Second Conference on Legal Challenges and Opportunities of Mexico’s Increased Global Interaction

American Bar Association

Los Cabos, Mexico, November 2013

Mexican Statutes, Regulations, Policies and Authorities on Environmental Issues Applicable to the Energy Sector.

• Main Environmental Authorities

Ministry of the Environment and Natural Resources (SEMARNAT): Among others, SEMARNAT evaluates and authorizes the potential environmental impact of energy facilities and is responsible of controlling and preventing atmospheric, water and soil contamination generated from energy projects.

Ministry of Agriculture, Livestock and Fisheries (SAGARPA): Among others, SAGARPA issues Mexican Official Norms on sustainable production and grants permits for biofuel production.

Ministry of Energy (SENER): Among others, SENER issues Mexican Official Norms that contain requisites characteristics and safety measures for the use of biofuels and grants permits for biofuels projects. SENER and CRE (Energy Regulatory Commission, issue (non-environmental) energy related permits). 2

Mexican Statutes, Regulations, Policies and Authorities on Environmental Issues Applicable to the Energy Sector.

• Main Environmental Authorities

The National Water Commission (CNA): Among others, CNA is responsible for issuing concession titles for the use of national water in hydroelectric power plants (as well as federal waste water discharge permits).

The National Commission for the Efficient Use of Energy (CONUEE): Among others, CONUEE is responsible for issuing methodologies for the calculation of greenhouse gas emissions related to energy projects and sanctioning non-compliance with the Law on the Sustainable Use of Energy.

National Ecology and Climate Change Institute (INECC): Among others, INECC is responsible for the general oversight of climate change related matters.

Federal Environment Protection Agency (PROFEPA): Federal environmental law enforcement agency. 3

Mexican Statutes, Regulations, Policies and Authorities on Environmental Issues Applicable to the Energy Sector.

• Main Policies, Statutes and Regulatory Framework

The National Development Plan (2013-2018): Prepared by Mexico’s executive power and contains a general guide for Mexico’s development. It contains a chapter on energy and one on sustainable development that are applicable in this matter.

Energy National Strategy (2013-2027): It contains a strategy in order to achieve energy efficiency and avoid and reduce the environmental impact and risks.

Renewable Energies Foresight (2012-2026): Mexican energetic sector analysis in relation with renewable energies in order to achieve a clean energy generation and consumption.

National Strategy for Climate Change (2013): Leading instrument of the national policy on mid and long term to face the effects of climate change and enter to a sustainable competitive and low carbon emission economy.

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Mexican Statutes, Regulations, Policies and Authorities on Environmental Issues Applicable to the Energy Sector.

• Main Policies, Statutes and Regulatory Framework

The General Law on Ecological Equilibrium and Environmental Protection and its Regulations: Overview on how environmental matters will be regulated in the Federal, State and Municipal scopes.

The General Law on the Prevention and Comprehensive Management of Waste and its Regulations: Overview on how waste matters will be regulated in the Federal, State and Municipal scopes.

Federal Law on the Sustainable Development of Forestry and its Regulations: Among others, it regulates how projects need to justify and obtain approval for change of forestry land uses.

The National Waters Law and its Regulations: Sets out the general rules for using national water from federal water sources, as well as federal discharges of waste waters.

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Mexican Statutes, Regulations, Policies and Authorities on Environmental Issues Applicable to the Energy Sector.

• Main Policies, Statutes and Regulatory Framework

The Electric Power Utility Law: (non-environmental) Divides the Mexican electricity sector into the electric power utility service and power generation projects.

The Law on the Sustainable Use of Energy: (non-environmental) Intends to incentivize the sustainable use of energy during all stages from generation to consumption.

The Law on the Promotion and Development of Biofuels: (non-environmental) Intends to promote the development of biofuels and energetic diversification.

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Mexican Statutes, Regulations, Policies and Authorities on Environmental Issues Applicable to the Energy Sector.

• Main Policies, Statutes and Regulatory Framework

The General Law on Climate Change: It establishes broad general framework type provisions in order to face the adverse effects of climate change.

The Law on the Use of Renewable Energy and the Financing of the Energy Transition: (non-environmental) Among others, it regulates the exploitation of renewable energies and clean technologies in order to provide energy for purposes other than public service.

Mexican Official Norms: (among others) SEMARNAT- Technical standards that regulate maximum

contamination limits for fixed and mobile sources. SENER- Technical standards published in order to achieve energy

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Mexican Statutes, Regulations, Policies and Authorities on Environmental Issues Applicable to the Energy Sector.

• Main Environmental Permits and Licenses for Energy Projects

Environmental Impact Authorization: The vast majority of activities related to the generation of energy (construction of power plants, distribution and transportation of fuels, etc) require a federal environmental impact authorization (EIA) to be obtained from SEMARNAT.

Operation License or Environmental Sole License: In order to generate air emissions, obtaining an operations or sole environmental license is required.

Annual Operations Report: Annual report on air emissions and other sources of generation of contaminants (in accordance, among others, with Mexican Official Norms and Registration of Emissions and Transfer of Contaminants). 8

Mexican Statutes, Regulations, Policies and Authorities on Environmental Issues Applicable to the Energy Sector.

• Main Permits and Licenses

Change of Forestry Land Use: In order to be able to perform any kind of work or construction in areas having “forestry type vegetation”, authorizations for the change of forestry land use are required (i.e., discuss ETJ + EIA).

Registration as a Hazardous Waste Generator: The majority of the activities related to the generation of energy produce hazardous waste and require a Registration as a Hazardous Waste Generator.

Water Concessions: In order to use national waters (i.e., federal water sources) a concession title issued by the National Water Commission is required; and Waste Water Discharge Permits: In order to discharge waste water in a national body of water or federal water sources, a waste water discharge permit is required. 9

Main General Environmental Regulation of Renewable Energies and Sustainable Development.

• Projects based on Bioenergy, Wind Energy , Solar Energy, Geothermal Energy and Hydropower often require, among others:

Non-Environmental Permits from SENER/CRE Environmental Impact Authorization Change of Forestry Land Use Approvals (ETJ+EIA) Environmental Risk Study Accident Prevention Programme Registration as a Hazardous Waste Generator Water Concession Titles and Waste Water Discharge Permits Air Emissions Operations License or Environmental Sole License (and

Annual Operations Report)

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Key Take-Away Points

Extensive and comprehensive policies, laws and regulations

Sophisticated Authorities

Increased levels of enforcement

Need to enter Mexican market with proper legal and technical advice

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For any questions or comments please contactCarlos de Icaza Aneiros at carlos.deicaza@creel.mx