global warming mitigation technology promotion … 1 - report on the global warming mitigation...

FY2014 Study Report

Global Warming Mitigation Technology Promotion Project

Report

March 2015

The Japan Research Institute, Limited

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Report on the Global Warming Mitigation Technology Promotion Project

- Contents -

1. Background and Aim of the Study............................................................................ 3

1.1. Background of the study........................................................................................... 3

1.1.1 Basic Information about Mexico ............................................................................... 3

1.1.2. Energy Supply and Demand Situation and Prospects in Mexico ............................ 7

1.1.3. Greenhouse Gas Emissions Situation and Prospects in Mexico............................. 8

1.1.4. Situation Regarding the Mexico-Japan Joint Crediting Mechanism (JCM) ............. 9

1.2. The Purpose of this Study ...................................................................................... 10

2.1. Existing Policies for Promotion of Energy Conservation in Commercial and Business

Sectors .................................................................................................................. 11

2.2 Analysis of Corporate Awareness and Recognition Relating to the Promotion of

Energy Conversation ............................................................................................. 15

2.2.1. Challenges in Energy Conservation ....................................................................... 15

2.2.2. Implementation and Review of the Status of Initiatives Related to Energy Effieicncy

............................................................................................................................... 16

3.1. Energy Audits Description and Results .................................................................. 19

3.2. Solutions for energy conservation promotion based on the audit Resuts ............. 24

3.3. Economic effect in the case of widespread commercialization ............................. 27

4. Study of Emissions Reduction Methodology, Estimates of Emissions Reductions

Amount Expected using the Methodology ............................................................ 29

4.1. Examination of JCM Methodology ......................................................................... 29

4.1.1. JCM Methodology Investigation Policy .................................................................. 29

4.1.2. Analysis of JCM Methodology ................................................................................ 30

4.2. Examination of Emissions Reduction Methodology ............................................... 37

4.2.1. Examination of JCM methodology for inverter-type air conditioners ..................... 37

4.2.2. Examination of JCM Methodology for Lighting ...................................................... 43

4.3. Calculation of Emissions Reduction ....................................................................... 49

4.3.1. Parameter setting ................................................................................................... 49

4.3.2. Calculation of reference emissions ........................................................................ 50

4.3.3. Calculation of project emissions ............................................................................. 50

4.3.4. Calculation of emissions reduction......................................................................... 51

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4.3.5. Calculation of emissions reductions from multiple stores ...................................... 51

5． Implementation of FS Debriefing Session for Mexican Government Officials ....... 53

5.1. Debriefing Session for Each Company that underwent Energy Audit ................... 53

5.1.1. Manufacturer A ....................................................................................................... 53

5.1.2. Retailer B ................................................................................................................ 53

5.2. Debriefing Session with Mexican Government Officials ........................................ 54

5.2.1 Regarding Promotion of the Joint Crediting Mechanism ....................................... 55

5.2.2. Regarding Energy Efficient Technology and Products ........................................... 56

5.2.3. Regarding Future Promotion of Energy Conservation in Mexico .......................... 56

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1. Background and Aim of the Study

1.1. Background of the study

1.1.1 Basic Information about Mexico

Mexico has a population of 118.4 million people and an area of 1,964,375 square

kilometers (about 5.2 times the size of Japan). Its economic scale is the second largest in

Latin America after Brazil, with a nominal GDP total in 2013 of 1.2622 trillion US dollars1.

Demographically, more than half of the population is under 30 years of age, and there is an

active consumer market. According to Mexico’s National Population Council (CONAPO), the

domestic population is predicted to increase to 150 million by 2049, with expansion of the

consumer market expected to continue in the future.

Mexico has free trade agreements (FTA) with 45 countries such as the United States, EU

and Brazil, and is aggressively developing trade liberalization. In particular, Mexico has

maintained a close political and economic relationship with the United States , and following

Mexico’s participation in the North American Free Trade Agreement (NAFTA) with the United

States and Canada in 1994, its low cost of logistics and labor have enabled it to rapidly

develop as an export manufacturing base for the United States. In 2013 exports to the United

States accounted for 78.8% of Mexico’s total exports2

Exhibit 1-1 : Nominal GDP trends in per capita

Source: Created by JRI based on the IMF World Economic Outlook (October 2014)

1 Mexican National Institute of Statistics and Geography (INEGI) （Producto interno

bruto trimestral, base 2008） 2 Central bank announcement and INEGI trade statistics

10,650

0

2,000

4,000

6,000

8,000

10,000

12,000

(US$)

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Nominal GDP per capita in Mexico fell temporarily to about $ 8,000 due to the influence of

the 2009 financial crisis, but recovered to $10,000 in 2011 and slightly increased to $ 10,650

in 2013. Real GDP growth rate was temporarily stagnant in the 1-1.9% range since 2013 due

to delays in budget execution as a result of changes in government, but in the third quarter of

2014 there was a slight increase of 2.2 percent year-over-year. With US economic recovery

and various structural reforms by the government in the future (education, communications,

financial, political and electoral system, energy), Mexico's economic recovery is expected to

progress.

Exhibit 1-2: Real GDP growth rate (%)

Source: Created by Japan Research Institute

based on Mexican National Institute of Statistics and Geography

Mexico is one of the world's leading producers of crude oil, and the oil industry is an

important industry for the country, accounting for about 30% of revenue. Oil production in

2013 was 2.875 million barrels per day, making Mexico the 10th largest oil producing country,

the same as in 20123. However, due to stagnation in investment, such as updating of new oil

field exploration and existing facilities, oil production has fallen from the peak in 2004, and

2013 production was 1.1% lower than 2012. Following the Peña Nieto government’s energy

reforms launched in December 2013 to allow the entry of private companies in the oil industry,

3 BP Statistical Review of World Energy June 2014.

4.8 4.5

3.2 3.6

1.0

1.8 1.6

1.1

1.9 1.6

2.2

0.0

1.0

2.0

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4.0

5.0

6.0

I II III IV I II III IV I II III

2012 2013 2014

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previously monopolized by Mexican Petroleum (Pemex), it is hoped that the development of

new oil and gas fields (deep water, shale gas, etc.) will increase production.

In manufacturing, a major industry of Mexico, the automotive industry has continued strong

growth, with production volume of 1.68 million units in 2005 increasing to 3.52 million units in

20134. The production rate in January-November 2014 of 3.01 million units is higher than the

previous year5. Automobiles and parts accounted for 25.7% of total exports in 2013

(about $380.189 billion), a 10.6 point increase over the previous year6. The non-Japanese

manufacturers GM, Volkswagen, Ford, Chrysler and Fiat, and the Japanese manufacturers

Mazda, Honda, Nissan and Toyota are producing in Mexico. Japanese manufacturers have

established further production bases since 2011, and foreign direct investment from Japan to

Mexico is increasing, with investment in 2013 of $ 1.75billion being about 2.5 times that of

2011.

Exhibit 1-3: Foreign direct investment from Japan

Source: Created by JRI based on JETRO materials

4 OICA correspondent’s survey. “World Motor Vehicle Production by Country and Type” 5 Asociacion Mexicana de la Industria Automotrilz. “Cifras de Noviembre Y Acumulado

2014” 6 Central bank announcement and INEGI trade statistics

211

688

264

1,023

1,750

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2009 2010 2011 2012 2013

(million US$)

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The policy interest rate has been reduced in stages from 4.5% in June 2012, and reached a

record low of 3.0% following a reduction of 0.5 points from 3.5% since the beginning of

2014. The reason for this rate cut is mainly in order to increase demand and address the

reduction in domestic consumption and private investment due to increases in tax

rates. In 2014 there were many months where the consumer price inflation was slightly above

the Mexican central bank’s objective maximum of 4% (annual + 3%, fluctuation range ± 1%)

and in November became 4.17%, but the central bank expects it will decrease in 2015 due to

factors such as the impact of tax increases settling.

The exchange rate jostled around the $ 1=13 pesos level in 2014 but by December 2014

the weak peso against the dollar proceeded to $1=14 pesos. The background behind the

peso depreciation is the degradation of the social situation, global dollar of movements, and

crude oil price declines.

Exhibit 1-4: Mexican Peso (MXN) vs. US dollar (USD) exchange rate

Source: Created by JRI based on Mexico central bank database

8

9

10

11

12

13

14

15

16

Jan-1

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4

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1.1.2. Energy Supply and Demand Situation and Prospects in Mexico

1. Final Energy Consumption

The final energy consumption in 2012 in Mexico of 117Mtoe, had a breakdown of

industrial sector 25.8%, transport sector 44.8%, residential sector 15.4%, commercial

and public sector 3.2%, agriculture and forestry sector 3.4%. The average annual growth

rate from 2002 to 2012 was 1.8%, except in 2008 there was an increasing tendency. As

a whole, when comparing 2002 to 2012 there was an increase of about 21Mtoe, with the

increase of the internal transportation sector accounting for about 70% of the increase

with about 15Mtoe. As well as other emerging markets in Mexico, due to advances in

motorization along with economic development, up to 2008 energy consumption by the

transportation sector significantly expanded. However since 2008 there has been the

increasing trend has slowed, it can be said that the popularization of automobiles has

settled down. On the other hand there is an increasing trend energy consumption in the

industrial sector, with the recent trend of manufacturing industry development, and the

industrial sector’s growth from 2011 and 2012 exceeded the rate of increase in the

transportation sector. A slight increase trend has also continued in the commercial and

public sector.

