Reducing greenhouse gas emissions by means of emissions trading
Project description
Title: Preparation of an Emissions Trading System (ETS) in Mexico
Commissioned by: German Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV)
Country: Mexico
Lead executing agency: Mexican Agency for International Development Cooperation (AMEXCID)
Total duration: 2017 to 2023
Context
The Paris Agreement on climate change requires signatory countries to set national targets for reducing their greenhouse gas emissions. Mexico aims to cut its emissions by 22 per cent compared to a ‘business as usual’ scenario by 2030. The energy and manufacturing sectors will have a key part to play in this, so it is crucial to identify cost-efficient saving measures in these sectors to promote low-carbon development, boost economic growth and reduce emissions.
Emissions trading systems set an upper limit on the volume of greenhouse gases individual sectors are allowed to emit. Within the defined limits, companies can buy and sell emissions certificates entitling them to emit specific amounts of greenhouse gases. This instrument incentivises producers, consumers and investors to cut their emissions. It also gives them the freedom to decide which measures to adopt and when.
Objective
The institutional and technical preconditions for an emissions trading system in Mexico are in place.
Approach
The project is supporting Mexico’s Environment Ministry in structuring the pilot phase of the Emissions Trading System (ETS).
Scientific analyses and policy recommendations provide decision-makers with the information required to design and implement the ETS.
Training courses and workshops contribute to capacity building and the involvement of relevant ministries, businesses, financial institutions, civil society and academia.
The deployment of experts in the field and the organisation of study trips to Germany for Mexican stakeholders promote international dialogue with countries that already operate a similar system.
The pilot phase of the ETS in Mexico began in January 2020. Only industrial and energy plants declaring emissions of more than 100,000 tonnes of CO2 between 2016 and 2019 are taking part (around 300 plants).
Last update: March 2022