On October 28th 2014, the Mexican Government published in its federal official gazette, the Regulations to the General Law on Climate Change in the area of the National Emissions Registry (the “Regulations”). These became effective on October 29th 2014.
Following is a description of the more relevant provisions of the Regulations:
First, it is worth noting that the Climate Change Law required the Ministry of Environment and Natural Resources (“SEMARNAT”) to create a National Emissions Registry (the “Registry”), comprised of data on the greenhouse gas (GHG) emissions generated by stationary and mobile sources having an obligation to report (defined in the Climate Change Law as the “Reporting Establishments”). Reporting Establishments would be legally required to provide to the Registry information, data and documents regarding their direct and indirect emissions, in order to comprise the Registry.
The Regulations define direct and indirect emissions as follows:
Reportable GHG emissions
GHGs and compounds that will have to be reported are the following:
Carbon dioxide, methane, nitrous oxide, black carbon, chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride, nitrogen trifluoride, halogenated ethers, halocarbons, mixtures comprising these substances and other GHGs and compounds that SEMARNAT may regulate for reporting purposes, based on data from the Intergovernmental Panel on Climate Change (“IPCC”).
The threshold that will trigger a reporting requirement, taking into account direct and indirect emissions, will be based on an annual sum, as long as the result is equal or higher than 25,000 metric tons of carbon dioxide equivalent (CO2e). The annual sum will result from calculating the emissions of each of the stationary and mobile sources, identified by a Reporting Establishments.
Reporting Establishments are comprised of the following sectors: (i) energy, (ii) transportation (land, rail, air and maritime), (iii) industrial, (iv) agriculture and farming, (v) waste, (vi) commerce and services. The Regulations also describe the specific sub-sectors that will have reporting obligations. We are happy to provide information regarding the specific sub-sectors upon request.
Reporting Establishments will be required to (i) identify their direct and indirect emissions stemming from stationary or mobile sources, (ii) identify their indirect emissions associated with the consumption of electrical and thermal energy, (iii) measure, calculate or estimate their GHG emissions from all sources identified by the Reporting Establishment, establishing the methodology determined by the Regulations, (iv) gather and use the information specified in the measurement, calculation or estimation methodology in accordance with the Regulations, (v) report their emissions annually through an Annual Operating Report (the “Annual Report”), quantifying them by annual metric tons of GHG or compound and the equivalent in CO2e, (vi) verify the reported information pursuant to the Regulations through Verification Organisms and (vi) keep the information on file during a minimum of 5 years as of the date of submittal to SEMARNAT of the corresponding Annual Report.
The methodologies and procedures that Reporting Establishments must apply in order to measure, calculate or estimate their direct or indirect GHG or compound emissions, must be based on the application of (i) emission factor calculations, (ii) material balance calculations and (iii) those established by the IPCC.
Reporting Establishments may submit for the consideration of SEMARNAT alternative methodologies in order to measure, calculate or estimate their emissions. If these alternative methodologies are approved by SEMARNAT, they will be published in the official federal gazette.
Submitting the Report
Between the period of March 1st and June 30th of each year, Reporting Establishments must provide information to the Registry on their direct and indirect emissions generated between January 1st and December 31st of the preceding year, through the Annual Report.
An important aspect of the Regulations is that it allows Reporting Establishments to report projects or activities that mitigate, reduce or absorb GHGs as well as those that involve the sustainable management or conservation of ecosystems, for the increase or conservation of carbon sinks from the forestry sector and any other activity that has as its purpose carbon sequestration.
Every 3 years, Reporting Establishments will have to attach to their report, a verification certificate issued by a certified and approved verification organism. These organisms will have to secure an authorization from SEMARNAT to verify the veracity and accuracy of the emission reports and also to be able to validate mitigation and reduction activities. In the case of Reporting Establishments currently operating, a verification certificate will have to be attached to their emissions report for the first time, in accordance with the following criteria and calendar: