Abstract
AbstractA more general lesson from the past decade is that climate policy and carbon initiatives such as ETS and carbon pricing are not static concepts, but are instead constantly evolving and building upon previous experiences. The vision of a single, top-down global trading system has shifted toward the reality of various single and regional trading system programmes. Building a national emission trading system in Mexico will surely pass through processes and experiences that the country has somehow undertaken from the Kyoto Protocol (KP) in 2005, particularly with the Clean Development Mechanism (CDM), the Mexican Carbon Fund (FOMECAR) and their legacy. Additional design elements or provisions must be prepared under the new ETS in Mexico: regulation will possibly include definitions, scope, compliance obligation, legal procedures and other necessary provisions such as the allocation of permits. However, in order to start the process, important questions on financing the initiative and accompanying the development of an ETS will go through a finance support scenario. Thus, who is going to finance the starting process for allocating emissions, financing bonds and other design issues for the implementation of the Mexican ETS? Who will be financing and offering technical cooperation to follow up on eligible projects for the ETS and who will be supporting education and information activities about ETS implementation? Those and other questions will be addressed in this article, in the light of international and regional experiences.
Highlights
The implementation of a future Mexican Emissions Trading Scheme (ETS) will go through different phases, and it will be working in parallel with market mechanisms rules for climate change mitigation that were adopted during Conference of the Parties (COP)-25 in 2019
As carbon market actions were built upon many years of intense negotiations and have evolved overtime, it is crucial to understand the legacy of the market mechanisms and learn from past international experiences to better understand the Mexican ETS outreach
Either through the involvement of Mexican development banks or international and regional multilateral banks and the contribution of public and private resources together with technical assistance from international cooperation, a new financing scheme can be created for projects that may issue compensation credits that participate in this emissions trading system
Summary
The CDM has been a great success in developing a new market for GHG emission reduction projects and providing tools for mitigation actions worldwide (World Bank 2012). Over the past two decades, many international financial institutions, donor agencies and national development banks have supported the creation of different initiatives to build carbon trading markets under the UNFCCC process and beyond.
Sign-in/Register to view highlights & summary 
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call