Author Archives: Christina McCain

California-Mexico partnership on climate change: promise, possibility, and a whole lot of work to do

California Governor Jerry Brown and Mexican officials pose after signing climate pact. (Credit: Danae Azuara)

California Governor Jerry Brown and Mexican officials pose after signing climate pact. (Credit: Danae Azuara)

When California Governor Jerry Brown kicked off a three-day trade and investment mission to Mexico last week, he didn’t do it by meeting with the minister of finance (though that did come later in the trip).

Instead, Governor Brown presided over a marquee event where he signed a Memorandum of Understanding (MOU) with Mexico’s federal Ministry of Environment and Natural Resources to cooperate on combating climate change – a key priority that complements a broader joint economic agenda very well.

The Governor, staff, high-level administration officials, and legislators on the California delegation had a packed agenda that covered not only climate change, but also trade, investment, education, energy and immigration.

As a participant in the large delegation, I attended official events focused on energy and climate that were both substantive and informative. Both sides spoke thoughtfully and enthusiastically about implementation of the MOU.

But it was the meetings we had after the delegation had departed that gave me additional insight – and hope – that this agreement can truly signal the beginning of a new chapter in Mexico and California’s history, and one with global significance.

Still, it is fair to ask: In a world where MOUs are plentiful but action often seems in short supply, why is this agreement actually, as my colleague Nat Keohane argues, a sign that momentum is growing on climate action? I provide here some perspective on what we know about California’s and Mexico’s past and potential future paths on climate change.

Climate change optimism in Mexico

Mexico is currently the world’s 13th largest economy, though it’s projected to grow to the 5th largest by 2050. The country boasts a stable currency, saw modest growth in the middle class over the last decade, and is California’s biggest export market. Mexico’s foreign minister, José Antonio Meade Kuribreña, had no shortage of such statistics at hand when he explained to a group of business delegates in Sacramento why Mexico is such a good place to invest and build partnerships.

But Mexico is also a good place to invest in working to combat climate change. The current president, Enrique Peña Nieto, has inherited a legacy on climate change leadership, through high-profile international emissions-reduction targets and a sweeping domestic climate change law that passed just before he took office. It is also a country poised for big changes, in no small part because its congress just approved a national energy reform, with potentially enormous implications for its energy future and emissions trajectory.

Regardless of whether Mexico’s climate change law passed on Peña Nieto’s watch, it is his to interpret, to implement, and potentially to capitalize on immensely. Ratcheting down Mexico’s national emissions toward the 2020 target of 30% below business as usual can be achieved by implementing smart energy and economic development policy that also drives the growth of a sustainable, low-carbon economy. There is enormous opportunity in Mexico to achieve significant, economy-wide emissions reductions (many at low cost) to meet the country’s ambitious mitigation goals and to stimulate green investment and economic growth, particularly in the energy sector.

California-Mexico climate partnership opportunities on display

Given that opportunity, EDF staff met last week in Mexico City with policymakers, NGOs, think tanks and other experts to understand how this MOU could help propel Mexico and California forward, and serve as an important impetus for even broader ambitious action.

What we heard repeatedly, especially from those close to the California-Mexico climate agreement, was optimism and a multitude of perspectives on ripe opportunities to work together.

The MOU itself outlines cooperative work on policy and technical tools, such as putting a price on carbon (the price being a key ingredient to drive investment in low-carbon technologies and increased efficiency); potential harmonization of measurement, monitoring, and tracking of greenhouse gas emissions; and promoting the development of renewable energy (an area where California has enormous expertise and Mexico a huge untapped potential).

California’s bet on win-wins for the environment and the economy is paying dividends, with a state economy back on track after weathering a recession and implementing the second largest cap-and-trade program in the world. And California sees the lion’s share of green investments in the country, with green job growth outpacing all other sectors ten-fold.

Mexico has the opportunity to strengthen its investment in a green economy and benefit the health of its citizens and the planet, while showing itself as a shining example of global vision and leadership. And in California, it has found the ideal partner to help make it happen.

Could the energy on both sides fizzle? Could Mexico’s President decide to walk away from Mexico’s climate leadership?

