On October 28th, 2014, implementing provisions to the General Law on Climate Change on matters related to the National Registry of Emissions (Reglamento de la Ley General de Cambio Climático en materia del Registro Nacional de Emisiones) (the "Regulations") were enacted and entered into effect on the following day (October 29th, 2014).
These Regulations are key to several commercial, services and industrial sectors, including banks, real estate developers, hotels, hospitals, schools and other activities which may generate greenhouse gases ("GHG") and which up until now were not subject to GHG measuring and reporting obligations, as opposed to other sectors, such as energy and automotive, which were already obligated to report under the emissions registry and transfer of pollutants regulations.
Companies and persons operating in such sectors should be aware of these new Regulations and take the necessary steps, including the allocation of human and financial resources, to be able to comply with their measuring and reporting obligations in a duly and timely fashion to avoid administrative sanctions and/or risks of other liabilities.
Activities subject to GHG measuring and reporting obligations
Criteria. Regulated Activities subject to measuring and reporting obligations must meet three basic criteria:
- Carry out an activity within a regulated sector under the General Law on Climate Change ("Regulated Activities"), which are (i) energy, (ii) transportation, (iii) industry, (iv) agriculture and livestock, (v) wastes, and/or (vi) commercial activities and services.
- The activity must generate any of the relevant GHGs1; and
- That the generated GHGs exceed directly or indirectly, a threshold of 25,000 tons of carbon dioxide equivalent ("CO2e") per year.
Regulated Activities are subject to the following main obligations:
- Identify direct emissions deriving from mobile and stationary sources;
- Identify indirect emissions arising from the consumption of electric and thermal energy;
- Measure or calculate the release of GHG emissions of each and all the sources within the facility, based on the methodologies issued by the Ministry of Environment and Natural Resources ("SEMARNAT") or the Intergovernmental Panel on Climate Change ("IPCC"). Although the different methodologies are mentioned in the Regulations, the formulas to be used in each of them are yet to be issued by SEMARNAT;
- Collect and use data specified in the measuring or calculation methodology that is applicable to the sector, subsector and the performed activity;
- Report to SEMARNAT on an annual basis, GHG emissions through the Annual Air Emissions Report (Cédula de Operación Anual);
- Validate the reported information every three years. This validation must be carried out by an authorized organism or entity; and
- Keep records of the reported information for a five year term.
The Annual Air Emissions Report –instrument linked to the air emissions license or the comprehensive environmental license (commonly known as "LAU")- is the means to comply with annual GHG reporting obligations arising from the General Law on Climate Change and these Regulations.
Filing obligations. Two main periodical reporting obligations arise from the Regulations:
- Report GHG emissions every year between March 1st and June 30th.
- Report the results of the validation process undertaken by the authorized organisms, every three years.
Content. The Annual Air Emissions Report must include information on the emissions generated between January 1st and December 31st of the previous year.
Regulated Activities currently ongoing must attach to their Annual Air Emissions Report the validation report by the authorized organism for the first time as follows:
- If the release of GHG's exceeds 1'000,000 tons of CO2e, the validation report must be filed along with the 2016 Annual Air Emissions Report.
- If the GHG's releases range between 100,000.1 and 999,999.99 tons of CO2e, the validation report must be filed along with the 2017 Annual Air Emissions Report.
- If the GHG's releases range between 25,000 and 100,000.09 tons of CO2e, the validation report must be filed along with the 2018 Air Emissions Report.
Registry of GHG mitigation activities
Subject to the terms and conditions of the Regulations, projects and activities that mitigate, reduce or capture GHG's within Mexico, are entitled to request their registration before the National Registry of Greenhouse Gases or Compounds Emissions. In turn and as applicable, SEMARNAT will issue a certification evidencing the registration of the activity and of the reduced GHG's.
Although the practical effects of these certificates and the data that will be collected by SEMARNAT through the periodical reports to be filed by Regulated Activities is still unclear, it might be the case that they will be used as the basis for an internal carbon trading market, in accordance with the international trends.
1. For purposes of the Regulations, the following are deemed GHG's : carbon dioxide, methane, nitrous oxide, black carbon or soot, chlorofluorocarbons, hydrochlorofluorocarbons, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride, nitrogen trifluoride, halogen ethers, halocarbons, any mix of the aforementioned gases, and the GHG's and compounds thereof that the IPCC categorizes as such and that SEMARNAT subjects to reporting obligations by means of a decree published in the Official Gazette of the Federation.
Originally published 7 November 2014
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.