by developing tools and fostering a collaborative environment for the resilient transition of the financial sector toward a carbon-neutral economy.
Areas of work and impacts
To increase the technical capacity of institutional investors, asset owners, and asset managers to incorporate climate change as a central variable in investment decision-making, LACADI focuses its efforts on three lines of work:
Consolidating Advisory Committees whose purpose is to guide decisions and facilitate engagement and interaction with relevant actors in the financial sector.
Developing and strengthening capacities through peer-learning sessions, the creation and analysis of questionnaires, and the application of specific rating and ranking methodologies.
Researching and preparing policy documents with recommendations, as well as supporting the public sector in implementing these recommendations, generating materials that can contribute to public policy and regulatory advocacy.
The mountainous Valle de Bravo-Amanalco region is rich in biodiversity and forms part of the Cutzamala water system, which supplies water to Mexico City. Rising temperatures, forest fires, and activities such as deforestation and agriculture place pressure on the ecosystem and contribute to water scarcity. The project integrates climate change adaptation and biodiversity conservation into land-use processes in six ejidos. Ejidos are areas owned collectively by the community. Members of the ejidos may use the land for agricultural purposes but do not hold individual land ownership rights. The project strengthens the technical and management capacities of the ejidos through training, workshops, and participatory territorial planning. The main beneficiaries of the project are members of the ejidos, as well as approximately 5,000 residents of the region. Through collaboration with local governments, the project results are integrated into municipal development plans.
Objectives
Integrate climate change adaptation and biodiversity conservation into the land use of six ejidos. Members of the ejidos hold communal land ownership and can collectively manage their territories.
Improve their technical and management skills through training, workshops, and participatory planning. The main beneficiaries are ejido members and approximately 5,000 local residents.
Collaborate with local governments to incorporate project results into municipal development plans.
Activities
Training sessions on the following topics: data collection, data acquisition, systematization, and processing for multiple intervention scales.
Development of socio-ecological indicators through data processing, aggregation mechanisms, and classification to assess the impact of EbA measures.
Integration of indicators into a monitoring system for the longitudinal evaluation of EbA measures.
Introduction to visualization mechanisms for communicating results to different communities of practice.
Context-specific research, review of case studies on good practices, and the development of a set of knowledge resources to support Procuenca and its staff in the practical integration of gender and climate change considerations across future initiatives and projects.
Context
Latin America is a biodiversity hotspot, but it faces increasing greenhouse gas emissions and waste generation due to growing material and energy intensity, partly driven by rising urban consumption. Progress in sustainable public procurement (SPP) and Type I ecolabelling across the region varies considerably. The project promotes a transformation toward more sustainable consumption and production (SCP) in the five partner countries. This will be achieved by aligning and promoting third-party verified ecolabels that provide a reliable source of information and ensure the low climate impact of products. In addition, the project will integrate climate and biodiversity protection into SPP policies by defining or improving procurement criteria and using ecolabels as a means of verification. The countries will not only contribute to climate change mitigation, the sustainable use of natural resources, and biodiversity conservation, but can also set trends across the region.
Objective
Promote the transformation toward Sustainable Consumption and Production patterns through the promotion of ecolabels and sustainable public procurement, contributing to climate change mitigation, biodiversity protection, and the conservation of natural resources.
Initial situation
The project supports the design of the NBSAP Accelerator Partnership, which works to achieve the goals of the Kunming-Montreal Global Biodiversity Framework under the Convention on Biological Diversity. It provides technical, financial, and political support to member countries to accelerate and scale up the implementation of their National Biodiversity Strategies and Action Plans (NBSAPs).
In doing so, the project consistently promotes whole-of-government and whole-of-society approaches in close coordination with the many other ongoing and emerging initiatives in this field. This includes matching the demand for and supply of funding for biodiversity conservation measures, as well as providing direct technical and financial support on the ground.
Objectives
Strengthen global, regional, and national ambition for biodiversity action.
Provide a neutral space for countries to access and share financial resources, technical assistance, and knowledge, promoting greater transparency and coherence among donors and across sectors.
Facilitate access to support so that countries can develop and accelerate effective and cross-cutting NBSAPs through its matchmaking mechanism, facilitator programme, and innovative and collaborative initiatives, collectively contributing to the delivery of the 23 targets of the Global Biodiversity Framework.
Activities
The work of the NBSAP Accelerator Partnership is guided by a collaborative governance mechanism established to facilitate its development and growth. Its activities are facilitated by the Global Coordination Unit hosted by the Secretariat of the Convention on Biological Diversity, the United Nations Development Programme, and the United Nations Environment Programme.
Cities currently account for 75% of carbon emissions. Achieving global emissions targets requires leadership from cities. However, rapid and radical decarbonization can only be sustainable if it is socially just. Transformations that go beyond technical solutions require holistic approaches and the participation of diverse stakeholders and civil society. To trigger such processes in a highly urbanized region, catalytic projects will be implemented in five Urban Labs in Mexico, Brazil, and Argentina, where new coalition-building and governance models will be tested.
This process is reinforced by transformative research, tailored communication strategies, and activities to build local capacity. The project will also use film and art to inspire new narratives of attractive urban futures and shift mindsets toward sustainability. Finally, the coalition-building and governance models will be scaled up to other cities and countries and, ultimately, contribute to influencing global agendas for sustainability transformations.