Sure, it’s possible – but it’s hard to make a case for doing so. The very same strategies reduce emissions – improvements in technology, efficiency, increasing green investment, and making smart decisions on fuels, transportation, and infrastructure – also provide short- and long-term economic gains for Mexico, and ultimately, could do so for the entire region.

Governor Brown spoke passionately last week about the reality and the urgency of climate change, and both governments reflected a sincere desire to do something real to make a difference together. For my part, I was convinced – now it’s time to get down to work.

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California and Mexico: Valuable teammates in the fight against climate change

en español  |  For nearly a decade, California’s landmark climate change law, AB 32, has been widely recognized for its efforts to curb greenhouse gas (GHG) emissions and build a low-carbon future.

Mexico flag and palm tree

Working together, California and Mexico can maximize the mutual benefits of setting high environmental standards to build low-carbon economies for the future. (Photo credit: Flickr user gabofr)

While climate action in Washington, D.C. continues to be stymied, our neighbor to the south is a key player and emerging leader on the global climate stage and is willing and able to join California in the fight.

Mexico has been a leader in advancing UN global climate change talks and recently passed its own historic climate change law.

These actions have garnered much attention from the international community, including Governor Jerry Brown.

In fact, his administration has indicated it is reaching out to Mexico on climate change, and just this week we’ve learned that Mexico’s President, Enrique Peña Nieto, is planning a visit to the Golden State.

The opportunities here can’t be overstated. As Governor Brown pointed out in his 2014 State of the State Address, if we want to move the needle on cutting carbon pollution, California can’t do it alone.

The collaboration between California and Mexico could be a powerful force to move global action on climate change forward, while creating mutual benefits. And, the partnership is both a natural and practical one.  California and Mexico have deep cultural, political, and economic ties that bind their histories, and climate change represents an opportunity for leaders on both sides of the border to work together to shape our collective future.

There are five primary areas where Mexico’s and California’s existing efforts to curb climate change align:

Climate efforts in California and Mexico
 CaliforniaMexico
1. Comprehensive climate change lawsPassed in 2006, AB32, the state’s landmark climate law, sets a declining cap on emissions in sectors producing the most GHG pollution. The law confirmed California's commitment to transition to a sustainable, clean energy economy, helped put climate change front and center on the national agenda and spurred similar action by states and regions across the U.S.In 2012, Mexico passed a broad climate change law with ambitious goals for reducing GHGs. Mexico’s climate change law does not yet mandate its GHG targets, but rather establishes voluntary targets comparable in scale to California’s mandatory limits. It also sets a comprehensive institutional, technical, and legal plan to help achieve those goals. This historic program is being built right now.
2. Climate policy strategiesAB 32 lays out a strategy and a comprehensive set of actions including:

  • Expanding and strengthening energy efficiency programs and building and appliance standards.
  • Achieving a statewide renewable energy mix of 33% by 2020.
  • Developing a California cap-and-trade program that links with other partner programs to create a larger market system.
  • Establishing targets for transportation-related GHG emissions for regions throughout California.
  • Adopting and implementing direct measures to reduce emissions and protect public health, including California's clean car standards, goods movement measures and the Low Carbon Fuel Standard.
Mexico’s climate change strategy focuses on areas that align with California’s vision of a lower carbon future:

  • Accelerating a transition toward clean energy sources
  • Reducing energy intensity through energy efficiency and conservation
  • Building sustainable cities
  • Reducing particulate pollution and short-lived climate pollutants.
  • Improving management of agricultural and forest lands
3. Economic efficiencyCalifornia’s successful carbon market provides a great example of how environmental and economic policy can work hand in hand.  It is also spurring innovation and investment in a clean and efficient economy while benefiting the state’s most disadvantaged communities.Mexico is laying the groundwork for market mechanisms. From the potential for emissions trading to renewable energy markets, the country’s law prioritizes economically efficient means to achieve its climate goals, but more work is needed.
4. Historic energy reformA majority of California’s emissions come from its energy sector, including transportation fuels. The Low Carbon Fuel Standard (LCFS) uses a market-based cap and trade approach to lowering the greenhouse gas emissions from petroleum-based fuels like reformulated gasoline and diesel. The LCFS slowly changes the California fueling system by providing opportunities for all fuel types to improve and grow.Energy reform is creating an unprecedented host of opportunities in Mexico. The majority of Mexico’s emissions come from its energy sector, including electricity generation and the production and burning of transportation fuels. An overhaul of long-standing energy monopolies creates new opportunities for developing renewable energy, cleaning up energy production and producing cleaner transportation fuels.
5. Natural resource protectionCalifornia’s climate law may permit a small number of credits from Reducing Emissions from Deforestation and forest Degradation (REDD) to be used in its carbon market. This would reward indigenous and forest-dwelling communities, potentially including those in Mexico, with incentives for ecosystem protection.Mexico is building models for comprehensive programs to reduce emissions from forest destruction through REDD. The cutting and burning of tropical forests worldwide contributes more GHG emissions each year than the entire global transportation sector. Mexico’s forests are a vital resource for its rural population and home to some of the world’s richest areas of biodiversity. Incentivizing best practices in agricultural production also targets a significant source of emissions from land use.

It’s become abundantly clear that international partnerships are key to effectively reducing GHG emissions, preventing the most disastrous effects of climate change, and building resilient economies that will help protect the planet for future generations.

Ultimately, California can catalyze action outside of its borders with partners like Mexico, amplifying the impact of our efforts to cut carbon pollution. Working together, California and Mexico can maximize the mutual benefits of setting high environmental standards to build low-carbon economies for the future.

(This post originally appeared on EDF's California Dream 2.0 blog on Mar. 4)

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How Mexico’s reforms open new doors for reaching clean energy and climate goals

(This post originally appeared on Foreign Policy Blogs on Feb. 24)

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With a new climate change law and President Enrique Peña Nieto's overhaul of federal oil and electricity monopolies, Mexico now has important opportunities to meet renewable energy and emissions reduction goals and grow its economy. Credit: Edgar Alberto Domínguez Cataño

Mexican President Enrique Peña Nieto’s major policy reform proposals, on everything from new taxes on soda pop to amending the 70-year constitutional prohibition on foreign investment in Mexico’s petroleum sector, have swept through that nation’s congress with breathtaking speed.

The reform agenda did not come as a surprise to anyone paying attention. Peña Nieto had campaigned on a platform of increasing economic growth and jobs through major (and controversial) reforms. The energy reform restructures and opens up Mexico’s federal energy monopolies to foreign investment — a major goal being to boost the country’s oil and gas production.

But in all the discussion of shifting the global energy map, a critical potential is being overlooked: The overhaul of Mexico’s federal oil and electricity monopolies also breathes new life into prospects for making the energy sector cleaner and opening the door to green growth in the long run.

Mexico now has important opportunities to meet renewable energy and emissions reduction goals and grow its economy.

Energy and climate goals

Mexico’s new climate change law, which I’ve written about previously, sets voluntary national targets to reduce Mexico’s total emissions to half of 2000 levels by 2050 and requires Mexico to get over a third of its electricity from renewable sources by 2024.

At present, Mexico’s energy sector is responsible for roughly 65 percent of its national greenhouse gas emissions and renewables make up a small fraction of electricity production. Over the last decade, multiple independent analyses have shown certain measures in the energy sector could save or even make Mexico money while keeping millions of tons of carbon out of the atmosphere.

So, if Mexico’s energy sector could make money while modernizing and reducing greenhouse gas emissions (seemingly a win-win), what’s the hold up? Some of the most significant barriers have been a shortage of new capital to invest in modernization, efficiency, and long-term upgrades, as well as old-school inertia and institutional resistance to doing things differently.

But much of that old system, without a doubt, is changing now.

Moving toward a greener future

The latest reforms and the 2012 climate change law lay the groundwork for the country’s transition from relying on an aging infrastructure, old technologies and heavy fossil fuel dependence to a green growth future.

1. Emissions reduction targets

Mexico has committed to reducing its emissions 30 percent below business-as-usual levels by 2020 and 50 percent below 2000 levels by 2050. While voluntary, the targets it set at the U.N. climate negotiations in 2009 and reiterated in its climate law are a serious commitment on an international stage, and Mexico’s high-profile leadership on climate change should not be taken lightly. Experts from Mexico’s environment ministry and National Institute of Ecology and Climate Change based these targets on extensive analysis — and they were put on the table precisely because they can be achieved with the right incentives.