Exhibit 1-5: Final energy consumption trends in Mexico

Source: Created by JRI based on IEA

0

20

40

60

80

100

120 Non-Energy Use

Non-Specified

Agriculture /ForestryCommercial andPublic ServicesResidential

Industry

Transport

(Mtoe)

25.8%

44.8%

15.4%

3.2%

3.4%0.9%

6.5%

2012: total 117Mtoe

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2. Domestic Primary Energy Supply

Total primary energy supply volume in 2012 in Mexico (TPES) was 188Mtoe, the

breakdown being petroleum 43%, gas 31%, coal 5% and renewable energy 7%. Since

Mexico’s domestic oil production has fallen in recent years, domestic oil supply has

slightly decreased from the peak of about 91Mtoe in 2005, to about 82Mtoe in 2012, the

same level as in 2002. In addition, the proportion of oil in primary energy reduced

to 43% in 2012 from 55% in 2002. On the other hand the proportion of natural gas

increased from 22% in 2002 (33Mtoe) to 31% (58Mtoe) in 2012. Along with this imports

of natural gas from the United States have also increased, and since the existing natural

gas pipeline transportation capacity is approaching its limit in recent years, President

Peña Nieto has announced a new pipeline construction project7. Although the increase

of natural gas is expected to continue in the future, production is expected due to the

possibility of oil industry entry by private companies as a result of energy reform in oil

production in Mexico.

1.1.3. Greenhouse Gas Emissions Situation and Prospects in Mexico

GHG emissions, along with the growth of final energy consumption have also increased;

GHG emissions in 1990 were about 500 million t / year, and in 2010 were about 700million t

/ year, an increase of 1.5 times over about 20 years. The average annual growth rate from

1990 to 2010 is 2.1%. The Mexican government established a basic law in

April 2012 (GLCC: the General Law of Climate Change) to reduce emissions, with a target

of 30% reduction in greenhouse gas emissions by 2020 (base year: 2000), and 50%

reduction by 2050. In addition, in 2007 a comprehensive national climate change strategy

(ENACC: Estrategia Nacional de Cambio Climatico)" was developed, and in 2013 the Peña

Nieto presidency announced the "National Climate Change Strategy. Vision 10-20-40”

(ENACC: Estrategia Nacional de Cambio Climatico. Vision 10-20-40). The new national

climate change strategy seeks to make clear the challenges , including

reducing GHG emissions, for society as a whole to 1. respond to climate change 2. promote

a shift to a sustainable and competitive low-carbon and low emission economy, and

suggests actions and strategies.

7 June 2014 Mexico Embassy "Mexico Infrastructure Market Overview - Natural Gas

Pipeline Project"

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Exhibit 1-6: GHG Emissions (LULUCF excluded) (carbon dioxide CO2 equivalent)

Source: Created by JRI based on OECD (2014), Greenhouse gas emissions, OECD

Environment Statistics (Database)

1.1.4. Situation Regarding the Mexico-Japan Joint Crediting Mechanism (JCM)

On July 25, 2014, taking the opportunity of Prime Minister Shinzo Abe’s visit, the signing

of bilateral documents on the Joint Crediting Mechanism was carried out between Japan

and Mexico. Since the start of the Joint Crediting Mechanism in 2013, Mexico became

the 12th country to sign.

At the "20th Conference of the Parties to the United Nations Framework Convention on

Climate Change (COP20)", held in Lima, Peru in December 2014, a meeting was held

between the 12 countries that signed the Joint Crediting Mechanism and Japan, and a

Joint Statement confirming progress to date and the aims for future progress was

issued. It should be noted that from Mexico, Rodolfo Lacy, Secretary of Ministry of

Environment and Natural Resources (SEMARNAT) attended.

Regarding the Ministry of Economy, Trade and Industry’s FY2013 “Global Warming

Mitigation Technology Promotion Program” (operated by Japan Research Institute Co.,

Ltd.), Mr. Lacy participated in an event with invited Japanese companies with the aim of

education and promoting understanding of Japanese low-carbon technologies, and

deepened his knowledge of related technologies and products and the Joint Crediting

Mechanism through visits to Japanese companies. These efforts relating to the promotion

458,754

701,360

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

(thousands)

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of the Joint Crediting Mechanism can be said to have greatly contributed to the recent

conclusion of institutional documents with Mexico.

1.2. The Purpose of this Study

This study investigates and examines new policies and business schemes utilizing the

Joint Crediting Mechanism with Mexico that will contribute to the spread of Japanese

technology, products and services related to energy conservation (for example energy

audit, LED lighting, air conditioning equipment and solar power).

Regarding the study of business schemes, this study analyses, as a model case, the

economic impact of energy audit and the implementation of solutions proposed by the audit,

in Mexican stores and offices that expressed willingness to cooperate in this study, as a

project to promote packages of products and services for energy conservation.

Based on this model case, this report investigates and analyses methodologies for

measuring, reporting, and verifying reductions in greenhouse gases (hereinafter referred to

as "GHG") that are achieved through the realization of the project scheme, and using the

same methodology reviews and analyses trial calculations of the expected GHG reduction

amount.

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2. Policies for the Promotion of Energy Conservation in Cooperation with the Joint

Crediting Mechanism

2.1. Existing Policies for Promotion of Energy Conservation in Commercial and

Business Sectors

1. Medium-term energy policies

President Peña Nieto established the basic policies and strategies in his term (2013 -

2018) in the "National Development Plan 2013-2018 (PND: Plan National

de Desarrollo)", which lays out policies in each individual field. In the energy sector,

under the PND, the "Energy Plan 2013-2018 (PSE: Programa Sectorial de

Energia 2013-2018)" has been developed, and goals are set for saving, creating, and

storing energy, including "Goal 5: expand the use of clean energy and renewable energy,

promote energy conservation and social and environmental responsibility". Under the

above high level policy, as an individual policy for the energy production sector, the

"Renewable Energy Use Special Plan 2013-2018 (PEAER: Programa Especial Para el

Aprovechamiento de Energias Renovables) " has been announced by the Department of

Energy to expand the use of renewable energy.

As an individual policy for energy conservation, the "National Plan for the Sustainable

Use of Energy 2014-2018 (PRONASE: Programa Nacional Para el Aprovechamiento

Sustentable de la Energia 2014-2018)" was announced in April 2014. The National Plan

for the Sustainable Use of Energy sets six goals, defining numerical targets and

strategies for each. Examples of numerical targets are, "the level of energy intensity in

2018 shall be at the same level as 2012 (667.47 kJ / $) or less", "the final energy

consumption energy efficiency standard (Mexico official standard "NOM") in 2018 shall

be at the same level as 2012 (46%) or increase to 51%”. Also, concrete strategies and

actions to achieve the targets are set out, such as "implement program to replace

inefficient equipment in the industrial, commercial and service sectors", "identify and

develop equipment, devices and systems to be targets of new energy efficiency

standards (NOM)", "set the framework of optimal financing to promote the uptake of

programs and projects related to energy conservation". The previously announced

strategy "National Plan 2009-2012 for the Sustainable Use of Energy" did not mention

specific numerical goals and strategies for all sectors, but the contents of the current

plan are more comprehensive, showing specific numerical targets and strategies.

- 12 -

It should be noted that Article 26 of the Renewable Energy Use and Energy Transition

Funds Law determines that the situation of energy conservation and renewable energy

should be evaluated and adjusted every year under the "National Energy Transition

Strategy and Sustainable Use of Energy (ENTEASE: Estrategia Nacional de Transicion

Energetica y Aprovechamiento Sustentable de la Energia)".

Exhibit 2-1 :Saving-creating-storing energy-related policies in Mexico

Source: Created by JRI based on Department of Energy "PRONASE 2014-2018"

Development Plan 2013-2018 (PND: Plan National de Desarrollo 2013-2018)

National Target 4: Prosperity for Mexico.

↓

Department of Energy plan 2013-2018 (PSE: Programa Sectorial de Energia

2013-2018)

Goal 5: To expand the use of clean energy and renewable energy,

to promote energy efficiency and social and environmental responsibility.

↓

National plan for the sustainable use of energy 2014-2018 (PRONASE

2014-2018)

Goal 1: Design and development of programs and actions to promote optimal use

of energy in national energy chain.

Goal 2: Enhance the energy efficiency regulations for electrical equipment and

energy systems that are manufactured and sold in Mexico.

Goal 3: Strengthen federal, national, city level energy efficiency and systems and

harmonize public, private, research and social organizations.

Goal 4: Strengthen the development of technology and capacity for sustainable use

of energy.

Goal 5: Contribute to the building and dissemination of energy conservation culture.

Goal 6: Promote technology development and research of energy conservation.

