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At the IDB, we believe that together we can go farther. Our partnership network is making positive differences in Latin America and the Caribbean every day, and this blog is our channel for telling that story. Stay tuned for literature on partnership perspectives, stories from the field, changing trends, outlooks for development and the region, information on ways and opportunities to partner, and more. Thanks for stopping by.

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Welcome Home: What New and Improved Housing Means for Energy in LAC

By - Mar 26 2015

Inspired by a Newly Released Publication on the Germany-IDB Partnership

For many, buying a house is a life goal, a concrete milestone on their journey to stability and success. Therefore a demand for more and improved housing, an indicator of an expanding middle class and growth, is a good thing for development, right? Not so much actually, if you look at it from an energy consumption perspective. Driven by a growing middle class and swift population growth averaging two million per year, Mexico is also home to this rising demand for improved residential quality and homes. With the OECD’s economic forecasts for the country looking bright, it’s safe to assume that this demand will persist as more Mexicans enjoy improved economic status and added purchasing power. Yet given that in its current state, Mexico has seen a steady rise in energy consumption and already attributes 17 percent of its greenhouse gas emissions to private homes, these outlooks aren’t all good.

Seeking to fulfill its international commitments to reduce greenhouse gas emissions by 50 percent from 2002 levels (per the United Nations Framework Convention on Climate Change), housing has presented an unexpected challenge for Mexico. Though the growth driving this housing demand is good news indeed, as an ever-central player in international climate change efforts Mexico sought creative solutions its negative side effects.

Enter Mexico’s NAMA for Sustainable New Housing, developed by the Government of Mexico with support from Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) and GIZ, a technical cooperation agency of the German government. Highlighted in a newly released publication on the Germany-Inter-American Development Bank (IDB) partnership, Mexico’s NAMA, or National Appropriate Mitigation Action, was the world’s first. It has been a source of support for energy-efficient housing initiatives striving toward the twin objective of expanding basic efficiency standards into Mexico’s entire new housing market and upgrading these standards to more ambitious levels.

The NAMAs first pilot project, the EcoCasa program, gives us reason to expect great things of this initiative. Recognized by the United Nations Framework Convention on Climate Change (UNFCCC) as a “Lighthouse Activity” as part of the Momentum for Change Initiative, the project is an early testament to the ingenuity, expertise, and commitment of all these partners at work. Thanks to US$128 million in critical co-financing from the German Development Bank (KfW) and the European Commission, as well as resources channeled through the IDB’s ordinary capital and Clean Technology Fund, the EcoCasa project will support the construction of 27,000 energy efficient homes.

The EcoCasa’s approach to housing is twofold, as it works to both improve the quality of life of these home’s low-income residents and reduce greenhouse gas emissions through the construction of new sustainable housing. Through financial incentives that lower the cost of developing and acquire such homes, it also seeks to scale up the development of low-carbon housing. Additionally, the IDB and KfW have teamed up with the Mexican government’s Federal Mortgage Society to finance houses that achieve a minimum GHG emissions reduction of 20 percent compared to the traditional houses, as well as green mortgages for houses that comply with certain sustainability criteria.

Making great strides in uplifting Mexico’s house-seeking families and reducing GHG emissions, the EcoCasa’s innovative and cross-sector approach to development is representative of Germany’s overall partnership with the IDB. A driving force behind the mainstreaming of climate change across IDB operations and a supporter of the Bank’s most inventive green efforts, Germany and the IDB have much to celebrate in the ten years of Strategic Partnership they commemorated in Berlin earlier this year. Gathering to both reflect on past collaborations and formalize ten more years of partnership, the two partners’ joint confrontation of unsustainability in the Mexican housing sector is just one indication that continued is set to make an even more tangible impact on the region.

To read more about the Germany-IDB story, please make sure to read the Bank’s recently released publication on the partnership.

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