Preparation of an Emissions Trading System (ETS) in Mexico

Mexico intends to involve the private sector in the implementation of its NDCs through the introduction of an Emissions Trading System (ETS). However, there is still a lack of expertise and institutional capacity to continue the development of and implement an ETS. Therefore, the project creates the institutional and technical conditions to be met by stakeholders from the public and the private sector and civil society. In doing so, the project develops knowledge-based recommendations for action to guide the Mexican decision-making processes on ETS design. The project strengthens the different stakeholders involved through capacity development and promotes cooperation between them. Besides, the project relies on international knowledge transfer to enable the Mexican stakeholders to learn from other countries and regions that already have an ETS and to disseminate the lessons learned in Mexico.

Project data

Countries
Mexico
IKI funding
6,200,000.00 €
Duration
09/2017 till 02/2025
Status
open
Implementing organisation
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Political Partner
  • Ministry of Environment and Natural Resources (SEMARNAT) - Mexico
Implementing Partner
  • Ministry of Environment and Natural Resources (SEMARNAT) - Mexico

State of implementation/results

  • Building on the work of the Climate Alliance and with the support of the project, the amendment to the Climate Change Act (LGCC) came into force in July 2018, which provides for the introduction of an emissions trading system (ETS) and a three-year pilot phase starting in 2019. Results of the project's technical and legal advice informed the development of the legal framework as well as negotiations with the private sector.
  • In the first quarter of 2023, several Mexican states started collaborating with the project on their own carbon pricing instruments (especially CO2 taxes). The aim is to use different instruments at state and federal level in a coordinated way and in the spirit of effective climate action.
  • In the first half of 2023, the project has promoted exchanges on Mexico's experience with the ETS through events in Mexico and internationally. Events include the Festival de Financiamiento Sostenible in Mexico City, the Latin American Climate Summit in Panama and the Mexico Carbon Forum in Querétaro, Mexico.
  • In December 2022, the project presented the results of the studies on competitiveness and benchmarking as an allocation method. The event was attended by more than 100 people representing the sectors involved in the study (iron and steel, cement and lime, power generation, and oil and gas), as well as Mexico's Ministry of Environment SEMARNAT.
  • In the period April 2022 to February 2023, legislators from the Mexican Chamber of Deputies and Senate respectively took part in three high-level information events on the emissions trading system organised by the project and conducted a dialogue on the prospects for this climate protection instrument. The events took place with the participation of the civil society organisation POLEA.
  • With the participation of 67 people from Mexican government and research institutions, the inaugural session of the ETS Academy, a three-week training format on technical, economic and political issues of carbon trading, took place in March 2022.
  • Since February 2022, the SEMARNAT project has been advising on the regulation for the implementation phase of the ETS, which is to enter into force in 2024. For this purpose, the implementation of important technical studies was already started in the 3rd quarter of 2021. Thematic focal points of the studies include: Setting of emission caps, competitiveness of the participating companies, allocation of emission rights and feasibility of benchmarking analyses.
  • In the 1st quarter of 2021, anti-corruption training was conducted with the participation of the German Emissions Trading Authority (DEHSt), SEMARNAT and the companies participating in the ETS. At the same time, in cooperation with the EU- and BMU-funded SPIPA project and the European University Institute (EUI), four exchange events on European experiences with ETS design and implementation were held, involving SEMARNAT, the private sector and Mexican research institutions.
  • In June 2022, the project released a video on the Mexican ETS and the role of the project. The video is available in Spanish.

 

Latest Update:
02/2024

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