- 13 -

2. Long-term energy policy

A longer term energy strategy than the above-mentioned "Department of Energy Plan

2013-2018" is "National Energy Strategy (ENE: Estrategia Nacional de Energia)" which

shows targets and strategies for energy issues to be addressed over the next 15 years. This

strategy is revised and published annually by the Department of Energy and the latest

version is the National Energy Strategy 2014-2028. However, the 2013-2027 strategy,

announced by the Peña Nieto presidency is the basic policy, and the 2014 edition also

includes the perspective of monitoring of objectives (indicators) and strategies that have been

set out in 2013. As a long-term goal with an eye to 2027 1."acceleration of GDP growth", and

2. "realization of social inclusion" are cited, and 21 strategies and 26 indicators to be

monitored have been set. It should be noted that there are the indicators 1. “sustainability", 2.

“efficiency", and 3. “safety". Among the goals of "sustainability" are to "reduce GHG

emissions in the energy sector", and to "increased the proportion of power from non-fossil

fuel sources". Among the goals of "efficiency", there is "reduction of energy intensity", and

under the goal of "safety" there is "diversification of energy sources". For energy conservation

and efficiency, Strategy 2 aims "to promote efficient energy use in all energy sectors", and as

concrete action there is a policy to proceed with energy efficiency standardization efforts.

3. System

As a financing system in the energy conservation field, the Mexican Energy Efficiency Trust

Fund (FIDE) implements the "Business Energy Efficiency and Savings Program” (PAEEEM:

Programa de Ahorro y Eficiencia Energetica Empresarial). This system provides financing

through the "Energy Transition and Sustainable Use of Energy Fund", defined in Article 27 of

the "Promotion of Alternative Energy Use and New Energy Transition Financial Assistance

Law" enacted in November 2008. Under the "Business Energy Efficiency and Savings

Program", when companies buy energy efficient products that achieve the NOM standards

(commercial refrigerators, electric motors, air conditioning units, efficient lighting or LEDs,

substations) they can receive a low-interest loan. The target companies of this plan are

mainly small and medium-sized enterprises (convenience stores, department stores, gas

stations, offices, hotels, restaurants, sports clubs, hospitals, schools, etc.), the loan amount is

up to $350,000 (Mexican Pesos), the repayment period is 4 years, and there is a mechanism

to repay through the company’s electricity bill payments (CFE jurisdiction).

- 14 -

In addition to the above financing system, there is also an investment system (Eficiencia

Energetica) mainly for large companies where the amount and repayment period of the

financing is determined through discussions with the Energy Efficiency Trust Fund. This

system has been operational since 2011, and there are several cases in which Japanese

products have been purchased with the help of this system. On the other hand, in local

interviews to Mexican government officials, awareness of the two financing plans is low

among companies, and there were views that there is a need to address the promotion of the

systems.

4. Energy reform

From his inauguration in December 2012, President Peña Nieto has aggressively pursued

structural reforms in various areas (labor, communication, education, finance, politics,

energy) and among these, energy reform has been addressed as a top priority. And, in

December 2013 one year from his inauguration, a series of energy reform legislation was

established and passed by the Diet, and in August 2014 was promulgated. With the reforms,

private companies can enter into the power industry and the oil and gas industry, which had

previously been a monopoly of state-owned enterprises. In particular, the oil industry is an

important industry, accounting for about 30% of the national revenue, but in recent years

domestic oil production has shown a decreasing production trend, and strengthening the

resource development of the state-owned enterprise PEMEX (Mexico Petroleum

Corporation) was a pressing issue. By opening the industry to private companies, including

foreign companies, the Mexican government hoped to activate the oil industry by developing

new resources, such as deep-sea oil and shale resources, that require financial strength and

technical capabilities. It should be noted that under the reforms it also became possible to

secure production sharing contracts and license agreements which had not been recognized

before then. In addition, also for the power industry, although until now the state-owned

enterprise CFE (Mexico Power Corporation) had been supplying power with a vertically

integrated model, it will be possible for the private sector to enter into the power generation

business in the future. By this series of reforms, it is hoped that private investment in the

energy sector will increase, and that this will lead to activation of the entire Mexican economy.

- 15 -

2.2 Analysis of Corporate Awareness and Recognition Relating to the Promotion of

Energy Conversation

2.2.1. Challenges in Energy Conservation

1. Corporate Side Challenges

In this study, energy audits were carried out in Mexican manufacturing industry,

distribution and retail businesses. While supporting Mexican economic growth, these

industrial and commercial sectors, when combined with the residential sector, are the

main source of GHG emissions. For the Mexican government, having listed GHG

emission reduction targets to address global warming, promoting energy conservation in

the industrial and commercial sectors has become a major challenge.

On the other hand, awareness on the corporate side with respect to energy

conservation promotion can generally be said to be low. Business activities to improve

sales and profits have priority, and it is not the case that environmental action has been

actively promoted. Although in some large companies pioneering efforts have been

made, fostering of knowledge and awareness of concepts and behaviors such as energy

conservation and power saving is needed in the entire industry.

For the companies in this survey, except for a few large companies, room for

significant improvement was observed regarding measures to encourage power saving

and efficient energy use in business locations.

2. Institutional Challenges

There are also institutional problems with the systems that Mexican authorities have

developed. As described above, energy efficiency certification exists for electrical

products in Mexico, and support is provided for energy saving promotion to small and

medium-sized enterprises. However, regarding the actual system in operation, there is

still much room for improvement, according to local manufacturers that have been using

such systems.

For example, for air conditioning, the top three air-conditioning equipment

manufacturers that have been purchased by using the FIDE PAEEEM system are local

manufacturers. But their market share is very small. On the other hand, manufacturers

such as from the US have almost no registrations or purchases under PAEEEM, but their

market share is large. PAEEEM is a system to increase sales of registered products, but

because installation costs are not included, users (SMEs) do not feel the benefit, and as

- 16 -

a result largely do not buy, which means that manufacturers feel little incentive to go

through the cumbersome registration process, and this is one reason why the system

has failed to become more widely used.

Manufacturers have explained these problems to FIDE and asked for improvements,

but no such improvements have been made.

2.2.2. Implementation and Review of the Status of Initiatives Related to Energy

Effieicncy

1. FIDE’s Activities

In Mexico, FIDE has developed a specific approach for energy efficiency for general

homes and enterprises since the 1990s. However, efforts to also actively drive efforts at

the corporate level of the industrial and commercial sectors, which may have a

significant impact on the economy and the environment have not progressed. FIDE has

also recognized this situation and is exploring cooperation possibilities in

institution-building and operations through consultations and interviews with companies.

(1) Challenges Recognized by FIDE and its Responses

Challenge Response

Nationwide awareness of energy

efficiency is low. FIDE has

conducted specific initiatives for

energy efficiency since the 1990s for

general homes and companies, yet

awareness of the public and

businesses to save energy is low.

Deployment of enlightenment and

awareness-raising activities for energy

conservation, especially for children.

Lack of engineers with basic

knowledge and companies providing

energy efficiency services.

Public-private partnership framework

for promotion of energy conservation

has not been established.

Development of technical personnel, scheme

aimed at professional development (under

planning and review)

Energy saving has not become Implementation of grand prize event for

- 17 -

widespread at the corporate level. companies using FIDE mark home

appliances and commercial equipment. ※

since promotion of energy conservation

efforts are not obligatory, few companies

proactively make efforts.

SENER has decided to significantly increase the budget of PAEEEM, currently the

only energy conservation promotion support system, by four times. In order to plan

promotion activities at this budget scale, FIDE is strengthening its efforts to convince

manufacturers to register with PAEEEM.

2. CONUEE’s Activities

This energy conservation authority is also acting vigorously.

In Mexico, as a regulatory oversight agency independent from the government, the

Mexico Energy Efficiency Commission (Comisión Nacional para el Uso Eficiente de

Energía, hereinafter referred to as "CONUEE") is developing its own NOM standards for

items such as appliances. In addition it also carries out reviews and certifications of

standards for NOM products. 8

According to interviews with CONUEE, the general assessment is that Mexican

energy efficiency standards have become stricter, since the country has adopted the

same standards as the neighboring countries of the United States and Canada. The

background is that electrical appliances that are domestically manufactured are mainly

exported to the United States, such that product specifications must meet US standards.

CONUEE, with these functions, through raising efficiency of home appliances as a

regulatory oversight agency, plays a role to accelerate the efficiency and energy

conservation of energy use in Mexico. As with PRONASE, discussed earlier, based on

the goal of "enhanced energy efficiency regulation of production and sales of electrical

equipment and energy systems made in Mexico", focus is being put on the development

of NOM standards to expand target equipment, devices and systems under NOM.

8 Currently CONUEE has 7 certified institutions and 50 laboratories for product

inspection in Mexico

- 18 -

In terms of concrete efforts, in September 2014 a new standard “NOM-032” was

released which includes standby energy use that had not been regulated before,

expanding the scope of NOM. Target products were audio-visual equipment such as TVs

and DVD players, microwaves etc. In addition, standards for solar-related equipment,

inverters, household pump equipment and power adapters are in development, and

based on the national strategy of energy conservation, CONUEE is performing its duties

as a supervisory body.