2. National emissions registry and green light on emissions trading

Mexico’s climate change law created the national emissions registry as part of its National Climate Change System; polluting industries’ reporting is mandatory, standardized and public. Addressing emissions across an entire national economy through the integrated measurement, reporting, accounting and transparency required by the national registry helps establish the building blocks for emissions trading. (The law also explicitly authorized, but did not require, the development of a voluntary emissions trading system.)

3. Price on carbon in fossil fuels

Fiscal reforms by the Peña Nieto administration include a tax on carbon in fossil fuel products, which aims to reduce Mexico’s emissions by seven million tons annually, and applies to everything, from diesel, to coal, to propane. The amount of the tax is based on the carbon content and linked to global market prices for carbon tons.

Built in to the tax legislation is eligibility for companies to pay the carbon tax through carbon offsets projects of an equivalent number of tons.

4. Pilot trading of carbon credits

The passage of the new carbon tax coincided with the announcement of a new offset trading platform on the Mexican stock exchange where credits for carbon emissions reductions (in tons) can be purchased either for the voluntary market, or in lieu of paying the carbon tax for those tons. This would create, in essence, a mini-compliance market for carbon credits.

It’s unclear what the scale and rules around offsets under the tax law will be, but the platform will mean developing key precursors to a future emissions-trading system — accountability, transparency, tracking of credits and transactions.

While Mexico may be tip-toeing into the emissions-trading-system arena, analysis by Environmental Defense Fund shows developing a full-scale emissions-trading system would be profitable and effective for meeting the country’s greenhouse gas emissions targets. Legally binding targets would be a necessary step in getting there.

5. New opportunities for capital, technology, and transparency

Most of Mexico’s energy infrastructure to meet demand beyond 2020 is yet to be built and it is widely acknowledged that the potential for renewable energy in Mexico vastly outweighs the current development. Opening Mexico’s major energy producing sectors to private investment provides capital, pressure to reduce waste and increase transparency to attract investment, and — particularly in the electricity sector — opens the field to a wide array of clean energy players who previously could not break in to Mexico.

Key pieces of the policy outlined have been driven by different goals and approaches, and of course, spanned a presidential election. But they do provide essential ingredients for a cohesive climate and energy policy and an effective mechanism to get to Mexico’s climate and development goals, and the time is ripe to put them together.

The Peña Nieto administration has already issued its climate change strategy (see my analysis from last June), and a roadmap for implementing climate policy between now and 2018 — just approved by its high-level commission — is due to be released this spring. Legislation to implement the Peña Nieto reforms is being crafted now.

Mexico will face the challenge of balancing the much-hyped economic potential of tapping its fossil fuel reserves with the climate change leadership it has established over the last decade. But as the world aspires to transition toward low-carbon economies that are no longer dependent on the fossil fuel reserves so keenly eyed in Mexico, there is significantly underappreciated opportunity here — to reduce the environmental impact of old, dirty sources of energy, while taking the long view and building a sustainable future economy.

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Mexico's new president releases promising strategy for national climate action

Mexico is the 12th largest emitter of greenhouse gases in the world and has been a leader among developing and middle-income countries on international climate policy – and so far domestic actions appear to be backing the country’s international commitments to reduce its emissions. While the strategy does not provide many new details, it does seem to carefully examine and support key aspects of Mexico’s new climate change law for implementation.

Mexico's new National Strategy on Climate Change lays out actions the country could take to reduce its emissions domestically. (Source)

The strategy was called for in Mexico’s General Law on Climate Change (LGCC), which was signed into law last June. Because the sweeping, but extremely general, legislation predated Enrique Peña Nieto’s new presidency, it was an open question whether the incoming administration would champion the issue or downplay implementation.

Peña Nieto’s administration hinted at an answer by releasing its official strategy for addressing climate change earlier this month.

