Reducing greenhouse gas emissions through emissions trading

Context

As part of the Paris Agreement on climate change, Mexico has set itself the national target of reducing its emissions of greenhouse gases and compounds by 35 per cent by 2030. Industry and the energy sector play an important role here, as they are among the largest emitters of greenhouse gases. To prevent negative economic impacts, Mexico is focussing on cost-effective climate change mitigation measures.

Emissions trading systems (ETS) set an upper limit on the greenhouse gases that regulated sectors are allowed to emit. Within these limits, companies can trade emissions certificates with each other. The system thus creates economic incentives to invest in greenhouse gas reductions and at the same time gives companies the freedom to decide which measures to adopt and when to implement them.

Objective

The institutional and technical preconditions for an ETS in Mexico are in place.

Approach

The project supports the Mexican Ministry of Environment and Natural Resources (SEMARNAT) in implementing the pilot and operational phases of the ETS.

Through scientific analyses and policy recommendations, it provides decision-makers with key information on implementation of the ETS. To this end, the project has organised a dialogue process with the main interest groups, including regulated companies. The dialogue creates space for government, civil society and business representatives to participate in implementation of the ETS.

Mexican states working on the development and implementation of carbon pricing policies are also being advised by the project. This supports the achievement of local and national climate goals.

The project engages local experts on the ground to develop training and dialogue measures, thus facilitating the exchange of experience and international dialogue with Germany and other countries that have already successfully implemented an ETS.

Last update: February 2024