- 19 -

3. Concrete Plan towards Commercialization Utilizing Energy

Conservation Promotion Policies

3.1. Energy Audits Description and Results

In this study, we conducted energy audits for Mexican companies in the industrial and

commercial sectors, and an analysis of the measurement results was carried out.

Furthermore, based on the results, in order to enhance the energy conservation of the

companies audited, proposals were made to introduce equipment and systems and improve

operations.

The following summarizes the implementation overview and results of the energy audit at

each company audited.

<Project Aim >

The objectives of this project are to investigate and deliberate new political policies in

Mexico related to the Joint Crediting Mechanism (JCM) between Japan and Mexico that is

contributing to the spread of Japanese technology, products and services related to the

conservation, creation and storage of energy (example: Energy conservation diagnosis,

LED lighting, ventilation equipment, solar energy production, lithium-ion batteries, etc.), as

well as business ventures that take advantage of these policies.

<Survey Overview>

When implementing a project to introduce energy-conserving technology and equipment,

the energy survey is performed to analyze in how energy can be conserved as a result of

the project. Details on the method and procedures are stated below.

<Survey Method>

Walk-through investigation

: Check of the operating status of lighting and air-conditioning equipment.

Management document check

: Check of operating records, equipment lists and electricity bill.

Energy consumption measurement

: Measurement of electricity consumption for lighting and air-conditioning equipment by

using power loggers.

(The outdoor temperature is also measured in order to assess the effect of the

- 20 -

temperature.)

3.1.1. ManufacturerA

For manufacturer A, an audit of its manufacturing base, a walk-through survey,

confirmation of management documentation and measurement of energy consumption

was carried out.

<Measurement Overview>

Two measurements were carried out between September to November, lasting 2 and

4 weeks.

Exhibit 3-1：Measurement Overview

＜Companies in charge of measurement＞

Hokuriku Electric Power Company

(Cooperation)

Panasonic de Mexico S.A de C.V

Panasonic Corporation AVC Networks Company

＜Estimated results of the annual amount of energy＞

The surveyed factory uses electricity and natural gas, etc. but only the equipment

- 21 -

that uses electricity was surveyed. Therefore, the annual amount of electricity used

was grasped in advance from CFE bills. Each load ratio was estimated from the

survey result. Air-conditioning units are used mainly for offices, not used in the plant

work area (with the exception of the monitoring room). Therefore, the percentage of

electricity consumed by Air-Conditioning units is estimated to be 2% of all the

electricity used by the entire factory. Efforts have been made to conserve energy

inside the factory by using daylight as much as possible. It is estimated that Lighting

accounts for 9% of the electricity consumed by the entire factory. If Japanese

energy-saving technology is applied to Lighting and Air-Conditioning, the amount of

electricity used in the factory can be reduced.

Exhibit 3-2：Estimated annual power consumption by usage

Source: Consortium material

The figure below shows the average outside temperature and power consumption by

month. There is no observed effect on the power consumption due to changes in

outside air temperature.

2013 Total7,000,000 kWh/year 120,000 670,000

6,200,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

AC Lighting Others

AC2%

Lighting9%

Others89%

AC Lighting Others

- 22 -

Exhibit 3-3：Average outside temperature and power consumption by month


3.1.2. Retailer B

For retailer B, an audit of the store, a walk-through survey, confirmation of

management documentation and measurement of energy consumption was carried

out.

<Measurement Overview>

Measurement Period: 28 October 2014 – 24 November 2014

＜Companies in charge of measurement＞

Hokuriku Electric Power Company

(Cooperation)

Panasonic de Mexico S.A. de C.V

Panasonic Corporation AVC Networks Company

＜Estimated results of the annual amount of energy＞

Electricity consumption of the annual whole store was grasped from a CFE bill

because there is no use of energy except for electricity in the building. We measured

- 23 -

respective electricity consumption in order to be classified by use and estimated the

respective annual consumption. Air-Conditioning and Lighting account for 55% and

33% of electricity consumption, respectively.

If Japanese energy-conserving technology is applied, the amount of energy used in

the store can be reduced.

Exhibit 3-4：Estimated annual power consumption by usage


Looking at the above exhibits, it can be seen that energy usage is dominated by

air conditioning with 55% and illumination with 33%. That is, by applying Japanese

energy-saving technologies for air conditioning and lighting, it can be said that it is

possible to reduce the store’s energy use.

In exhibits 3-5 the correlation of power consumption and the outside air

temperature in each month is shown. With high outside air temperatures from April

to October, it is found that the power consumption is high as compared to other

months.

AC55%Lighting

33%

Others12%

AC Lighting Others

2013 Total540,000 kWh/year

300,000

180,000

60,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

AC Lighting Others

(kWh)

- 24 -

Exhibit 3-5：Average outside temperature and power consumption by month


From the audit results of the walk-through surveys, confirmation of management

documentation and measurement of energy consumption, the following can be cited as

recommendations.

Lighting : in non-business hours, light only places needed for work

Air conditioning: Manually switch power on and off at the time of opening and

before closing

3.2. Solutions for energy conservation promotion based on the audit Resuts

Based on the results of the preceding energy audits, towards each audit target, we

propose solutions for energy conservation as follows.

3.2.1. Manufacturer A

1. Proposed equipment

Air conditioning: introduction of inverter-type air conditioning

Lighting: introduction of LED lighting, practice improvement of adjustment,

operational illumination level

Compressor: reduction of pressure loss, airflow improvement, etc., practice

operational improvement

- 25 -

2. Energy-saving effect due to the introduction of proposed equipmen

Items Equipment Operation

Air-Conditioning System -0.6% -

Lighting -3.6% -1.5%

Other -2.2% -

Total -6.4% -1.5%

The combined effect of the equipment installation and operational improvement

is estimated at a total of 7.9% annual energy saving effect.

3. Cost saving effect of the proposed equipment and operational improvements

The cost reduction effect and ROI from the above-mentioned equipment

introduction and operational improvement will be as follows.

Exhibit 3-6：Energy- and cost-savings by introducing equipment

Items Amount of reduction

Electricity（kWh/year）

Cost saving

（MXN$）

Air-Conditioning System 45,000 69,000

Lighting 356,000 635,000

Other 155,000 240,000

Total 556,000 940,000


3.2.2. Retailer B

1. Proposed equipment

Air conditioning: introduction of inverter-type air conditioning

Lighting: introduction of LED lighting, practice improvement of adjustment,

operational illumination level

Other: demand peak suppression by the introduction of demand-control

system

- 26 -

2. Energy-saving effect due to the introduction of proposed equipment

Items Equipment Operation

Air-Conditioning System -22.7% -4.5%

Lighting -15.8% -3.7%

Other -1.5% -

Total -40.0% -8.2%

The combined effect of the equipment installation and operational improvement

is estimated at a total of 48.2% annual energy saving effect.

3. Cost saving effect of the proposed equipment

The cost reduction effect and ROI from the above-mentioned equipment

introduction and operational improvements will be as follows.

Exhibit 3-7：Energy- and cost-savings by introducing equipment

Items Amount of reduction

Electricity（kWh/year）

Cost saving

（MXN$）

Air-Conditioning System 149,000 218,000

Lighting 106,000 195,000

Other 8,000 12,000

Total 263,000 425,000


- 27 -

3.3. Economic effect in the case of widespread commercialization

Businesses such as the SMEs for which the energy audits were done and solutions

proposed, are widespread in Mexico. Therefore, the energy and cost saving effect

obtained if the introduced solutions presented above were adopted across Mexico are

shown. It should be noted that on the estimates, electricity rates were 1.36 Mexican peso

/ kWh.

3.3.1. Retailer B

In retailer B, improvements in air conditioning (introduction of inverter-type air

conditioning) and lighting (introduction of LED lighting, improvement of adjustment,

operational illumination level) were proposed. If these were introduced in all stores

(1,000 shops), annual energy savings of 165,000MWh and cost savings of

approximately 280 million pesos are estimated.

Exhibit 3-8：Energy and cost savings in the case of nationwide deployment (retailer B）

Items Energy saving

per store

Energy saving

in all stores

Cost saving

（Per store）（All store）

(kWh/year) （MWh/year）（MXN$）

Air-Conditioning System 333,000 50,000 490,000 73,000,000

Lighting 107,000 110,000 195,000 200,000,000

Other 14,000 5,000 21,000 7,000,000

Total 454,000 165,000 706,000 280,000,000

Source: Created by JRI based on various data

Furthermore, the cumulative energy savings for the proposed solution from 2016 to 2025

that are obtained when introduced in 100 stores per year, and the cost saving effects are

shown in the exhibits below.

