Global Warming Mitigation Technology Promotion Project Report
Transcription
Global Warming Mitigation Technology Promotion Project Report
FY2014 Study Report Global Warming Mitigation Technology Promotion Project Report March 2015 The Japan Research Institute, Limited 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 -1- 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 -2- Background and Aim of the Study 1. 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 (US$) 12,000 10,650 10,000 8,000 6,000 4,000 2,000 0 Source: Created by JRI based on the IMF World Economic Outlook (October 2014) Mexican National Institute of Statistics and Geography (INEGI) (Producto interno bruto trimestral, base 2008) 2 Central bank announcement and INEGI trade statistics 1 -3- 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 (%) 6.0 5.0 4.8 4.5 4.0 3.2 3.6 3.0 1.9 1.8 1.6 2.0 2.2 1.6 1.1 1.0 1.0 0.0 I II III IV I 2012 II III 2013 IV I II III 2014 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- 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 (million US$) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 211 200 0 2009 1,750 1,023 688 264 2010 2011 2012 2013 Source: Created by JRI based on JETRO materials OICA correspondent’s survey. “World Motor Vehicle Production by Country and Type” Asociacion Mexicana de la Industria Automotrilz. “Cifras de Noviembre Y Acumulado 2014” 6 Central bank announcement and INEGI trade statistics 4 5 -5- 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 16 15 14 13 12 11 10 9 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 8 Source: Created by JRI based on Mexico central bank database -6- 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 (Mtoe) 120 Non-Energy Use 100 Non-Specified 80 40 Agriculture / Forestry Commercial and Public Services Residential 20 Industry 0 Transport 60 2012: total 117Mtoe 0.9% 3.4% 6.5% 3.2% Source: Created by JRI based on IEA -7- 25.8 % 15.4 % 44.8 % 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. June 2014 Mexico Embassy "Mexico Infrastructure Market Overview - Natural Gas Pipeline Project" 7 -8- Exhibit 1-6: GHG Emissions (LULUCF excluded) (carbon dioxide CO2 equivalent) (thousands) 800,000 701,360 700,000 600,000 500,000 458,754 400,000 300,000 200,000 100,000 0 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 -9- 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. - 10 - 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. - 11 - 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 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. Source: Created by JRI based on Department of Energy "PRONASE 2014-2018" - 12 - 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). - 13 - 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. - 14 - 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 - 15 - 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 Deployment efficiency is low. conducted specific FIDE has initiatives for of awareness-raising enlightenment activities for and energy conservation, especially for children. energy efficiency since the 1990s for general homes and companies, yet awareness of the public and businesses to save energy is low. Lack of engineers with basic Development of technical personnel, scheme knowledge and companies providing aimed at professional development (under energy planning and review) efficiency services. Public-private partnership framework for promotion of energy conservation has not been established. Energy saving has not become Implementation of grand prize event for - 16 - 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. Currently CONUEE has 7 certified institutions and 50 laboratories for product inspection in Mexico 8 - 17 - 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. - 18 - 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 - 19 - 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 - 20 - 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 7,000,000 AC 2% Lighting 9% 6,000,000 5,000,000 4,000,000 6,200,000 3,000,000 Others 89% 2,000,000 1,000,000 2013 Total 7,000,000 kWh/year 120,000 670,000 AC Lighting 0 AC Lighting Others Others 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. - 21 - Exhibit 3-3:Average outside temperature and power consumption by month Source: Consortium material 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 - 22 - 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 (kWh) 350,000 300,000 250,000 Others 12% 200,000 AC 55% Lighting 33% 150,000 300,000 100,000 180,000 50,000 2013 Total 540,000 kWh/year 60,000 0 AC AC Lighting Lighting Others Others Source: Consortium material 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. - 23 - Exhibit 3-5:Average outside temperature and power consumption by month Source: Consortium material 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 - 24 - 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 Cost saving Electricity(kWh/year) (MXN$) Air-Conditioning System 45,000 69,000 Lighting 356,000 635,000 Other 155,000 240,000 Total 556,000 940,000 Source: Consortium material 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 - 25 - 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 Cost saving Electricity(kWh/year) (MXN$) Air-Conditioning System 149,000 218,000 Lighting 106,000 195,000 Other 8,000 12,000 Total 263,000 425,000 Source: Consortium material - 26 - 3.3. Economic effect in the case of widespread commercialization Businesses such as the SMEs for which the energy audits were done and solutions proposed, are widespread in Mexico. Therefore, the energy and cost saving effect obtained if the introduced solutions presented above were adopted across Mexico are shown. It should be noted that on the estimates, electricity rates were 1.36 Mexican peso / kWh. 3.3.1. Retailer B In retailer B, improvements in air conditioning (introduction