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-- [ Page 7 ] -- Climate Planning In June 2012, Mexico approved the General Climate Change Law, which authorized the creation of a voluntary emissions trading scheme (ETS) in the country. With a carbon tax on fossil fuels (natural gas exempted 57), the establishment of a mandatory reporting system through the National Emissions Registry, the submission of its INDC 58 and steps to reform the energy sector, Mexico may transition to an ETS. 59 The INDC of Mexico translates previously aspirational commitments into mandatory goals that SEMARNAT anticipates to be met regardless of a robust global market mechanism. However, SEMARNAT also recognizes the importance of such a mechanism to achieve rapid and cost-effective mitigation of carbon emissions. 60 The type of ETS (including emissions, GHG, and sectors covered), the phases and allocation, the flexibility, and the type of compliance is yet to be released. 61 The Interministerial Commission on Climate Change (CICC) will be in charge of enforcing 54 “Mexico’s New Electricity Market Guidelines.” 2015. Jones Day.

55 Michael S. Hindus, Eric Save, and John B. McNeece III. 2014. “Mexico’s Guidelines for Clean Energy Certificates Will Support Renewable Energy Development”. Pillsbury.

56 “Mexico’s New Electricity Market Guidelines.” 2015. Jones Day.

57 Addition from USAID commenter: And hard fuels, such as coke and coal, taxed at about 30 percent of the rate per ton of CO2 as other fuels.

58 *Note: Intended Nationally Determined Contribution (INDC) is a public outline of what post-2020 climate actions a country intends to take. The INDCs are made in preparation for the U.N. Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP21) in Paris in December 2015. “What Is an INDC?” n.d. World Resources Institute.http://www.wri.org/indc-definition.

59 “Mexico Announces Guidelines for Issuance of Clean Energy Certificates.” 2014. Nexant.

“Mexico: Intended Nationally Determined Contribution.” n.d.

60 SEMARNAT.http://www.semarnat.gob.mx/sites/default/files/documentos/mexico_indc.pdf.

61 *Note: As of June 1, 2015.

30 the new ETS law and overseeing the development of the carbon market. 62 SEMARNAT is clearly advancing a robust market-based mechanism but the details of this mechanism were unclear at the time of the TDY. Opportunities for USAID to participate in Mexico’s carbon market will be considered in the assessment CEADIR is compiling.

2.1.5 Capacity Development Across all the activities listed above, capacity development activities could be considered for grid operations and planning, renewable energy finance, and work force development. This will be important for sustainable, long-term growth in renewable energy. Capacity building could be designed for three target audiences: professional;

students in higher education; and, workforce development (wage-earners in assembly and installation in the renewable energy industry).

As renewable energy demands increase, there will also be an increase in demand for an associated workforce with advanced competencies in grid operations, planning, and market monitoring, especially related to increased renewable energy integration.

Professionals already working in this field may require additional training to most effectively and efficiently incorporate renewable energy.

Development related to changing roles and responsibilities as a result of the energy reform is needed within CFE and CENACE. CRE is responsible for increased oversight of grid planning and grid codes, especially as the energy reform rolls out. In addition, CENACE is the independent grid operator with a coinciding new set of roles and responsibilities. While both these organizations have some expertise in these areas, the new responsibilities combined with the fast pace of change and the timely opportunity to make choices that could maximize the amount of integrated renewable energy, mean that additional or improved human resources are needed. CRE recognizes that training this workforce is a priority.

Mexico is already participating in many bilateral and multilateral energy engagements including the Clean Energy Ministerial. There are additional professional groups and organizations in which Mexican professionals can learn and share their experiences with integrating renewable energy.

If the anticipated renewable energy growth for Mexico becomes a reality, positioning the Mexican workforce to take advantage of job opportunities is important. While these jobs will likely be less numerous than those in other established sectors such as the auto industry or other assembly and manufacturing jobs in Mexico, there is an opportunity to have a Mexican workforce assembling, installing, and maintaining renewable energy. In the US, the Interstate Renewable Energy Council (IREC) 63 was developed in 1982 to accelerate the renewable energy industry. IREC is known for its credentialing program to drive quality workforce training. IREC has also impacted the workforce by ensuring top-tier training, developing community college programs and more.

62 “What Is an INDC?” n.d. World Resources Institute.http://www.wri.org/indc-definition.

63 http://www.irecusa.org/ 31 Local content rules regarding the percentage of work required to be performed by citizens and energy companies in Mexico remain unclear. The rules create a requirement that private companies source at least 25% of their supplies locally by 2015 and 35% by 2025. However, the legislation provided enough flexibility so that each individual contract does not have to meet the 35% target. Targeted workforce development initiatives can spur the Mexican clean energy market and enable the domestic private sector to achieve local content rules. Through the development of clean-tech clusters or implementation of loans to retool manufacturing facilities, USAID has the opportunity to help further drive economic growth and foster new clean tech jobs by laying out the skills and experience needed in a variety of career pathways to meet market demands.

The distribution network presents another opportunity to assist the GOM to make smart investments in new technologies that reduce system losses. Technical and nontechnical losses are currently higher than 18%, twice the OECD average. 64 Targeted capacity development for advanced distribution management systems can result in minimized losses, minimized load imbalance, and improved voltage quality. Optimized distribution networks decrease long term operating costs, reduce energy waste, and create a more integrated and flexible network to achieve targets of new renewable energy deployment.

Overall, this topic is the foundation for all of the other topics. Capacity building needs to occur in all of the building blocks for Mexico to achieve long-term success in building the renewable energy industry. Program Theme Both from the literature and from in-country meetings, it is clear there is an opportunity to build capacity to support accelerated renewable energy deployment. Before designing a capacity building program, a more thorough gap analysis to identify which specific skill sets are of the highest priority would aid in designing a program to develop those skills.