The new National Strategy on Climate Change, released June 3 by the Environment Ministry (SEMARNAT), lays out a number of potential actions Mexico can take to reduce emissions – also known as “mitigation.” These actions focus on prioritizing mitigation potential, cost-efficiency, and additional benefits for reducing domestic greenhouse gas emissions.  Some highlights include:

    • Accelerating the transition to low-carbon energy sources, with a goal to produce 35% of electricity from “clean” sources by 2024.
    • Development of new economic instruments to finance mitigation, including the potential development of an emissions trading system.
    • Reducing subsidies that favor inefficient use of resources, and redirection of current subsidies from fossil fuels.
    • Reducing energy intensity through conservation and efficiency measures.
    • Integrating national emissions reductions targets into the federal, state and sectoral programs.
    • Improving forest management and reducing deforestation through REDD+ (Reducing Emissions from Deforestation and forest Degradation) policies and other measures.
    • Reducing emissions of short-term climate forcers and other greenhouse gases.

There are a number of highly encouraging signs from its release, which was  a few weeks before the official deadline. The Peña Nieto administration reiterated and expanded on some  key components of the law and the strategy maintains its focus on developing a climate change program that is centered on reaching Mexico’s emissions reductions targets.

Recall that only last summer, the historic climate law passed in Mexico’s outgoing congress with broad support across parties, including the current president’s. The comprehensive and historic law laid out a broad institutional framework; established federal responsibility for the development of strategies, plans and programs to address climate change mitigation and adaptation; and put forward ambitious (though still non-binding) domestic targets for reducing greenhouse gas emissions.

We noted then that the real guts of how Mexico would achieve those targets was left to be determined, and ultimately its success would rely on strength of commitment to implementation by Mexico’s next federal government.

What the climate strategy could mean for Mexico

The good news is that the new administration’s plan appears to take full advantage of the framework laid out by the law through the new “National Climate Change System.” The plan also includes the key commitment that national mitigation targets of 30% below business as usual by 2020 and 50 % below 2000 levels by 2050 will be integrated into the federal, state and sectoral development programs – where the real action on emissions reductions will be.

Notably, its introduction also frames the strategy explicitly in an international context where many countries, as well as some states and provinces, are developing or implementing emissions trading systems as a cost-efficient mechanism for reducing emissions.  (You can learn more about emissions trading programs around the globe in EDF’s new resource, The World’s Carbon Markets.)

Clearly, Mexico has taken note of its potential to participate in carbon markets in building a low-carbon economy – and rightly so.

With a new administration that has focused on public commitments to economic growth, job creation, and energy, taking advantage of such tools could form a key part of reducing emissions nationally while setting the country on a path to prosperity and low carbon development for the future.  Mexico, in particular, has a wealth of opportunities for effective, cost-efficient emissions reductions in many key sectors.

As an international leader on climate, Mexico also appears interested in leveraging this positive domestic action globally.  The document states:

This strategy is a fundamental step to implement the General Climate Change Law and shows that Mexico is advancing in complying with its international commitments. To the extent that it is executed, it will also be the best argument to demand collective action against climate change from the international community.

With the world’s global carbon-dioxide emissions reaching a record high in 2012, there is still a chance to avoid the worst effects of climate change – but action, indeed, is what we need.

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Mexico's historic climate law: an analysis

While environmental issues were not center stage in Mexico’s recent election, Mexico’s new president, whether he is yet aware of it or not, will inherit a tremendous opportunity for win-wins on environmental stewardship and combating the country's pressing economic challenges through Mexico’s new climate law.

Mexico's new president will hold a great deal of power in transforming Mexico into a clean energy economy, thanks to the country's sweeping new climate law. (Photo credit: Flickr user Esparta)

The new General Law on Climate Change allows Mexico to deploy economically efficient mechanisms (like the development of emissions trading) that offer enormous opportunities for reducing the country’s greenhouse gas emissions and could truly transform Mexico into a 21st century, clean energy economy. The country’s presumed president-elect, Enrique Peña Nieto, and his administration will hold a great deal of power in both making this a reality – and making it their own.