of inverter-type air conditioning) and lighting (introduction of LED lighting, improvement of adjustment, operational illumination level) were proposed. If these were introduced in all stores (1,000 shops), annual energy savings of 165,000MWh and cost savings of approximately 280 million pesos are estimated. Exhibit 3-8:Energy and cost savings in the case of nationwide deployment (retailer B) Items Energy saving Energy saving per store in all stores (kWh/year) (MWh/year) Cost saving (Per store) (All store) (MXN$) 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. - 27 - Exhibit 3-9:Energy saving effect in 2016 - 2025 cumulative (retailer B) Unit:MWh 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Created by JRI based on various data Exhibit 3-10:2016 - 2025 cost savings (retailer B) Unit:Million MXN$ 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2016 2017 2018 2019 2020 2021 2022 2023 Source: Created by JRI based on various data - 28 - 2024 2025 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 - 29 - 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 Methodology Country Number Methodology Name Status Energy Saving by Introduction Indonesia ID_AM002 of High Efficiency Centrifugal Approved Chiller Installation of Inverter-Type Air Indonesia ID_AM004 Conditioning System for Approved Cooling for Grocery Store Installation of LED Lighting for Indonesia ID_PM004 Proposed Proposed Grocery Store Introduction of room air conditioners equipped with Vietnam VN_PM003 inverters to public sector buildings Improving the energy efficiency of commercial buildings by Vietnam VN_PM004 Proposed utilization of high efficiency equipment 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”, - 30 - 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- Methodology ology Name Eligibility Criteria Number 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. Installation of Inverter-Type 2. The installed air conditioning system is wall mounted type and/or ceiling cassette type, and Air ID_ has a COP value higher than that of the value Conditioning AM004 indicated in the table below. System for Cooling for Grocery Store 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 - 31 - 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. 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 Introduction of national standard TCVN7831:2012. room air 4. Ozone Depletion Potential (ODP) of the conditioners VN_ refrigerant used for project RAC is zero. equipped with PM003 5. Plans to prevent release of refrigerants into the inverters to atmosphere at the time of RAC removal are public sector prepared for both project RACs and the buildings 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. - 32 - Overview of eligibility requirements common to JCM methodologies related to inverter-type air conditioners No. Requirement 1 Applicable Contents Must be Inverter-type Air Conditioner Technology 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 Limited to products to be applied in the project activity condition (ID_AM004: not less than was determined for each cooling capacity COP, VN_PM003: conforms to cooling capacity of Vietnam standard TCVN7831:2012) 4 5 Applicable That ozone depletion potential of the refrigerant being used in condition products to be applied in the project activity (ODP) is zero. Applicable Refrigerants must not be released into the air when the existing activity 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 - 33 - 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- Methodology ology Name Eligibility Criteria Number 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 Installation of LED with color temperature between 5,000 ID_ LED Lighting PM004 for Grocery and 6,500 K, length between 602.5 and 1,513.0 mm, and luminous efficiency of more Store 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. - 34 - VN_ Improving the 1. The project involves implementation of one or PM004 energy more energy efficiency measures categorized efficiency of in Table 1 by using high efficiency equipment commercial at an existing facility. buildings by Projects involving installation of high efficiency utilization of lighting need to be coupled with another high efficiency energy saving measure(s) in order to be equipment 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 - 35 - 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 No. 1 Requirement Applicable Technology Contents 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 - 36 - 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 - 37 - 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) No. Requirement 1 Applicable Project activity to be the introduction of inverter-type air Technology conditioners Applicable The subject will be a building which has undergone an energy subject audit. However, in the case of multiple similar buildings, the 2 Contents 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 Air conditioner exceeds the energy efficiency standards set by condition 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 That the ozone depletion potential of the refrigerant being condition used in products to be applied in the project activity (ODP) is - 38 - zero 5 Applicable Refrigerants must not be released into the air when the activity 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 - 39 - by the national Mexican standard 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 Measurement Overview 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 Calculation of reference emissions by use of air conditioners in reference the reference scenario is carried out by the following method. emissions 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. - 40 - Monitoring Energy consumption of project activity air conditioner parameter 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 Energy consumption