Mexico: Mexico Passes Climate Change Legislation

Last Updated: 21 June 2012

By Hana Vizcarra1

On April 19, the Mexican Congress passed a climate change bill that sets greenhouse gas emissions reduction targets for the country, outlines goals for a national climate change policy, and specifically creates the authority to institute a cap-and-trade program in the future. The comprehensive law emphasizes public participation and education and the promotion of renewable resources. The law establishes structures for implementing climate change adaptation and mitigation goals and builds on previous legislative efforts to combat climate change in Mexico. Passed in the Cámara de Diputados by vote of 128 to 10 and in the Senado by a vote of 78 to 0, the law did not engender the political divisiveness surrounding climate change issues in the United States. President Calderón signed the bill on June 5, and it was published in Mexico's Federal Register (Diario Oficial de la Federación) on June 6. The bill goes into effect on September 4, 2012.

Under the Kyoto Protocol, Mexico is a non-Annex I Party, meaning that it does not currently have binding GHG emission reduction targets. As a non-Annex I Party, Mexico hosts numerous projects under the Clean Development Mechanism (CDM), generating certified emission reduction credits that can be used by other Kyoto Parties to achieve their emission reduction targets. The Kyoto regime's flexibility mechanisms, including the CDM, are premised upon the idea that emissions reductions in non-Annex I countries go beyond those that will happen in a business-as-usual scenario and are therefore "additional." The general test for additionality under the CDM requires the project sponsor to demonstrate that the emission reductions created by the process are not legally required and would not happen without the incentives provided by the availability of carbon credits.2 Therefore, non-Annex I countries that choose to develop climate legislation are faced with the challenge of how to do so without the resulting law defeating the additionality requirement of the CDM. If a reduction is mandatory under the law, or a project would have happened without the CDM process due to other incentives, it would not be eligible to receive carbon credits.

Mexico's law largely focuses on establishing general policy goals and voluntary reductions, and also requires the adoption of monitoring, measurement, and reporting requirements for yet-to-bedetermined industrial sectors. The law provides authority for incentive programs to encourage voluntary emission reductions and even a cap-and-trade program. The law also leaves open the possibility that the government could impose binding emissions reductions limits sometime in the future. Depending on how the government chooses to implement the law, it could pose a risk of defeating additionality requirements and therefore CDM eligibility.

The Ley General de Cambio Climático (General Law on Climate Change)3 sets the "aspirational goal" of reducing emissions thirty percent as compared to a hypothetical baseline of emissions that would otherwise occur by 2020 and fifty percent below 2000 levels by 2050.4 The law creates the Fondo para el Cambio Climático (Climate Change Fund) to pull together public, private, national, or international financial resources for implementing climate change related programs. It also establishes an "aspirational goal" that 35% of the electricity generated by the Federal Government shall come from renewable sources or clean energy by the year 2024, a task that is to be coordinated by the Federal Energy Commission5 (Comisión Federal de Electricidad) and the Federal Commission for the Regulation of Energy (Comisión Reguladora de Energía).6 The government may consider economic and fiscal incentives and instruments such as stimulus efforts, financial instruments such as credits and insurance, and market instruments such as concessions, authorizations, licenses, and cap-and-trade mechanisms to incentivize compliance with the climate change objectives.7 The law specifically authorizes the creation of a voluntary emissions reduction market linked to international emissions reduction markets.8

The new law identifies the following climate change policy principles and goals:

  • Sustainability;
  • Shared responsibility between the Federal, State, and Municipal governments and society for mitigation of and adaptation to the adverse effects of climate change;
  • Precaution, which is defined as not allowing a lack of total scientific certainty to postpone mitigation or adaptation measures when there is a threat of grave or irreversible harm;
  • Prevention;
  • Adoption of production and consumption standards for the public, social, and private sectors to transition to a low carbon economy;
  • The development of incentives to promote the use of clean energy and renewable energy sources, including the gradual phase out of fossil fuel subsidies;
  • Requiring mandatory emissions reporting for specific sources and sectors that generate greenhouse gas emissions and making coordinated efforts to merge other federal or local reporting systems;
  • Incentivizing the use of clean public transportation in the Country;
  • Taking advantage of methane and other gases generated in waste management;
  • Integration, coordination, and cooperation;
  • Public participation in the formation, execution, monitoring, and evaluation of the National Strategy;
  • Environmental responsibility;
  • Use of economic instruments to incentivize the protection, preservation, and restoration of the environment and the sustainable use of natural resources;
  • Transparency and access to information and justice;
  • Ecosystem conservation and biodiversity; and
  • Commitment to the economy and national economic development to achieve sustainability without harming economic competitiveness.9

Responsibility under the law is divided between the Federal, State, and Municipal governments, with the bulk of the responsibility placed on the federal government.10 The federal government must, with public participation, draft a National Strategy on climate change (to be revised every ten years) and update or amend the Special Climate Change Program to implement this strategy. It is given regulatory authority to implement mitigation and adaptation actions envisioned in the law and to regulate emissions. Additionally, the law calls for the promotion of scientific research and education related to climate change issues.

The Federal government must create an emissions reporting system (Registro)11 and transmit information to the public through the Sistema de Información sobre el Cambio Climático (System of Information about Climate Change).12 The government is to establish in its National Strategy document which sectors will face mandatory GHG reporting requirements. Previous governmental policy documents indicate that these are most likely to include the transportation, waste management, electricity, energy, and forestry and agricultural sectors.

