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Mexico aims to cut home energy use with green loan plan

Source: Thu, 27 Jun 2013 02:15 PM
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Workers from a Mexican construction firm build energy-efficient homes in Tula, in Hidalgo state. THOMSON REUTERS FOUNDATION/Monica Healy
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MEXICO CITY (Thomson Reuters Foundation) – Since the 1980s, the Mexican government has subsidised massive tract-housing projects around the country, filling them with hundreds of thousands of concrete-block, brick and mortar structures that have no insulation or other comfort control features.

This response to intense pressure for affordable urban housing is to blame for widespread urban sprawl in Mexico over the last 30 years – and increases in climate-changing emissions, experts say. Homes now use 16 percent of the country’s energy and account for 3 percent of direct greenhouse gas emissions, as well as a variety of indirect ones, according to the country’s Social Development Ministry.

That rising urban carbon footprint is one reason the country’s climate change policymakers see cutting residential emissions as essential for reaching Mexico’s 2050 target to cut its greenhouse gas emissions in half from 2002 levels.

To accomplish the needed cut, they have turned to a so-called Eco House programme, which Gisela Campillo Bermudo,  leader of the Inter-American Development Bank’s infrastructure and environment team, says is new in Latin America.

MORE COMFORT, LESS ENERGY

The construction loan program offers buyers of newly built homes increased comfort and energy cost savings – through features such as roof insulation and solar water heating - at the same price they’d pay for conventional shelter. It aims to reduce the housing sector’s greenhouse-gas emissions at least 20 percent by the end of this decade.

The object is “to prompt climate-friendly design, adjusting it to the characteristics of each locale, and develop new construction systems of higher quality and efficiency,” says Mónica Healy Hegewisch, a member of Campillo’s team.

The Eco House program is being financed with up to $150 million in loans including approximately $50 million from the multi donor  Clean Technology Fund (CTF), which aims to help middle-income countries scale up low-carbon  technology. The CTF is one of two Climate Investment Funds  that support developing countries to pilot low-emissions and climate-resilient development projects through multilateral development banks.

Mexico is the first country in the hemisphere to access the CTF via a Nationally Appropriate Mitigation Action for Sustainable Housing - essentially the country’s own plan to reduce carbon emissions from housing.  Mexico’s decision to focus on reducing housing emissions reflects findings that investments in domestic energy efficiency are more cost-effective than other alternatives for reducing greenhouse gas.

The financing deal creates a revolving fund, which can create $350 million in generous cut-rate loans to builders over the next seven years. It makes Mexico a leader in testing new climate-linked lending models now being used by the World Bank and its international partners.

The money is expected to filter down to contractors in equal shares from the German Economic Development Bank KfW, the Inter-American Development Bank, and the Mexican Development Bank’s Federal Mortgage Society.

All borrowers have to do, to start, is make sure they fit new homes they build with previously overlooked items such as roof and wall insulation, double-pane windows, solar water heating and state-of-the-art refrigerators.

 All the buyers have to do is select the home sites they want, draw up the paperwork, and move in.

ADVANCING THE ‘GREEN MORTGAGE’

The program goes a step further than what Campillo calls the “well-known and successful” Green Mortgage program, in which the government helped some 900,000 people take out mortgages to buy energy-efficient homes from 2007 to 2012, through the National Housing Fund for private sector employees.

The Green Mortgage program led to reductions of 60 percent in water consumption in the new homes, compared to traditional homes, as well as reductions of 50 percent in gas, and 40 percent in electricity. Greenhouse gas emissions fell 1.2 tons per dwelling per year.

The financial incentive earned a UN World Habitat award and an Inter-American Development Bank Beyond Banking prize for encouraging developers to outfit homes with energy-efficient materials and appliances by offering government subsidised loans to the purchasers.

In the EcoHouse program, green mortgages will be extended beyond National Housing Fund recipients to 1,700 other home buyers  financed through the State Workers Housing Fund for public employees as well as to breadwinners not eligible for either fund.

Some 27,600 Eco Houses are slated for completion before 2020. Since construction began in December, three developers have finished 84 Eco Houses in the south central Mexican state of Hidalgo.

The finished houses, in the Hidalgo state capital of Pachuca, are ready to occupy as soon as the buyers make plans to move, according to Tobias Contreras, a spokesman for VINTE, one of the three developers working on Phase I of the programme.

VINTE and two other developers were chosen to participate in the programme on the basis of capacity, experience and inventiveness in energy efficiency measures. The three have started work on 2,500 new units and expect to complete 9,500 in Phase 1.

So far lenders have extended them $900,000 in credit. When the contractors repay the loans, the money goes back into the programme to finance building more Eco Houses in Phase II, according to the scheme.

GREEN MATERIALS?

Eco House developers are free to select the materials they prefer to meet efficiency guidelines. At the outset of the programme, the developers are relying on concrete structural components and polystyrene insulation, according to Adrian Araujo, a spokesman for the National Mortgage Society.

Polystyrene is a petroleum product that exudes hydro chlorofluorocarbons, scientifically linked to ozone depletion and global warming. The material takes hundreds of years to decompose.

A 5-hectare forest plot would be necessary to offset the carbon dioxide emissions of each typical cement block house in Mexico, according to international award-winning Mexican architect and green builder Alejandra Caballero.

But the programme is expected over time to create growing demand for climate-friendly insulation and other building materials, administrators said.  Improving manufacturing of green construction products is one of the stated Eco House programme goals.

Backers of the programme acknowledge that home builders will require technical assistance to design and build next-generation homes.  The programme earmarks $660,000 from the Clean Technology Fund for external advisers and consultants in the design and certification processes.

 ‘PASSIVE’ HOUSES NEXT

One important step forward, within the Eco House programme, is a newly launched system of grants of $7,000 to $17,000, from the European Commission’s Latin American Investment Facility, to help build 800 special “passive” houses which need no active heating or cooling systems, Healy said.

Such houses are expected to eventually account for the majority of the 1-million-ton reduction in greenhouse gas emissions sought through the Eco House programme.

Green building is alive and well in Mexico. Its techniques include do-it-yourself strategic landscaping, water catchment, and construction with materials such as local mud, straw, and thatch that provide inexpensive, low-carbon and healthy alternatives to tract housing.

At least one builder is seeking certification to use compressed earth blocks as part of the Eco House programme, aiming to break the trail for other green builders. But Healy said some methods of “bio construction”, such as adobe building, are out of the running for use in Eco House homes because they are too “artisanal” for the large scale of the project.

Part of the Eco Home foreign investment will fund monitoring, evaluation and efforts to raise awareness among both home builders and buyers about the importance of energy conservation in curbing global warming.

The most exciting aspect of the monitoring is an in-home device that shows residents their energy use in real time, said VINTE’s Contreras.

Technicians at VINTE invented and patented the meter, which Contreras hopes will raise awareness of water, gas, electricity and other consumption costs and ultimately contribute to building demand for environmentally friendly features in homes.

 “You can’t save what you can’t measure,” he notes.

Talli Nauman is an environmental journalist based in Mexico City. This article is part of a series funded by the Climate Investment Funds.

 

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