Outgoing President Felipe Calderón signed the legislation into law just days before June's G-20 Summit in Mexico and the Rio+20 Conference on Sustainable Development. It sets out ambitious, but achievable, mitigation goals and establishes critical machinery for setting the country on a sustainable, low-carbon development path.

But like many pieces of broad and potentially transformative legislation, much will be determined through the details of its implementation.

While the law is landmark in many ways, some key elements – such as its national targets for reducing emissions and the option to develop a domestic emissions trading system – are not mandatory, nor does the law itself spell out specific sanctions for not meeting those targets.

Absolute, legally binding caps are the surest way to achieve Mexico’s goals of reducing carbon emissions; given the law's lack of such a cap, the absolute strength of the law and whether it accomplishes its mitigation goals will depend on political will and leadership. (View a translation of the law's relevant provisions)

Summary: Major provisions in Mexico’s climate bill

Among other ambitious, though some voluntary, measures, the General Law on Climate Change (LGCC) aims to increase renewable energy use; sets ambitious goals to curb domestic emissions; and establishes a high-level climate commission that is authorized to create a domestic carbon market.

The law lays out clear federal authority to develop national-level policy, planning and specific actions for mitigation under a national climate change program. It provides a critical framework and a clear mandate for aligning national policies and programs across ministries and agencies in support of coherent mitigation and adaptation policy.  It also requires the Government to develop short, medium, and long-term policy plans.

Major components of Mexico’s General Law on Climate Change include:

  1. Goal to increase renewable energy use: The Ministry of Finance and relevant energy agencies will develop a system of incentives to favor the use of renewable energy by no later than 2020; the law also establishes goals for increasing electricity generation from renewable sources, including an aspirational target, or goal, of 35% of electricity generation coming from renewable sources by 2024.
  2. Ambitious, economy-wide emissions-reductions goals: The law sets a goal of reducing Mexico’s greenhouse gas emissions to 30% below business-as-usual levels by 2020, and 50% below 2000 levels by 2050.  These are the same as the aspirational, long-term emissions reductions (mitigation) goals Mexico pledged under the UN Framework Convention on Climate Change.
  3. National climate change information system: The law requires mandatory emissions reporting and the creation of a public emissions registry covering emissions sources from power generation and use, transport, agriculture, stockbreeding, forestry and other land uses, solid waste and industrial processes.
  4. Emissions trading system: The law authorizes the Environment Ministry to establish an emissions market that can include international transactions between Mexico and any countries with which it enters into emissions trading agreements.
  5. High-level climate change commission: The inter-secretarial climate change commission (CICC) established in the law will contribute to the formulation and approval of the national climate change policy. The CICC will be composed of heads of a range of ministries, including: Environment; Agriculture and Livestock; Rural Development, Fisheries, and Food; Health; Communications and Transport; Treasury; Tourism; Social Development; Governance; Oceans; Energy; Education; Finance and Public Credit; and Foreign Affairs.
  6. Climate change fund: The new fund will allow the federal government to collect and channel resources from domestic and international sources toward domestic climate change activities for reducing greenhouse gas emissions (mitigation) and adapting to the changing climate (adaptation).
  7. Expanding the National Institute of Ecology's mandate to include a major focus on climate change: Much additional technical and policy work will be conducted under the new National Institute of Ecology and Climate Change (INECC), formerly the National Institute of Ecology.

Analysis

Overwhelming multi-party support in both houses of the Mexican Congress this spring bodes well for the future of the climate law, which was three years in the making. The votes that turned the bill into law came from all major parties – including large swaths of the presumed president-elect's own party; the bill passed in the lower house 280-10 and the Senate 78-0.

Now most of the policy and regulatory power will depend on the political will of a few key federal ministries – largely led by the Environment Ministry (SEMARNAT) and the Energy Ministry (SENER) – along with a broader array of ministries that will make up the climate change commission.

Since its earliest iterations, the legislation has undergone changes that reflect compromises to address concerns of some industries over such comprehensive legislation. These changes mainly insert stipulations about consideration of cost impacts, economic well-being, and global competitiveness of the Mexican economy into decisions on climate change policy and programs.

While these stipulations could provide barriers to some actions, they may also represent opportunities for real economic benefits.  Many of the key, large-scale mitigation actions available to Mexico provide long-term cost efficiency and economic benefit, particularly in the energy sector.

