Mexico | The Triple Helix of the Carbon Market in Mexico

Summary

This article examines the potential of the carbon market in Mexico, focusing on three key instruments: an emissions tax, a voluntary market, and emissions trading systems.

Key points

• Key points:
• Since 2014, Mexico has had the Special Tax on Products and Services (IEPS) applied to fossil fuels. This tax is an effective instrument for establishing a price on CO₂ emissions, which is the first key step in the process of reducing these emissions.
• The second is the voluntary carbon market, which includes companies, individuals, or other institutions that, without having a legal obligation to reduce their emissions, choose to participate in order to offset their emissions.
• The third instrument is an emissions trading system, which apply to companies with binding emissions reporting and reduction targets. At the federal level, Mexico has a suspended system, although significant progress has been made at the state level.
• It is anticipated that the next administration will resume the federal emissions trading system, although coordination mechanisms with the states are still pending.

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