- 28 -

Exhibit 3-9：Energy saving effect in 2016 - 2025 cumulative (retailer B)

Unit:MWh


Exhibit 3-10：2016 - 2025 cost savings (retailer B)

Unit:Million MXN$


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

- 29 -

4. Study of Emissions Reduction Methodology, Estimates of Emissions Reductions

Amount Expected using the Methodology

4.1. Examination of JCM Methodology

4.1.1. JCM Methodology Investigation Policy

The CDM methodologies considered possible for use with the main energy

conservation technologies used in this project, namely air-conditioning (the

technology used in this project is an inverter-type air-conditioner) and lighting (the

technology used in this project is LED), are the small scale energy conservation

methodology AMS-Ⅱ.C “Demand-side energy conservation activities for specific

technologies” and the small scale energy conservation methodology AMS-.E ”

Energy conservation and fuel switching measures for buildings”. These

methodologies take the equipment uptime as the amount of activity, and multiply the

difference between before and after equipment efficiency (for example air conditioner

COP) or energy consumption (for example lighting energy consumption) to calculate

the reference emissions. Business feasibility studies for energy conservation related

JCM projects up to now have also referred to these methodologies in studying and

creating the JCM methodology proposals.

On the other hand, the JCM methodology MN_AM001 "Installation of

energy-saving transmission lines in the Mongolian Grid" was approved by the

Japan-Mongolia Joint Committee in February 2014, and after that 1 other project at

the Japan and Mongolia Joint Committee (total 2 projects), and 4 JCM

methodologies have been approved by the Japan-Indonesia Joint Committee. In

addition, 3 methodologies are being considered by the Japan-Indonesia Joint

Committee, 4 by the Japan-Vietnam Joint Committee and 1 at the Japan-Palau Joint

Committee, such that the total of approved and proposed methodologies is now 14

(as of end of January 2015).

Because the JCM is a system that is operated by a Joint Committee established

between two countries, cooperation between each Joint Committee basically is not

thought to be required. On the other hand, since the Japanese Government is

involved in all of the Joint Committees, and robust methodologies, transparency,

ensuring environmental integrity, systems and operations that conform to

international rules are the aim, largely different JCM methodologies approved at the

Joint Committees should be avoided. The study of the methodology to be applied to

- 30 -

this project activity refers to the approved and proposed methodologies in JCM, such

as eligibility requirements and reference scenarios, and examines the specific

circumstances and conditions in this project.

4.1.2. Analysis of JCM Methodology

There have so far been five approved or proposed JCM methodologies related to air

conditioning and lighting as the major subject equipment to achieve energy

conservation.

JCM methodologies related to inverter-type air conditioners and LED lighting

Target

Country

Methodology

Number Methodology Name Status

Indonesia ID_AM002

Energy Saving by Introduction

of High Efficiency Centrifugal

Chiller

Approved

Indonesia ID_AM004

Installation of Inverter-Type Air

Conditioning System for

Cooling for Grocery Store

Approved

Indonesia ID_PM004 Installation of LED Lighting for

Grocery Store Proposed

Vietnam VN_PM003

Introduction of room air

conditioners equipped with

inverters to public sector

buildings

Proposed

Vietnam VN_PM004

Improving the energy efficiency

of commercial buildings by

utilization of high efficiency

equipment

Proposed

Source: created by JRI from each Joint Committee website

Among these JCM methodologies, three relate to air conditioning (ID_AM002

“Energy Saving by Introduction of High Efficiency Centrifugal Chiller”, ID_AM004

“Installation of Inverter-Type Air Conditioning System for Cooling for Grocery Store”,

- 31 -

VN_PM003 “Introduction of room air conditioners equipped with inverters to public

sector buildings”). Two methodologies are related to lighting (ID_PM004

“Installation of LED Lighting for Grocery Store”, VN_PM004 “Improving the energy

efficiency of commercial buildings by utilization of high efficiency equipment”).

(1) Analysis of JCM Methodologies for Air Conditioning

In the methodologies related to air conditioning, one has targeted at chillers and two

are intended for split type of inverter-type air conditioners. Since it is a split type

inverter air conditioner employed in the present project activity, it was decided to

analyze the two JCM methodologies with similar technology.

Eligibility requirements are as follows for the two JCM methodologies that are

targeted to the split type of inverter air conditioner.

Eligibility requirements in JCM methodologies related to inverter-type air conditioners

Method-

ology

Number

Methodology

Name

Eligibility Criteria

ID_

AM004

Installation of

Inverter-Type

Air

Conditioning

System for

Cooling for

Grocery Store

1. Single split inverter-type air conditioning

system is newly installed or installed to replace

existing air conditioning system for grocery

store whose selling area is less than 400 (four

hundred) m2.

2. The installed air conditioning system is wall

mounted type and/or ceiling cassette type, and

has a COP value higher than that of the value

indicated in the table below.

3. Ozone Depletion Potential (ODP) of the

refrigerant used for the installed air

conditioning system is 0 (zero).

4. Plan for not releasing refrigerant used for

- 32 -

project air conditioning system is prepared. In

the case of replacing the existing air

conditioning system with the project air

conditioning system, refrigerant used for the

existing air conditioning system is not

released to the air.

VN_

PM003

Introduction of

room air

conditioners

equipped with

inverters to

public sector

buildings

1. The project newly introduces RACs equipped

with inverters, or replaces existing non-inverter

RACs by inverter RACs.

2. This methodology is applicable to public sector

buildings.

3. Rated cooling capacity of a project RAC is

within the applicable range of the Vietnamese

national standard TCVN7831:2012.

4. Ozone Depletion Potential (ODP) of the

refrigerant used for project RAC is zero.

5. Plans to prevent release of refrigerants into the

atmosphere at the time of RAC removal are

prepared for both project RACs and the

existing RACs replaced by the project. In the

case of replacing existing RACs by project

RACs, execution of the prevention plan is

checked at the time of verification, in order to

confirm that refrigerant used for the existing

RACs removed by the project is not released

to the air.

Source: Created by JRI based on each JCM methodology

Note 1：RAC：Room air conditioner

Among the eligibility requirements of the two JCM methodologies, the following summarizes

the common requirements.

- 33 -

Overview of eligibility requirements common to JCM methodologies related to

inverter-type air conditioners

No. Requirement Contents

1 Applicable

Technology

Must be Inverter-type Air Conditioner

2 Applies to Limited to buildings which are the target of project activity

(ID_AM004: sales floor area <400m2 grocery store, VN_PM003:

government or public buildings)

3 Applicable

condition

Limited to products to be applied in the project activity

(ID_AM004: not less than was determined for each cooling

capacity COP, VN_PM003: conforms to cooling capacity of

Vietnam standard TCVN7831:2012)

4 Applicable

condition

That ozone depletion potential of the refrigerant being used in

products to be applied in the project activity (ODP) is zero.

5 Applicable

activity

Refrigerants must not be released into the air when the existing

air conditioner is replaced, and also when the air conditioner

installed under the project is removed.

Eligibility requirements are configured simply, with an appropriate treatment of

technology, subject, conditions and activities. Since inverter-type air conditioners are

used in the project activities, requirements numbers 1, 4 and 5 are considered

necessary for all methodologies. Regarding numbers 2, 3, while based on the subject

and conditions of this project activity, there is a need to consider whether the

eligibility requirements can be secured.

The approach for reference emissions of the two JCM methodologies that are

targeted at split type inverter air conditioners both use the air conditioning energy

efficiency ratio of the reference scenario air-conditioner and the project air conditioner,

estimate the reference scenario power consumption from the power consumption of

the project, and calculate the reference emissions using the the reference emissions

factor of the power grid. The energy efficiency of the air conditioner is set in

ID_AM004 as the COP set for each cooling capacity, and VN_PM003 uses the air

conditioner evaluation method standard ISO5151, and the Cooling Seasonal

- 34 -

Performance Factor (CSPF) calculated by evaluation criteria set by the Vietnamese

national standard TCVN 7831:2012. Although there are differences in energy

efficiency indicators employed due to the circumstances in each country, by defining

the energy efficiency of the air conditioner that is employed in the reference scenario,

the reference emissions reduction calculated from the difference in energy efficiency

ratio of the air conditioner introduced in the project activity is considered to be

reasonable.

(2)Analysis of JCM Methodology for Lighting

Of the methodologies associated with lighting, two are intended for LED lighting.

Since the technology employed in the present project activity is LED lighting, it was

decided to analyze the two JCM methodologies that use similar technology.

Eligibility requirements are as follows for the two JCM methodologies that are

intended for LED lighting.

Eligibility requirements in JCM methodology related to LED lighting

Method-

ology

Number

Methodology

Name

Eligibility Criteria

ID_

PM004

Installation of

LED Lighting

for Grocery

Store

1. LED lighting is newly installed or installed to

replace existing fluorescent lighting for grocery

store whose selling area is less than 400 (four

hundred) m2

2. The installed LED lighting is a straight type

LED with color temperature between 5,000

and 6,500 K, length between 602.5 and

1,513.0 mm, and luminous efficiency of more

than 120 lm/W.

3. In the case of replacing existing fluorescent

lighting with the project LED lighting, mercury

contained in existing fluorescent lighting is not

released to the environment.

- 35 -

VN_

PM004

Improving the

energy

efficiency of

commercial

buildings by

utilization of

high efficiency

equipment

1. The project involves implementation of one or

more energy efficiency measures categorized

in Table 1 by using high efficiency equipment

at an existing facility.

Projects involving installation of high efficiency

lighting need to be coupled with another

energy saving measure(s) in order to be

eligible under this methodology.

