Workshop on Financing Energy Efficiency in Buildings and Approaches for Retrofitting in Mexico City

City leaders worldwide are increasingly prioritizing energy efficiency, given the growing global demand for energy and the pressing need for climate adaptation. In Mexico City, residential and commercial buildings account for more than 20 percent of total greenhouse gas emissions, making building efficiency a vital component of the city’s sustainable development strategy. Leading by example, the local government is assessing options to retrofit its public buildings to decrease energy use. However, the city faces several technical, administrative and financial barriers in implementing efficiency upgrades at scale.

On August 6, 2015 the Mexico City Building Efficiency Accelerator (BEA) partnership held a workshop, hosted by Tanya Müller, the city’s Secretary of Environment, to help develop solutions for the financial and technical implementation of building efficiency retrofits. With financial support from the Copenhagen Center for Energy Efficiency (C2E2), the workshop convened over 90 policymakers, representatives from the federal and local government, business leaders, energy services providers, finance-sector professionals, and civil society members. The results of the workshop will help the city catalyze investment in its buildings, manage energy retrofits, and choose energy-efficient technologies for future projects in Mexico City.

Leveraging investment and creating incentives for change

Discussion at the workshop centered on mechanisms to incentivize private-sector investment in energy efficiency, solutions to behavioral and informational challenges, and innovative financing mechanisms. 

Numerous ideas for catalyzing investment emerged from the workshop. For example, Erick Cárdenas Rodriguez, Undersecretary of Financial Planning for Mexico City, stressed the need for mitigating risk for private investors and financing bundles of small retrofit projects. Several participants noted the need to train third-party technical experts to guarantee that retrofitting projects result in the energy and financial savings that investors expect of them.

Currently, building owners lack access to sustainable financing options for retrofitting. In the context of Mexico City, one reason for this is that the federal government must approve all new debt, making agency borrowing difficult. Workshop participants explored a variety of solutions to this challenge, ranging from crowd funding to shared-savings contracts, in which the building owner and service provider share the savings from a renovation. Participants also discussed trust fund financing—how the model has been successful in the past, and how it can be adapted to Mexico City’s building efficiency needs.

Participants were in agreement that behavioral and informational barriers are a primary concern for improving building efficiency in Mexico City. Building owners and investors often lack awareness of the financial value of investments in energy efficiency projects, which makes articulating their benefits essential. Upgrading inefficient technologies in older buildings should be a priority.

Adriana Lobo, Director of CTS EMBARQ Mexico, also stressed that behavioral incentives are as critical as financial incentives. As a result of the workshop, participants identified potential next steps for the city: developing operations training, implementing low-cost projects (like proper installation of LED lighting fixtures), creating behavioral incentives for public-sector workers, and gathering more reliable baseline data. Many partners committed to supporting the city implement these actions. For example, Odón de Buen, director of CONUEE, the federal energy efficiency agency, committed to helping the city collect better data on energy use in their buildings through the federally-developed benchmarking system.

Collaborative solutions for a more efficient Mexico City

The workshop is a key input in helping partners develop specific recommendations for implementing energy codes and retrofitting projects in the city. Working groups of the partners—on finance, retrofits, building codes, and administrative solutions—will meet in the coming weeks to refine the recommendations and present them to the city government. In 2016, the partners will continue to work together with Mexico City to implement the recommendations.

In March, the Mexico City BEA partnership was launched at a workshop organized by EMBARQ Mexico and World Resources Institute (WRI) in partnership with Sustainable Energy for All (SE4All), La Alianza por la Eficiencia Energética (ALENER), and the government of Mexico City. The partnership supports the implementation of the city’s goals related to the United Nations’ SE4ALL initiative, of which the global Building Efficiency Accelerator is a part. Additional stakeholders who would like to engage the BEA process in Mexico City are invited to be in contact with their interests.