Context
The residential building sector was responsible for approximately 17% of Mexico’s total energy consumption. As the population grew by approximately 1.7 million per year and an increasing number of Mexicans aspired to better housing, an estimated 600,000 new residential units needed to be built every year over the next decade, leading to an increase in greenhouse gas (GHG) emissions in the housing sector.
Goals and approach to transformational change
To address the problem, in 2012, the National Housing Commission CONAVI developed mitigation measures in the sector. The “Mexican New Housing” is based on the whole-house approach focusing on the total energy performance of a building. The overarching goal of the project “Mexico – Implementation of the New Housing” (Mexico New Housing for short) was to implement the above mitigation measures, which promotes cost-effective energy-efficient building concepts across the housing sector, with a particular focus on low-income housing.
The project contributed to the implementation of the mitigation measures in two ways:
- It promoted the penetration of basic efficiency standards in the entire new housing market in Mexico by means of:
- technical assistance to large public housing financiers and housing developers and;
- financial incentives and project-related technical support for small and medium sized developers and financial intermediaries.
- It promoted the upgrading of energy efficiency standards to more ambitious levels.
Components and support mechanisms
The project combined technical assistance to CONAVI through its Technical Cooperation (TC) component with financial incentives and project-related support under the Financial Cooperation (FC) component, implemented in collaboration with the Mexican development bank. Together, these efforts paved the way for a broad, sector-wide transition toward sustainable housing. The project strengthened the capacities of federal, state, and local authorities in energy-efficient and sustainable housing, including improvements to building codes and the legislative framework. It also supported the development of a local market for environmentally friendly technologies and enhanced existing Mexican promotion and incentive instruments by introducing more ambitious energy efficiency standards at both federal and state levels. In addition, the project promoted the adoption of higher energy efficiency standards through investment grants that covered incremental costs and enabled the inclusion of additional eco-technologies.
During the seven-year implementation period of the FC component, the combination of loan guarantees for financial intermediaries and subsidies for small and medium-sized developers (SMEs), together with SHF’s standard programmes of guarantees and bridge loans, mobilised more than EUR 100 million in private finance for the construction of low-carbon housing.
Long-term impact
The financial incentives and project-specific advisory services led to the construction of around 48,000 energy efficient housing units by small and medium-sized project developers. With an assumed average CO2e emissions reduction of 20%, this contributed to around 446,000 tCO2e emissions saved during the lifetime of these buildings.
The project intervention resulted in reduced greenhouse gas emissions (direct and indirect) amounting to 1,090,826 tCO2e. It directly benefitted 188,647 people. Additionally, the project mobilised EUR 183,316,337 public finance (domestic and/or international) for carbon-neutral investment and development, and EUR 100,088,244 of private finance (domestic and/or international).