One process for identifying program design elements that could be utilized is the job task analysis (JTA). A JTA determines the skills and training an employee needs and the resources needed to achieve good performance. The JTA supplies the required process and/or steps to perform a task. After the steps are validated by industry, the JTA becomes a tool for educators to help design curriculums for trainings, programs, and certifications. 65

Capacity Building for Grid Operations and Planning

Professionals currently working in CRE, SENER, and CENACE will likely need additional training on new responsibilities as a result of the electricity reform and specifically around renewable energy integration and planning, market design, 64 Mexican Energy Reform, Implications and opportunities in the national electricity network. Price Waterhouse Coopers http://www.pwc.com/es_MX/mx/industrias/archivo/2014-01-mexican-energy-reform-implications.pdf 65 “Job Analysis,” Encyclopedia, Wikipedia, (June 21, 2015), https://en.wikipedia.org/wiki/Job_analysis.

32 dispatch/control practices to best integrate renewable energy. Capacity building in the latter will help Mexico reach its clean energy goals, while maximizing renewable energy use. The need for capacity building will likely be twofold: training for those who are already employed in government institutions and increasing the pipeline of qualified professionals, with the right skill sets, available to work in these organizations.

Professional development for CRE, SENER, and CENACE staff may include workshops, exchanges with international professional institutions, and collaboration on joint projects. In addition, professional groups specific to variable grid integration or other relevant topics may be useful. Mexico has participated in the Utility Variablegeneration Integration Group (UVIG) at least once. Mexico may benefit from joining UVIG as some Canadian utilities have done. UVIG was founded in the United States “in 1989 to provide a forum for the critical analysis of wind and solar technology for utility applications and to serve as a source of credible information on the status of wind and solar technology and deployment.” The group specifically looks at integrating intermittent renewable energy and has guided the development of many important and influential documents. Because a wide range of technical people participate, the group shares technical information and pushes learning on this topic forward 66. In addition to UVIG, Mexico could join IEA wind task 25 to enable worldwide lesson sharing and learning, and take advantage of technical assistance offered through Greening the Grid Program 67.

In addition to capacity building for those who are already involved in grid operations and planning, there is likely a need to increase the number of professionals entering fields that can support the electricity reform and the increase in energy sector careers (this need was noted anecdotally, but the exact breadth of this need requires further examination). These professionals often need to be very highlight educated with masters or Ph.D. degrees. To increase the number of professionals available to hire,

USAID could consider:

Working with universities and the institutions needing technical assistance to • strengthen technical curricula. Exchanges with international universities could also be of benefit.

Partnering with granting and scholarship organizations to increase the support for • the number of students with corresponding interests and skill areas.

Capacity Building for Renewable Energy Finance As mentioned in section, one opportunity for speeding up the mobilization of finance for clean energy is through the strengthening of the technical capabilities for analyzing the projects and with the application of innovative financial mechanisms and best practices. There is a capacity building opportunity that includes collaborating with various donors working in this space and assisting various government of Mexico institutions including SENER, domestic and multilateral development banks, private 66 “UVIG Home and Join,” Organization, UVIG, (2015), http://uvig.org/newsroom/.

67 Greening the Grid, http://greeningthegrid.org/ 33 sector financiers, CRE, academia, etc. This capacity building opportunity could include building data sources and systems for data sharing, feasibility analysis of new projects, creating networks of experts for sharing knowledge, specific programs for new technologies, etc.

Capacity Building for Assembly, Installation, and Operations and Maintenance In 2012, SENER estimated that by 2020, 175,000 jobs could be created by all renewable energy technologies 68. For comparison, in 2013 the number of jobs in Mexico related to the auto industry was 675,000 69. While the number of jobs estimated by SENER includes direct and indirect jobs, reviewing the methodology used by SENER can determine if there is a risk of overestimation. Regardless, Mexico has an opportunity to prepare a workforce ready to take advantage of any jobs arising from the assembly, installation, and operation and maintenance of renewable energy facilities.

The first step will be a careful JTA to understand what skills the labor force has that can be transferred to renewable energy jobs versus what skills need to be developed for every step along the assembly, installation, and operations of renewable energy plants.

The results of this analysis can inform how to best develop skills in the workforce.

Engaging stakeholders, such as developers and operators of renewable energy plants, in this process will help develop buy-in and plan for training that leads to jobs.

There are likely a smaller number of highly specialized jobs in the wind industry.

Working with wind developers and organizations such as La Asociación Mexicana de Energía Eólica (AMDEE) can help identify what these jobs are and whether Mexican workers are currently being employed or if foreign workers are brought in to do these jobs. From here, USAID can assess pathways to support the development of highly skilled Mexican workers for the wind industry if needed. Other Stakeholder Activity There is significant donor involvement in capacity building in the renewable energy and energy efficiency areas in Mexico. Organizaciones Populares de Vivienda, run by GIZ, is working in capacity building through vocational programs offered in four areas of renewable energy and five areas of energy efficiency retrofits. One program’s emphasis is gender equality and equal access 70.

GIZ and the Danish are involved in institutional capacity building at SENER and CRE.

In some cases, the institutional capacity building includes placing consultants into the institutions. The sustainability of these activities may depend on the timeframe and knowledge transfer between the consultants and the permanent members of the organizations. Using local consultants may be more effective than foreign consultants in terms of sustainability.

68 “Renewable Energy and Jobs” (IRENA, December 2013), http://www.irena.org/rejobs.pdf.

69 Priddle, Alisa and Snavely, Brent, “More Car Manufacturing Jobs Move South, to Mexico,” USA Today, June 15, 2015, Web edition, sec. Money, http://www.usatoday.com/story/money/cars/2015/06/15/auto-jobsmexico/71224972/.

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