of reference scenario air conditioner GHG type CO2 Project emissions GHG emissions source Energy consumption of project activity air conditioner F. Reference emissions determination and calculation F.1. Determination of reference emissions - 41 - GHG type CO2 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] EFgrid Power grid emissions factor in year y [tCO2/MWh] H. Calculation of emissions reduction - 42 - ERy = REy - PEy ERy GHG emissions reduction in year y [tCO2/y] REy Reference emissions in year y [tCO2/y] PEy Project emissions 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 / Explanation of data Source Power grid emissions factor in Regarding the power grid emissions year y: 0.4929 [tCO2/MWh] factor, the most recent value will be (reference value) used Parameter EFgrid 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 calculated by value the is that voluntary emissions trading scheme in Mexico (with Mexican involvement), GEI. 4.2.2. Examination of JCM Methodology for Lighting (1) Key points of consideration for emission reduction methodology - 43 - government 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) No. Requirement 1 Applicable Contents The project activity will be the introduction of LED lights. technology - 44 - 2 Applicable The subject will be a building which has undergone an energy subject 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 When fluorescent lights are replaced steps must be taken to activity 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 Indicator of the energy efficiency of a light source. Unit is the total Efficiency luminous flux per unit of electric power, measured in [lm/W]. - 45 - C. Methodology Overview Item Overview Measurement of This methodology is applied to the project activity of introducing GHG reduction LED lighting following an energy audit in Mexico Calculation of Calculation of reference emissions by use of lighting in the reference reference scenario is carried out by the following method. emissions 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 Energy consumption of project activity lighting parameter D. Eligibility criteria This methodology can be applied to projects which meet all of the following requirements. Requirement The project activity is the introduction of LED lighting. 1 Requirement The subject will be a building which has undergone an energy audit. 2 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 When fluorescent lights are replaced steps must be taken to ensure 3 that mercury contained in the fluorescent lights is not emitted to the atmosphere. - 46 - E. GHG emission sources and GHG types Reference emissions GHG emissions source GHG type Energy consumption of reference scenario lighting CO2 Project emissions GHG emissions source GHG type 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 REy Reference emissions in year y [tCO2/y] 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] EFgrid Power grid emissions factor in year y [tCO2/MWh] - 47 - G. Calculation of project emissions PEy = ECpj × EFgrid PEy Project emissions in year y [tCO2/y] ECpj Energy consumption of project activity lighting in year y [MWh/y] EFgrid Power grid emissions factor in year y [tCO2/MWh] H. Calculation of emissions reduction ERy = REy - PEy ERy GHG emissions reduction in year y [tCO2/y] REy Reference emissions in year y [tCO2/y] PEy Project emissions 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 / Explanation of data Source Power grid emissions factor Regarding the power grid emissions in year y: 0.4929 [tCO2/MWh] factor, the most recent value will be (reference value) used Parameter EFgrid 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. - 48 - 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] - 49 - 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 Reference scenario energy consumption:13.8 × 1.89 = 26.1 [MWh] Reference emissions:26.1 × 0.4929 = 12.9 [tCO2] (2) Reference scenario lighting GHG emissions ・ Medium-scale stores Reference scenario energy consumption:110.8 × 1.62 = 179.5 [MWh] Reference emissions:179.5 × 0.4929 = 88.5 [tCO2] ・ Small-scale stores 4.3.3. Reference scenario energy consumption:11.6 × 1.4 = 16.2 [MWh] Reference emissions:16.2 × 0.4929 = 8 [tCO2] Calculation of project emissions (1) Air conditioner GHG emissions from project activety ・ Medium-scale stores Project emissions:181.8 ×0.4929 = 89.6 [tCO2] ・ Small-scale stores Project emissions:13.8 × 0.4929 = 6.8 [tCO2] (2) Lighting GHG emissions from project activety ・ Medium-scale stores Project emissions:110.8 × 0.4929 = 54.6 [tCO2] ・ Small-scale stores Project emissions:11.6 × 0.4929 = 5.7 [tCO2] - 50 - 4.3.4. Calculation of emissions reduction (1) GHG emissions reduction from air conditioner ・ Medium-scale stores Emissions reduction:149.6 - 89.6 = 60.0 [tCO2] ・ Small-scale stores Emissions reduction:12.9 - 6.8 = 6.1 [tCO2] (2) GHG emissions reduction from lighting ・ Medium-scale stores Emissions reduction:88.5 - 54.6 = 33.9 [tCO2] ・ Small-scale stores Emissions reduction:8.0 - 5.7 = 2.3 [tCO2] 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. - 51 - Calculation of emissions reductions for multiple medium-scale store (3,000 stores) Project Activity Emissions reduction [tCO2/y] Reduction from inverter-type air 59,829 conditioner 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 51,187 conditioner 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. - 52 - 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 - 53 - 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 SEMARNAT Participants 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 - 54 - 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 Panasonic de Mexico, S.A.de C.V. 4. Solution idea for Energy Saving 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 - 55 - 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 - 56 -