Mandatory absolute caps on greenhouse gas emissions are the surest way to achieve Mexico’s mitigation goals. Lacking these, Mexico's new law is still an important step forward, in part because economic realities are likely to lead Mexico toward adopting economically efficient market-based approaches because:

  1. Mexico could cut the cost of its mitigation targets in half by instituting a domestic mandatory cap-and-trade system. EDF’s preliminary analysis based on the World Bank’s estimates indicates that Mexico could reach its 2020 target for one-half the anticipated cost by implementing a mandatory cap and allowing domestic carbon trading. Further, international trading of a portion of those reductions could result in billions of dollars of revenue, even before 2020. By instituting such caps, Mexico could take full advantage of these opportunities.
  2. Mexico’s power sector has significant potential for cost-effective emissions reductions. The potential for cumulative electricity sector emissions reductions through 2030 are estimated at 1.8 billion tons of carbon dioxide equivalent (tCO2e), according to the World Bank. The Bank also estimates more than 30% of the potential emission reductions at the relatively low price of just under $5/tCO2e could come from the power sector, and that number could jump to about 40% of the potential emission reductions if the price is just below $12/tCO2e.
  3. Mexico could reap huge energy cost savings from the law. The World Bank study predicts that Mexico’s investment in reducing energy consumption through 2030 would more than pay for itself, leading to an $8.2-billion net savings, or surplus, from lower energy costs. The net costs of reducing emissions within the sector up to 2030 and beyond could potentially be even lower given incentives provided through future international carbon trading.

With vision and political will, the president-elect can implement smart environmental and economic policy, build a 21st-century green economy and create a legacy of real action on climate change and transformative development for Mexico.

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Mexico's lower house passes climate change law

Mexico is one step closer to having a comprehensive law on climate change after its lower chamber passed the General Law on Climate Change late yesterday.

Mexico's house-passed General Law on Climate Change puts in place an important framework for emissions reductions from critical sectors and establishes key authorities and institutional structures. The bill now heads back to the Senate, which overwhelmingly passed an earlier version. (Photo thanks and credit to Mardan)

Now the bill’s final passage is in a race against time before the congressional session adjourns at the end of this month. In the next couple weeks, the bill has to clear its last two hurdles to become law: 1) passage by the Senate, which overwhelmingly passed an earlier version of the bill in December, and 2) signature by President Felipe Calderón.

A full analysis of the new bill, which passed 280-10 with one abstention, is still pending, but we highlight a few of the broader elements below.

Mexico’s General Law on Climate Change, as passed by the lower chamber:

  • Reiterates in domestic law the country’s aspirational long-term greenhouse-gas emissions mitigation goals pledged under the UN Framework Convention on Climate Change to reduce its emissions 30% below business-as-usual emissions by 2020, and 50% below 2000 levels by 2050.
  • Establishes a high-level climate change commission, a climate fund and mandatory emissions reporting and establishes a  national emissions registry. Also transforms the current National Institute of Ecology to the National Institute of Ecology and Climate Change. (These provisions were also included in the previous Senate-passed bill.)
  • Requests the Ministry of Finance and relevant energy ministries to develop a system of incentives by 2020 that favors the use of renewable energy. Establishes goals for increasing electricity generation from renewable sources, including an aspirational target of 35% of electricity generation to come from renewable sources by 2024.
  • Enables, but does not mandate, the creation of a domestic greenhouse-gas emissions trading system.

Several analyses, including from the World Bank, indicate that across the economy Mexico already has available abundant low-cost, or even profitable, opportunities for reducing carbon emissions.

EDF’s own preliminary economic analysis shows a Mexican emissions trading system could both attract international investment and propel Mexico to achieve the country’s current carbon reduction goals at low cost, and possibly significant profit, if the system were to include an absolute carbon cap set near their current target and allow trading both domestically and in international markets.

Binding domestic targets are the strongest way for Mexico, or any country, to ensure it will meet its mitigation goals and maximize the full potential of future international carbon markets. This legislation doesn't go quite that far; however, it does put in place an important framework for emissions reductions from critical sectors; establish key authorities and institutional structures; and send a message to industries that would hopefully further incentivize future low-carbon development.

We are excited and optimistic about Mexico’s continued momentum to attack climate change at the national level. This legislation is a strong step in the right direction toward a healthier climate in Mexico and around the world. And with so many opportunities to benefit economically from taking strong action on climate change, we are hopeful that Mexico will realize this law's full potential and continue its record of climate leadership by further strengthening the rules in the future.

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Mexico’s Congress looks to pass climate change law this spring

Climate change is likely to be high on the agenda of Mexico’s Congress when it returns to session today, and the world will be watching as the 15th largest emitter of global greenhouse gas emissions considers what would be the country’s first comprehensive law to curb climate change.

Mexico's lower house of Congress, which returns to session today, is anticipated to consider a sweeping climate change bill this spring. (Photo credit and thanks to Flickr user SCA)

The “General Law on Climate Change” has already made successful inroads in Congress, having passed Mexico’s Senate with an overwhelming majority in early December. This spring, the Senate-approved version of the bill is anticipated to be considered in Mexico’s lower house, the Chamber of Deputies.

The bill’s language states its intention is to:

favor the transition towards a competitive, sustainable economy with low carbon emissions, consequently generating environmental, social, and economic benefits.

The bill is still subject to change in the Chamber of Deputies from the language approved in the Senate. However, the current version provides some ambitious, albeit not obligatory, goals for greenhouse gas emissions reductions, as well as promising paths to achieve these goals through promoting renewable energy, ratcheting down of fossil fuel subsidies, and reducing emissions from land-use change.

The key features of the Senate-passed legislation include:

  • The permanent establishment of a new high-level Inter-secretarial Commission on Climate Change.
  • Creation of a climate fund to collect and channel resources for climate change activities to reduce greenhouse gas emissions (mitigation) and adapt to the changing climate (adaptation).
  • Authority to establish an emissions market that can include international transactions between Mexico and any countries with which it makes emissions trading agreements.
  • Requirements for mandatory emissions reporting and the creation of a public emissions registry that will cover emissions sources from power generation and use, transport, agriculture, stockbreeding, forestry and other land uses, solid waste, and industrial processes.
  • Goals for states to reverse the trend of deforestation, increase electricity generation from clean sources to 35% by 2024, and reduce fossil fuel subsidies.

While the Chamber of Deputies is able to make modifications to the bill, the threat of triggering delays for additional voting – especially now, as this Congressional session, scheduled to end this August, winds down – often incentivizes keeping the bill in its current form.

Broad support, efforts in Mexico to address climate change

Global attention on Mexico’s climate policy has faded from its 2010 peak when the country hosted the UN climate negotiations, but Mexico’s motivation to address climate change has not.

Mexico's President Felipe Calderón, who has made climate change a top priority in his administration, signed an agreement with the United States in January to "advance towards a green economy." (Photo credit and thanks to the Mexico's Presidency of the Republic)

Particularly over the last several years, the country has shown political willingness to address climate change, with a pledge to halve its emissions by 2050 from 2000 levels, and a number of sweeping climate change bills brought up in the Senate. Though the other climate bills never became law, the current bill’s overwhelming approval in the Senate by a broad coalition of sponsors (76-2 with 5 abstentions) shows a stronger momentum than we’ve seen.

While the political composition of Mexico’s lower chamber may mean the bill will not have as broad support in the Chamber of Deputies as it had in the Senate, it may benefit from that momentum.

Meanwhile, President Felipe Calderón has made clear climate change is a top priority in his administration, and in mid-January signed a formal agreement with the U.S. to “advance towards a green economy.”

Mexico’s passing this bill to enshrine domestic action on climate change into law guarantees the country’s efforts to curbing climate change can extend far beyond the current president.

And, as the world’s 15th largest global emitter of greenhouse gases, Mexico’s domestic environmental leadership will also be particularly important as the world increasingly acknowledges that action from developed and developing countries alike will be necessary if we are to avoid the disastrous effects of global warming.

*Clarification (Feb. 3): The third bullet point above has been revised to reflect a more accurate translation of the relevant provision.

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