The law calls for the development of both adaptation and mitigation policies to achieve its reduction goals. The law outlines the types of objectives that fall within each category. The adaptation section focuses on risk and disaster planning and resource and infrastructure development while the mitigation section focuses on emissions reductions and preserving the environment.13

Emissions reductions are to be assessed on a sector-by-sector basis. The law specifically provides that policies that add costs to the private sector or society that will not be financed by international funding sources or other funds may be implemented in a dual-phased approach—initially through a voluntary program and then by establishing specific reduction goals.14 However, it is unclear if that second phase, creating binding emission reduction targets, will be implemented.

The law outlines particular policy promotion goals for some economic sectors and prioritizes sectors with the highest potential for reductions.15 For example, it calls for such wide-ranging initiatives in the transportation sector as investing in the creation of bike lanes and non-motorized transportation infrastructure, developing public transportation systems, and promoting working from home or carpooling.16 In a section addressing reducing emissions in the energy industry, the law specifies including externalities in the decision making process regarding electricity generation, promoting energy efficiency practices, and incentivizing renewable energy development, among other approaches.17

The law creates various entities to implement its initiatives and provides broader authority to those that already exist. For instance, the law grants broader authority and tasks to the Comisión Intersecretarial de Cambio Climático (Inter-secretarial Commission on Climate Change), created by the Federal government on April 25th, 2005,18 for the elaboration of climate change policies. It will be responsible for promoting coordination between agencies, establishing national policies for mitigation and adaptation, approving the National Strategy, proposing research and regulatory instruments, as well as developing national positions for international climate change forums, among other responsibilities. The law specifies the creation of additional working groups for the Commission, including working groups addressing issues such as emissions reductions, Reducing Emissions from Deforestation and Forest Degradation (REDD), and international negotiations. Additionally, the Consejo de Cambio Climático (Climate Change Council) will advise the Commission and work with INECC (described below) to develop the National Strategy.

A new entity within the Ministry of the Environment and Natural Resources, Institute Nacional de Ecología y Cambio Climático (National Institute of Ecology and Climate Change or INECC), will be responsible for the technical work necessary to develop policy recommendations. Among other things, INECC will be responsible for:

  • Estimating annual emissions;
  • Coordinating scientific and technical research;
  • Creating and promoting criteria, methodologies, and technologies for conservation and sustainable use of natural resources;
  • Helping develop qualified individuals to work in these fields;
  • Collaborating in the creation of strategies and programs for sustainable development, the environment, and climate change;
  • Conducting sectorial analysis and analysis of the future costs of climate change and the benefits of proposed actions;
  • Evaluating goals and actions in the National Strategy to ensure they comply with the adaptation and mitigation objectives outlined in the law; and
  • Proposing policy recommendations regarding mitigation and adaptation actions.

Over the next year, the Mexican government will establish the gubernatorial bodies envisioned in the law and begin the process of developing regulations and implementing the law's initiatives. As it does so, entities interested in participating in credit-producing projects should monitor the development of the specifics of the incentive programs, monitoring and reporting requirements, and any reduction requirements for their potential impact on additionality determinations. Mexico may become an active market for emissions reduction technology even if the changes resulting from this law limit the ability to garner credits from emissions reduction projects. Although the national reduction goals are "aspirational," the programs and regulations developed in order to reach them will place real requirements on industry. Certain sectors will be bound to annually report their greenhouse gas emissions and subject to fines if they do not comply or submit false information, and binding reductions limits remain a possibility in the future. However, the tenuous status of the Kyoto Protocol and the possibility for its renewal as well as the currently depressed price for the CDM's Certified Emissions Reduction units begs the question of how important maintaining additionality for the sake of Kyoto may be.

Much work remains following the President's signing of the bill. The Federal government must work closely with states and municipalities to develop the National Strategy and regulations without duplicating or contradicting local and regional climate change efforts. Many details were left undecided in the law as passed and will require a coordinated effort among Federal agencies. Although an historic bill, the specifics of what impact the climate change bill will have on industry, technology, and emissions reductions projects remain to be seen.

Footnotes

1 A special thanks to Miguel Ángel Mateo Simón and Jeanett Trad Nacif at BSTL Abogados in Mexico City for their review and consultation on this article.

2 See EB39 Report Annex No. 10, Tool for the Demonstration and Assessment of Additionality, available at http://cdm.unfccc.int/EB/archives/meetings_08.html#039.

3 Ley General de Cambio Climático, passed by the Congress on April 19, 2012, available at "http://www.senado.gob.mx/sgsp/gaceta/61/3/2012-04-19-1/assets/documentos/ cambioclimatico_corregido.pdf" .

4 Artículo Transitorio Segundo.

5 Mexico's National State Utility.

6 Artículo Tercero Transitorio inciso (e).

7 Art. 93.

8 Art. 94 and 95.

9 Art. 26.

10 Art. 5o-12.

11 Art. 87 through 90.

12 Art. 76 through 79.

13 See Art. 27 through 37.

14 Art. 32.

15 Id.

16 Art. 34.

17 Id.

18 For further information, please visit the official site http://www.cambioclimatico.gob.mx/ index.php/politica-nacional-sobre-cambio-climatico.html#comision_intersecretarial

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions