Last week, beneath the fanfare surrounding issuance of internal regulations for Mexico’s new oil and gas agency and a suite of conforming amendments to more than half a dozen environmental regulations, the Secretariat of Environment and Natural Resources (Secretaría del Medio Ambiente y Recursos Naturales or SEMARNAT) quietly issued the nation’s new greenhouse gas (GHG) registry and reporting regulation.
The new regulation, entitled the Regulation to the General Law of Climate Change in Matters Relating to the National Registry of Emissions (Reglamento de la Ley General de Cambio Climático en Materia del Registro Nacional de Emisiones or GHG Regulation), is a key step forward in implementation of the country’s watershed 2012 General Climate Change Law (Ley General de Cambio Climático or Law) in which the country committed to GHG reductions of 35% below its 2000 baseline by 2020 and 50% by 2050. Law, Transitories, Art. 2. The GHG Regulation went into effect the day following its publication in the Official Gazette of the Federation (El Diario Oficial de la Federación) on October 28, 2014. A link to the regulation can be found here.
The GHG Regulation applies to a wide range of industries from the energy, transportation, industrial, agricultural, commercial, and services sectors identified in the Law. GHG Regulation, Art. 3, I-VI. The Regulation identifies more than 150 subsectors to which the annual reporting requirements apply. Id. Art. 4, I-VI.
Regulated entities must calculate their direct and indirect emissions for specifically listed GHGs, including carbon dioxide, methane, nitrous oxide, carbon black or soot, chlorofluorocarbons, hydrochlorofluorocarbons, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, nitrogen trifluoride, halogenated ethers, halocarbons, mixtures of these GHGs and any additional GHGs identified by the IPCC and designated by SEMARNAT. Id.Art. 5. If total annual direct and indirect GHG emissions are equal to or greater than 25,000 metric tons of carbon dioxide equivalent (CO2e),covered entities must include GHG emissions as part of their Annual Operating License (Cédula de Operación Anual) reporting obligations to be included in Mexico’s Pollutant Transfer and Emissions Registry (Registro de Emisiones y Transferencia de Contaminantes or RECT). Id. Art. 9, V; Art. 10. Entities whose GHG emissions fall below the 25,000 metric ton threshold can be required to report their emissions to other federal and local registries, paving the groundwork for state and local reporting requirements. Id. Art. 24. The GHG Regulation also sets forth provisions for the registration of GHG mitigation and emission reduction projects. Id. Art. 26, 27.
GHG reporting requirements vary for industry sectors. The transportation, agricultural, waste management, and commercial and services sectors must report emissions that include all facilities, buildings, warehouses, and any other site or installation utilized in support of their business activities. Id. Art. 4. The energy and industrial sectors must report emissions by facility (plant). Id. For all sectors, the report must also include information regarding point and mobile source emissions. Id. Art. 14, I-II. GHG Reports must be submitted to SEMARNAT between March 1st and June 30th of each year and cover emissions from the prior calendar year. Id. Art. 12, I. Methodologies for calculating GHG emissions are to be established by SEMARNAT, but can generally be expected to adhere to those developed by the IPCC. A process for requesting approval for alternative calculation methods is also outlined in the regulation. Id. Art. 7, 8.
To ensure the accuracy of emissions data, reporting entities must submit a Verification Statement (Dictamen de Verificación) to SEMARNAT every three years, based on a rolling schedule corresponding to an entity’s total GHG emissions. Id. Art. 16, Transitory Articles. The Verification Statement must be issued by an independent, accredited and approved organization, in accordance with the Federal Law of Metrology and Standardization (Ley Federal de Metrología y Normalización). Id. Art. 19.
According to the World Bank, Mexico is the 12th largest greenhouse gas emitter and the second largest emitter in Latin America. Although there are no reduction commitments outlined in the new reporting requirements, GHG emissions data will likely bring scrutiny to high emitters and may become a focus of Mexico’s active NGO community and Green Party. Mexico has been ambitious in its adoption of climate change policies, outlined in its Special Climate Change Program (2014-2018). These policies are framed not only within mitigation and abatement terms, but within economic terms, and may well inform some of Mexico’s new energy reform programs. Mexico has surprised some in industry for aggressive implementation of its 2008 energy law, the Law of Sustainable Energy Use (Ley para Aprovechamiento Sustentable de la Energía). How Mexico’s commitments to GHG emissions reductions and energy reform will dovetail or conflict will likely remain in play for some time.