High efficiency equipment introduced by the

project replaces the existing equipment or

substitutes the output of the existing

equipment, and it is included in the applicable

technologies as shown in Table 1:

Excerpt of table 1 … Installation of high

efficiency lighting: LED lighting

2. Omitting

3. High efficiency equipment in the project

guarantees a better performance than the

reference equipment for a minimum of one

year. The performance level can be confirmed

by comparing the efficiency or rated electricity

consumption between the high efficiency

equipment and the reference equipment, with

an evidence of either a manufacturer’s

performance guarantee or energy saving

company’s (ESCO) energy saving guarantee

of high efficiency equipment. Where such

evidence is not available for the reference

equipment, high efficiency equipment in the

project guarantees a better performance than

the default efficiency values provided in the

methodology.

Source: created by JRI from each JCM methodology

- 36 -

Among the eligibility requirements of the two JCM methodologies, the following

summarizes the common requirements.

Overview of the eligibility requirements common to JCM methodologies associated with LED

lighting


1 Applicable Technology Must be LED.

Since the ID_PM004 methodology is restricted only to LED lights whereas the

VN_PM004 methodology applies to high efficiency equipment, of which one example

is LED lighting, the level of eligibility criteria is different. In ID_PM004 the target,

conditions and activity are defined, such that what type of LED is used in what type of

facility in what way are defined. On the other hand, in VN_PM004, although LED

lighting is explicitly mentioned as a target technology, the applicable target and

conditions are not set. In terms of applicable activities, compared to the reference

technology and products, the technology and products to be used in the project

activity must be high efficiency and must have at least a 1 year guarantee provided

by either the manufacturer or the ESCO.

Although both JCM methodologies are targeted at LED lights, because VN_PM004

is targeted at the introduction of various types of high efficiency equipment including

boilers or fuel change at a particular site, it is a different type of project activity to this

project which intends to use LED lights alone (or combined with inverter-type air

conditioners). Therefore, in regards to eligibility criteria, based on the subject and

conditions of this project activity, it was decided to refer to ID_PM004 when

considering the applicable technology, subject, conditions and activities.

The approach to reference emissions amount taken by ID_PM004, which is only targeted at

LED lights, is to compare the luminous efficiency ratio of the reference light and the project

activity light, estimate the reference scenario energy consumption from the energy

consumption of the project activity, and calculate the reference emissions based on the

- 37 -

emissions factor of the power grid,. Luminous efficiency is measured in lm/W. Although the

reference scenarios use different lighting types, due to different circumstances in each

country (ID_PM004 assumes LED lights), by defining the lighting type and its luminous

efficiency to be used in the reference scenario, calculating the reference emissions based on

the comparison to the luminous efficiency of the LED light to be introduced in the project

activity is considered to be reasonable.

4.2. Examination of Emissions Reduction Methodology

4.2.1. Examination of JCM methodology for inverter-type air conditioners

(1) Key points of consideration for emission reduction methodology

Based on the approved JCM methodology ID_PM004 "Installation of Inverter-Type

Air Conditioning System for Cooling for Grocery Store Version 1.0", the methodology

is examined based on the following points.

· Eligibility requirements

Five requirements were examined shown by analysis of existing approved and

proposed JCM methodologies.

Since this project activity plans to use inverter-type air conditioners, it was decided

to use existing JCM methodologies that also use inverter-type air conditioners.

Regarding the application subject, since this project activity plans to implement

energy audits, and based on the result introduce equipment to improve energy

efficiency and reduce greenhouse gas emissions, a requirement that an energy audit

is implemented was set. However, since in the case of multiple similar buildings, such

as retail chains, the sales floor space and equipment is similar, and by using the

energy audit results in a particular building, the energy consumption by usage of

other stores can be estimated, it was decided that in such cases it can be regarded

that an energy audit has been conducted.

Regarding applicable conditions, Mexico has the national standards

NOM-011-ENER-2006, NOM-023-ENER-2010, and in these standards the standard

energy efficiency of air conditioners is defined (in NOM-011-ENER-2006 for central

air conditioners, REEE (seasonal energy efficiency indicator) >3.81 Wt/We, in

NOM-023-ENER-2010 for split type air conditioners, REE (energy efficiency

indicator) >2.72 Wt/We). It should be noted that these standards refer to American

- 38 -

domestic standards such as AHRI210/240、AHRI 340/360、ASHRAE Standard

90.1-2007, and REEE is a similar indicator to IEER(Integrated Energy Efficiency

Ratio), while REE can be considered synonymous with EER(Energy Efficiency

Ratio)/COP. Inverter-type air conditioners to be introduced in project activities should

exceed these criteria. In addition, in future consultation and coordination with the

Mexican side, it will be considered whether to set a higher level than the current

standard for REEE and REE, and if necessary this should be incorporated into the

eligibility requirements.

Regarding other applicable conditions and activities, following ID_AM004, products

used in project activities should have refrigerants with an an ozone depletion

potential (ODP) of zero, and when the existing air conditioner is replaced, and also

when the air conditioner installed under the project is removed, refrigerants must not

be released into the air.

Based on the above, the eligibility requirements for the JCM methodology to be

applied to this project activity are summarized as follows.

Proposed JCM methodology eligibility requirements (inverter air conditioner)


1 Applicable

Technology

Project activity to be the introduction of inverter-type air

conditioners

2 Applicable

subject

The subject will be a building which has undergone an energy

audit. However, in the case of multiple similar buildings, the

result of an energy audit in a particular building can be used,

and if the energy consumption of the air conditioners in the

other buildings can be estimated, these buildings can also be

a subject.

3 Applicable

condition

Air conditioner exceeds the energy efficiency standards set by

the Mexican national standards NOM-011-ENER-2006 and

NOM-023-ENER-2010 for the air conditioning to be

introduced in the project activity

4 Applicable

condition

That the ozone depletion potential of the refrigerant being

used in products to be applied in the project activity (ODP) is

- 39 -

zero

5 Applicable

activity

Refrigerants must not be released into the air when the

existing air conditioner is replaced, and also when the air

conditioner installed under the project is removed.

・Reference scenario

There is a high share of American made air conditioners in Mexico, which are mainly

non-inverter-type. Also, since it is included in the energy audit eligibility requirements,

it is easy to understand the air-conditioning equipment and its energy efficiency

adopted in the reference scenario.

Using the indicator REE (possible to use the American EER / COP) or REEE, the

ratio of energy efficiency of the reference scenario air conditioner and the project

activity air conditioner is calculated. By multiplying the energy efficiency ratio by the

power consumption in the project activity, the power consumption in the reference

scenario can be estimated, and by multiplying by the CO2 emissions factor of the

power grid the reference emissions amount is calculated.

(2) JCM methodology proposal

The JCM methodology proposal is summarized below.

A. Methodology Title

(Introduction of inverter type air conditioning system with energy audit)

B. Definition of terms

Term Definition

REEE Abbreviation of Relación de Eficiencia Energética Estacional. The

English translation is Seasonal Energy Efficiency Ratio. An energy

efficiency indicator for central air conditioners defined by the national

Mexican standard NOM-011-ENER-2006.

REE Abbreviation of Relación de Eficiencia Energética. English translation

is Energy Efficiency Ratio. An energy efficiency indicator for split type

air conditioners defined by the national Mexican standard

- 40 -

NOM-023-ENER-2010.

Wt Abbreviation of watts térmicos. Amount of heat obtained by the air

conditioner (unit W).

We Abbreviation of watts eléctricos. Heat Electricity used in the

operation of the air conditioner (unit W)

COP Abbreviation of Coefficient Of Performance. One of the energy

efficiency indicators of air conditioning equipment. Evaluates the

performance of air-conditioning equipment under certain conditions.

IEER Abbreviation of Integrated Energy Efficiency Ratio. Defined by the

American national standard AHRI 1230.

EER Abbreviation of Energy Efficiency Ratio. Defined by the American

national standards AHRI210/240、AHRI 340/360

C. Methodology Overview

Item Overview

Measurement of

GHG reduction

This methodology is applied to the project activity of introducing

inverter-type air conditioners following an energy audit in

Mexico

Calculation of

reference

emissions

Calculation of reference emissions by use of air conditioners in

the reference scenario is carried out by the following method.

The energy consumption of the air conditioner under the

project activity is multiplied by the ratio of the energy efficiency

of the project activity air conditioner and the reference scenario

air conditioner and the calculated reference scenario energy

consumption is multiplied by the power grid emissions factor

The energy efficiency indicator is selected from REEE、REE、

COP、IEER or EER based on the circumstances of the project

activity.

Calculation of

project emissions

Calculation of project emissions from the use of the project

activity air conditioner is carried out by the following method.

The energy consumption from the project activity air

conditioner is multiplied by the power grid emissions factor.

- 41 -

Monitoring

parameter

Energy consumption of project activity air conditioner

D. Eligibility criteria

This methodology can be applied to projects which meet all of the following

requirements.

Requirement 1 The project activity is the introduction of inverter-type inverters.

Requirement 2 The subject will be a building which has undergone an energy

audit. However, in the case of multiple similar buildings, the result

of an energy audit in a particular building can be used, and if the

energy consumption of the air conditioners in the other buildings

can be estimated, these buildings can also be a subject.

Requirement 3 The air conditioner introduced in the project activity must exceed

the energy efficiency ratio standards defined in the Mexican

national standards for air conditioners NOM-011-ENER-2006 and

NOM-023-ENER-2010

Requirement 4 That the ozone depletion potential of the refrigerant being used in

products to be applied in the project activity (ODP) is zero

Requirement 5 Refrigerants must not be released into the air when the existing air

conditioner is replaced, and also when the air conditioner installed

under the project is removed.

E. GHG emission sources and GHG types

Reference emissions

GHG emissions source GHG type

Energy consumption of reference scenario air conditioner CO2

Project emissions


Energy consumption of project activity air conditioner CO2

F. Reference emissions determination and calculation

F.1. Determination of reference emissions

- 42 -

The reference emissions are calculated by energy consumption from the project

activity air conditioner multiplied by project activity/reference scenario air conditioner

energy efficiency ratio multiplied by power grid emissions factor.

The reference scenario air conditioner energy efficiency is based on the energy

audit and decided by referring to the REEE、REE、COP、IEER、EER written in the

manufacturer’s technical documentation.

F.2 Calculation of reference emissions

REy = ECpj × (EEpj ÷ EERE) × EFgrid

REy Reference emissions in year y [tCO2/y]

ECpj Energy consumption of project activity air conditioner in year y

[MWh/y]

EEpj Energy efficiency of project activity air conditioner [-]

EERE Energy efficiency of reference scenario air conditioner [-]

EFgrid Power grid emissions factor in year y [tCO2/MWh]

G. Calculation of project emissions

PEy = ECpj × EFgrid

PEy Project emissions in year y [tCO2/y]

ECpj Energy consumption of project activity air conditioner in year y

[MWh/y]


H. Calculation of emissions reduction

- 43 -

ERy = REy - PEy

ERy GHG emissions reduction in year y [tCO2/y]



I. Data and parameters defined in advance

The source of data and parameters defined in advance are shown in the list below.

Data /

Parameter

Explanation of data Source

EFgrid Power grid emissions factor in

year y: 0.4929 [tCO2/MWh]

(reference value)

Regarding the power grid emissions

factor, the most recent value will be

used following appropriate

confirmation by a third party institute.

The emissions factor announced by

an organization such as the Mexican

DNA as specified by the Joint

Committee will be used.

The reference value is that

calculated by the voluntary

emissions trading scheme in Mexico

(with Mexican government

involvement), GEI.

4.2.2. Examination of JCM Methodology for Lighting

(1) Key points of consideration for emission reduction methodology

- 44 -

Based on the approved JCM methodology ID_AM004 ”Installation of LED Lighting

for Grocery Store Version 1.0”, the methodology is examined based on the following

points.

· Eligibility requirements

Applicable technologies, subjects, conditions and activities were examined referring

to eligibility criteria included in currently proposed JCM methodologies.

Regarding applicable technology, since this project plans to introduce LED lights,

existing JCM methodologies also based on LED lights were referred to.

Regarding applicable subjects, in the same way as for inverter-type air conditioners,

the carrying out of an energy audit was set as a requirement. Also, in the same way, in

the case of chain companies with multiple similar buildings, it is considered that the

energy consumption by usage in other stores can be estimated and it can be regarded

that an energy audit has been conducted.

Regarding applicable conditions, it is possible to define the luminous efficiency of

LED lights. However, given that the reference scenario lighting luminous efficiency can

be understood, and the emissions reduction can be calculated by the difference in

luminous efficiency between the reference scenario and the project lighting through the

energy audit, it was decided that it is not needed to set a particular standard. One one

hand, in the case of replacement of fluorescent lights, since it is is important to avoid

emissions of mercury to the atmosphere at the time of disposal from the point of view of

environmental integrity, this was also added as a requirement for applicable activities.

Given the above, the eligibility criteria for the JCM methodology applicable for this

project activity is summarized below.

Proposal for eligibility criteria for JCM Methodology (LED Lighting)


1 Applicable

technology

The project activity will be the introduction of LED lights.

- 45 -

2 Applicable

subject

The subject will be a building which has undergone an energy

audit. However, in the case of multiple similar buildings, the

result of an energy audit in a particular building can be used,

and if the energy consumption of the lights in the other

buildings can be estimated, these buildings can also be a

subject.

3 Applicable

activity

When fluorescent lights are replaced steps must be taken to

ensure that mercury contained in the fluorescent lights is not

emitted to the atmosphere

・Reference Scenario

As an indicator for the energy efficiency of lighting, luminous efficiency is generally

used, and since an energy audit is included as an eligibility requirement, it is easy to

understand the type of light used in the reference scenario and its luminous efficiency.

The ratio of luminous efficiency of the reference scenario lighting and the project

activity lighting is calculated. By multiplying the project activity energy consumption by

the luminous efficiency ratio, the energy consumption of the reference scenario can be

estimated, and by multiplying by the power grid CO2 emissions factor the reference

emissions can be calculated.

(2) JCM Methodology Proposal

The JCM methodology proposal is summarized below.

A. Methodology Title

(Introduction of LED lighting with energy audit)

B. Definition of terms

Term Definition

Luminous

Efficiency

Indicator of the energy efficiency of a light source. Unit is the total

luminous flux per unit of electric power, measured in [lm/W].

- 46 -

C. Methodology Overview

Item Overview

Measurement of

GHG reduction

This methodology is applied to the project activity of introducing

LED lighting following an energy audit in Mexico

Calculation of

reference

emissions

Calculation of reference emissions by use of lighting in the

reference scenario is carried out by the following method.

The energy consumption of the lighting under the project activity

is multiplied by the ratio of the energy efficiency of the project

activity lighting and the reference scenario lighting and the

calculated reference scenario energy consumption is multiplied

by the power grid emissions factor

Calculation of

project emissions

Calculation of project emissions from the use of the project

activity lighting is carried out by the following method.

The energy consumption from the project activity lighting is

multiplied by the power grid emissions factor.

Monitoring

parameter

Energy consumption of project activity lighting

D. Eligibility criteria

This methodology can be applied to projects which meet all of the following

requirements.

Requirement

1

The project activity is the introduction of LED lighting.

Requirement

2

The subject will be a building which has undergone an energy audit.

However, in the case of multiple similar buildings, the result of an

energy audit in a particular building can be used, and if the energy

consumption of the lighting in the other buildings can be estimated,

these buildings can also be a subject.

Requirement

3

When fluorescent lights are replaced steps must be taken to ensure

that mercury contained in the fluorescent lights is not emitted to the

atmosphere.

- 47 -

E. GHG emission sources and GHG types

Reference emissions


Energy consumption of reference scenario lighting CO2

Project emissions


Energy consumption of project activity lighting CO2

F. Reference emissions determination and calculation

F.1. Determination of reference emissions

The reference emissions are calculated by energy consumption from the project

activity lighting multiplied by project activity/reference scenario lighting luminous

efficiency ratio multiplied by power grid emissions factor.

The reference scenario lighting luminous efficiency is based on the energy audit and

decided by referring to the lm/W written in the manufacturer’s technical documentation.

F.2 Calculation of reference emissions

REy = ECpj × (LEpj ÷ LERE) × EFgrid


ECpj Energy consumption of project activity lighting in year y [MWh/y]

LEpj Energy efficiency of project activity lighting [lm/W]

LERE Energy efficiency of reference scenario lighting [lm/W]


- 48 -

G. Calculation of project emissions

PEy = ECpj × EFgrid


ECpj Energy consumption of project activity lighting in year y [MWh/y]


H. Calculation of emissions reduction

ERy = REy - PEy

ERy GHG emissions reduction in year y [tCO2/y]



I. Data and parameters defined in advance

The source of data and parameters defined in advance are shown in the list below.

Data /

Parameter

Explanation of data Source

EFgrid Power grid emissions factor

in year y: 0.4929 [tCO2/MWh]

(reference value)

Regarding the power grid emissions

factor, the most recent value will be

used following appropriate

confirmation by a third party institute.

The emissions factor announced by

an organization such as the Mexican

DNA as specified by the Joint

Committee will be used.

The reference value is that calculated

by the voluntary emissions trading

scheme in Mexico (with Mexican

government involvement), GEI.

- 49 -

4.3. Calculation of Emissions Reduction

4.3.1. Parameter setting

(1) Common parameters

・ Emissions factor： 0.4929 [tCO2/MWh] (emissions factor calculated by the

voluntary emissions trading scheme in Mexico (with Mexican government

involvement), GEI.)

