A Comprehensive Climate Mitigation Strategy for Mexico

20.500.12592/8hg6mp

A Comprehensive Climate Mitigation Strategy for Mexico

18 Oct 2021

This paper discusses a comprehensive strategy for implementing Mexico’s climate mitigation commitments. Progressively increasing carbon prices from current levels of US$3 per ton to US$75 per ton by 2030 would achieve Mexico’s mitigation pledges, while raising annual revenues of 1.8 percent of GDP and cumulatively averting 11,600 deaths from local air pollution. The carbon price would raise fossil fuel and electricity prices, imposing burdens of 2.7 percent of consumption on the average Mexican household. However, recycling carbon pricing revenues would offset most of this burden, and targeted transfers could make the reform pro-poor and pro-equity. Additionally, the economic efficiency costs of carbon pricing (0.3 percent of GDP in 2030) are more than offset by local air pollution and other domestic environmental benefits (before even counting climate benefits). Mexico would need a more ambitious 2030 target if it were to follow many other countries in adopting a midcentury ‘net-zero’ emissions target. To enhance the effectiveness of the mitigation strategy, carbon pricing can be reinforced with sectoral instruments, such as feebates in the transport, power, industry, building, forestry, extractive, and agricultural sectors. Complementary policies are also needed to support public investment in the clean energy transition.

Authors

Simon Black, Koralai Kirabaeva, Ian Parry, Mehdi Raissi, Karlygash Zhunussova

Frequency
regular
ISBN
9781513599847
ISSN
1018-5941
Pages
53
Published in
United States of America
Series
Working Paper No. 2021/246
StockNumber
WPIEA2021246

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