The demand for energy in emerging economies in Latin America is expected to increase sharply in the coming decades as population levels rise. Without a fundamental shift in the energy supply structure, this will quickly lead to an increase in the amount of greenhouse gas (GHG) emissions. The use of efficient technologies will reduce expected energy consumption levels in emerging economies and is a highly cost-effective strategy to cut GHG emissions.
In Mexico, the residential sector accounts for nearly 5% of national GHG emissions. If no action is taken, this figure is likely to grow given the expected rise in demand for residential buildings. The building sector is the main contributor to GHG emissions but it also holds the biggest potential to reduce these emissions.
The objective of the programme is to contribute to the Mexican government’s efforts to reduce GHG emissions generated by the residential sector by providing financial incentives for energy efficiency investments and low carbon houses to the low and middle income population. Specifically, the programme aims to increase the construction of low carbon houses by providing these financial incentives and to increase the supply of finance for low carbon housing.
These energy efficiency investments will use technologies in the areas of insulation in the roof and walls, reflective paint, efficient gas boilers, efficient refrigerators, solar water heaters and energy saving windows, etc.
Expected benefits of the programme are to reduce energy consumption, to reduce the energy-related costs and to improve the living conditions of Mexican households who are on low and middle incomes. The programme is estimated to cut CO2 emissions by just over one million tonnes. A major concrete use of the funds from the programme will be to build around 27 000 low carbon houses by 2019. This is expected to lead to a 20% reduction in CO2 emissions.
LAIF investment grants will be provided to buyers of passive houses. The objective is build up to 800 passive houses, resulting in a CO2 emission reduction of between 70% and 90% compared to normal standards. Examples of energy efficient measures in a passive house are window frames with insulation, windows with triple glazing and sun protection and roof insulation.
KfW and IDB are, with the support of the German government and the Clean Technology Fund (CTF) respectively, acting as co-financiers by providing concessional loans to the Sociedad Hipotecaria Federal (SHF) for the promotion of sustainable houses under the framework of the Nationally Appropriate Mitigation Action (NAMA) for Sustainable Housing.