(2) Parameters related to inverter-type air conditioners

・ Energy efficiency indicator

Medium-scale store

Reference Scenario…COP：3.0

Project activity…COP：5.0

Energy efficiency ratio：5.0÷3.0＝1.67

Small-scale store

Reference scenario…COP：3.1

Project activity…COP：5.86

Energy efficiency ratio：5.86÷3.1＝1.89

・ Project activity air conditioner energy consumption

Medium-scale store…181.8 [MWh]

Small-scale store… 13.8 [MWh]

(3) Parameters related to LED lighting

・ Luminous efficiency

Medium-scale stores

Reference scenario…94 lm/W

Project activity…152 lm/W

Luminous efficiency：152÷94＝1.62

Small-scale store

Reference scenario…108 lm/W

Project activity…152 lm/W

Luminous efficiency ratio：152÷108＝1.4

・ Project activity lighting energy consumption

Medium-scale stores…110.8 [MWh]

- 50 -

Small-scale stores… 11.6 [MWh]

4.3.2. Calculation of reference emissions

(1) GHG emissions from reference scenario air conditioner

・ Medium-scale stores

Reference scenario energy consumption：181.8 × 1.67 = 303.6 [MWh]

Reference emissions：303.6 × 0.4929 = 149.6 [tCO2]

・ Small-scale stores



(2) Reference scenario lighting GHG emissions






Reference emissions：16.2 × 0.4929 = 8 [tCO2]

4.3.3. Calculation of project emissions

(1) Air conditioner GHG emissions from project activety


Project emissions：181.8 ×0.4929 = 89.6 [tCO2]


Project emissions：13.8 × 0.4929 = 6.8 [tCO2]

(2) Lighting GHG emissions from project activety





- 51 -

4.3.4. Calculation of emissions reduction

(1) GHG emissions reduction from air conditioner


Emissions reduction：149.6 - 89.6 = 60.0 [tCO2]



(2) GHG emissions reduction from lighting





For medium-scale stores, the emissions reduction per store is 60.0＋33.9＝93.9

[tCO2]。For small-scale stores, the emissions reduction per store is 6.1＋2.3＝8.4

[tCO2].

4.3.5. Calculation of emissions reductions from multiple stores

(1) Medium-scale stores

There are multiple groups in Mexico that have medium-scale stores such as those

which underwent energy audits in this studyThere are about 10 of these

medium-scale store groups, and given that the large groups have around 1,000

stores, it can be estimated that there are at least around 3,000 in Mexico.

Emissions reductions were calculated referring to the store lists of large groups of

medium-scale stores, and based on Mexico’s climate.

For inverter-type air conditioners, the result, given that in several parts of Mexico

cooling is needed all year round, and assuming that due to low expectations of costs

savings introduction will be shelved, reduced emissions reductions totaling 161,410

[tCO2/y] are expected.

- 52 -

Calculation of emissions reductions for multiple medium-scale store (3,000 stores)

Project Activity Emissions reduction [tCO2/y]

Reduction from inverter-type air

conditioner

59,829

Reduction from LED lighting 101,581

Total 161,410

(2) Small-scale stores

There are multiple groups in Mexico that have small-scale stores. The largest

group has 12,000 stores in Mexico, the second largest has 2,000, and it is estimated

that the total convenience store industry has 16,000 stores across Mexico in

February 2015.

Emissions reductions were calculated referring to the store list of the largest group,

and based on Mexico’s climate.

For inverter-type air conditioners, the result, given that in several parts of Mexico is

cool all year round, and assuming that due to low expectations of costs savings

introduction will be shelved, reduced emissions reductions totaling 87,780 [tCO2/y]

are expected.

Calculation of emissions reductions for multiple small-scale store (16,000 stores)

Project Activity Emissions reduction [tCO2/y]

Reduction from inverter-type air

conditioner

51,187

Reduction from LED lighting 36,593

Total 87,780

The total emissions reduction of this project activity (total of medium and

small-scale) is 249,190 [tCO2/y]. It is not realistic to expect that project activities

would take place at all stores, but for example in the case that 10% of stores

introduced inverter-type air conditioners and LED lights, a total of 24,919 [tCO2/y]

would be reduced、and it is expected that a certain scale of GHG emissions reduction

could be realized.

- 53 -

5． Implementation of FS Debriefing Session for Mexican Government

Officials

5.1. Debriefing Session for Each Company that underwent Energy Audit

In this study, in order to report the results of the energy audits carried out on Mexican

businesses and industries and also to propose solutions to promote energy conservation

based on the energy audit results, debriefing sessions were held for each company audited.

Details（Date, Reported Company, Location）

Date Reported Company Location

12 February 2015 (Thu) Manufacturer A Head office of A

13 February 2015 (Fri) Retailer B Head office of B

The main points of the discussion at each company are detailed below.

5.1.1. Manufacturer A

A wide selection of staff related to energy and cost savings such as the factory chief,

energy conservation representative and finance officer participated and showed a

strong interest in the project. Regarding the energy audit results, there were

especially many questions about lighting、revealing the high interest in this area.

Regarding the proposed solutions, comments were made about their contribution not

just to energy conservation but to overall factory cost reductions, and there were

comments that budget should be made available for items with high return on

investment. Proposals should be reformulated for items of high interest and next

actions will be discussed from February for three months.

5.1.2. Retailer B

The debriefing session was attended by 13 people such as the energy

conservation representative, facilities manager and store manager and strong interest

was shown. The explanation of results of the energy audit were listened to

enthusiastically, and strong interest was shown in the efforts to estimate energy

consumption in individual pieces of equipment. Regarding proposed solutions,

interest was high not only about the large energy improvements that could be

achieved in lighting, but also for air conditioning, and opinions were given that an

- 54 -

energy audit should be implemented in the hot month of August and check the results.

Next steps will be discussed from February for three months including test

introduction into stores.

5.2. Debriefing Session with Mexican Government Officials

As the final report of this study, the following study debriefing session was held for

related Mexican government institutions who promote JCM and energy conservation.

・ Aim

Promote understanding about the Joint Crediting Mechanism among Mexican

government officials

Accelerate operation and project registration under the Joint Crediting Mechanism

Strengthen and promote deeper understanding and awareness of Japanese

services, technology and products in the field of energy conservation as effective

tools for the realization of a low carbon society

・ Details

Date and time：February 16 (Mon) 2015 1:30p.m.～5:00p.m.

Location：Hotel GENEVE Mexico City

Mexican participants: described below

Related Mexican government institution participants

Organization Participants

SEMARNAT Mr. Rodolfo Tamayo Lacy, Deputy Minister, Ministry

of Environment and Natural Resources

Ms. Mónica P. Echegoyen López, Director of Global

Environmental Policy

SENER Mr. Santiago Creuheras Diaz, General Director for

Energy Efficiency and Sustainability

CONUEE Mr. José Gabriel Marcoida Yáñez, Subdirector de

Certificación

- 55 -

Embassy of Japan in Mexico

- Minister Shimizu、Chancellor Matsumura

The debriefing program and contents are shown below.

Japanese

- Minister Shimizu、Chancellor Matsumura

The debriefing program and contents are shown below.

Session Program

Contents Presenter

Opening remarks Embassy of Japan

Welcome speech SEMARNAT

Welcome speech SENER

Key Note Session SENER

1. About the Joint Crediting Mechanism The Japan Research Institute

2. Outline of our Feasibility Study The Japan Research Institute

3. Introduction of Energy Survey Hokuriku Electric Power Company

4. Solution idea for Energy Saving Panasonic de Mexico, S.A.de C.V.

Panasonic Corporation

5. Possibility of collaboration in energy saving The Japan Research Institute

Discussion

Closing

From the Mexican government side, the following main items of interest and points were

made.

5.2.1 Regarding Promotion of the Joint Crediting Mechanism

As an update on the current status of the JCM, the first JCM project registered in

October 2014 in Indonesia ”Energy Saving for Air-Conditioning and Process Cooling by

Introducing High-efficiency Centrifugal Chiller” was introduced. Regarding this SEMARNAT

- 56 -

Vice-Minister Lacy, inquired as to whether, since this FS is also an air conditioning related

project、the same approach as taken by the Indonesian project could be used, and if this

could be possible then project registration could be done quickly also in Mexico.

5.2.2. Regarding Energy Efficient Technology and Products

The Mexican Government showed strong interest when the activities of the Energy

Conservation Center Japan（hearafter ECCJ）to promote energy conservation both inside

and outside of Japan were introduced.

Regarding ECCJ’s capacity building projects to introduce and disseminate energy

conservation in ASEAN countries and Japan’s energy audit experience aimed at

businesses、the wish was expressed that Japan would co-operate in disseminating such

activities in Mexico as part of the overall future JCM framework since Mexico is currently

lagging in these types of human resource development and energy audits.

At the debriefing session there was discussion that the approaches introduced to the

Mexican government side should also be raised at the Japan-Mexico Joint Committee.

5.2.3. Regarding Future Promotion of Energy Conservation in Mexico

Regarding the current system, it was suggested that since 95% of Mexican businesses

are SMEs, the structure of the scheme should be designed to make it easy to be used by

such companies. Currently each case can only receive 3,000USD, but it can be considered

to raise this to 1 million USD.

And, according to CONUEE, there have been few examples in the commercial sector to

date, and while referring to work done in energy conservation projects aimed at the

industrial sector and buildings, there was discussion that there would also be focus put on

energy conservation projects in the commercial sector in future (in concrete terms, there are

plans for a 2 year pilot project for energy efficient lighting in hospitals, offices and hotels).

As described above, this debriefing session can be evaluated as greatly contributing to

promoting the system and energy conservation and deepening knowledge and

understanding of impacts through announcing Japan’s private sector level work related to

the JCM to the Mexican side.

END

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