Mexico
Mexico can meet the objectives of the Paris Agreement through profound structural transformations across all economic sectors. This research analysed the main system transformations required throughout the whole economy to obtain a decarbonisation pathway, as well as assessing the ways in which a number of national companies are aligned with this required transition.
All changes required – be they of a technological or behavioural nature, or changes in business models, or even changes that involve the creation of whole new industries and new services – will have to be swift, and in keeping with the rest of the economy and the climate targets set. They will also need to be geared towards solving the most pressing domestic issues (poverty, energy, food and water insecurity, etc.).Success in this endeavour will not come about through incremental adjustments to Mexico’s current plans. A different development narrative, which seeks sustainable social and economic development by simultaneously addressing policies, regulation, public prices and social attitudes, will have to inform national decision-making and result in clear investments – and disinvestments – starting now.
Economy-wide deep decarbonization pathway
Reaching net zero is possible for Mexico, but doing so requires a progressive decrease in emissions until a reduction of 90% is achieved by 2050 compared with 2020 levels – namely a decrease down to 51 MtCO2e. This will require significant changes across the highest-emitting sectors (electricity generation, transport and industry), and in sector that functions as the country’s principal CO2 sink: the AFOLU sector.
Population
millions inhabitants
GDP
Billion $ USD (2015)
Emissions per capita
tCO2e/Capita
GDP Carbon intensity
tCO2e/Bn USD$ 2015
CO2 emissions from combustion
MtCO2
(1) except electricity
GHG and gases breakdown, sinks
MtCO2e
(1) without energy & IPPU
(2) Non-CO2 for Energy, N2O – CH4 – HFC – PFC – SF6 – mix
(3) forest and all other fluxes
Electric Utilities
A deep decarbonization pathway for power generation
Electricity generation must lead the way in Mexico’s decarbonisation. The sector can be decarbonised to the tune of around 15 gCO2e/kWh by 2050. Mexico’s vast renewable resources can provide clean electricity, but they require a major boost, in terms of generation capacity (wind and solar especially), as well as in infrastructure for storage, transmission and transformation (into hydrogen, for example). In this regard, reliable power delivery is possible (even though the power sources are highly intermittent), and without curtailment. This can be achieved by balancing load across the whole country and storing and transforming surplus electricity.
Electricity demand
TWh
Carbon intensity of electricity
gCO2/kWh
Power Generation capacities
GW
Power generation production
GWh
Climate transition performance and scenario alignment of Electric Utilities companies
The three companies assessed under the ACT EU methodology obtained scores of between 6 and 8, for an average performance score of 7/20, between E to B, for an average narrative of C, and an average trend score of “-“. Overall, companies obtained reasonably similar scores, indicating that the panel is relatively homogeneous in terms of its levels of maturity regarding the alignment to the country-sectoral decarbonization pathway.
| 7 | C | – |
| Performance | Narrative | Trend |
- Most of the companies evaluated have defined low-carbon strategies for themselves. Still, their emissions have increased over the past five years and continue on an upward trajectory.
- Most of the companies evaluated have not set medium- or long-term emissions reduction targets, but have started or are about to start doing so.
- None of the companies are investing in R&D into low-carbon alternatives or technologies, limiting their ability to develop new business opportunities with lower climate impacts.
- Most companies have defined a strategy and action plans to meet their climate goals; however, those plans are often not budgeted and lack sufficient detail to ensure consistency with the aims and goals set.
Performance modules scores
(%)
Quantitative indicators scores
(%)
Mexico, Electric Utilities companies : Average Performance modules and quantitative indicators scores.
Note: Average calculated for a sample of three Mexican companies in the sector, including one of the five largest companies in the country.
Most of the companies assessed play an essential role in increasing renewable energy capacity in Mexico. Their installed renewable energy capacity currently accounts for a high share of the country’s renewable energy supply. Furthermore, the companies assessed are starting to phase out fossil fuels and have identified successful and profitable business models for non-carbon electricity.
The companies assessed are not reducing their emissions at the speed necessary to achieve the level of decarbonisation expected for the sector and the country. Significant efforts will be needed to reduce emissions from the sector, including setting more ambitious medium- and long-term targets and investing more in decarbonising their assets. Also, developing new low-carbon production technologies and creating structured and coherent transition plans for achieving these targets.
An appropriate regulatory framework could facilitate and promote the transition of companies in the sector by establishing incentives for investment and greater accountability in terms of climate performance.
Cement
A deep decarbonization pathway for cement production
Decoupling cement production from GHG emissions is very important given how extensively used this material currently is, and will remain so in the future. By 2050, sectoral annual emissions could decrease by 77% compared with the Current Policy Scenario (CPS), falling to around 12 MtCO2e. A suite of interventions – including new technology R&D and plant retrofitting, changing consumer behaviours, modifying construction practices and introducing regulation – will all need to be coordinated throughout the whole production-consumption-reuse chain.
Due to their central role and large industrial capacity, cement manufacturers are in a privileged position for spearheading many of the transformations required in association with other sectorial stakeholders. Doing so would potentially bring enormous benefits to the sector and society, beyond reducing GHG emissions.
Production
Mt
Decarbonisation drivers
MtCO2e
Carbon intensity
tCO2/TJ
CO2 emissions
MtCO2e
(1) Final heat
(2) industrial process calcination emissions
(3) Energy Consumption Emissions
(4) On-site CCS U net
Climate transition performance and scenario alignment of Cement companies
The four companies assessed under the ACT Cement methodology obtained scores of between 3 and 10, for an average performance score of 6/20, between D to B, for an average narrative of C, and a trend score of “-“ as all companies presented a negative trend. Overall, companies obtained low scores, indicating that the panel is not yet transitioning towards a low-carbon economy.
| 6 | C | – |
| Performance | Narrative | Trend |
- Most companies have set medium- or long-term emission reduction targets, but these targets do not align with the compatible 1.5C° scenario decarbonisation trajectory proposed by the DDP initiative.
- All companies will need to decarbonise at a faster pace as their locked-in emissions exceed their theoretical carbon budget, and they have increased the carbon intensity of their emissions over the last five years.
- None of the companies are investing in R&D into low-carbon alternatives or technologies, limiting their ability to develop new business opportunities with lower climate impacts.
- All companies have integrated climate issues into their executive management; however, transition plans are not sufficiently detailed. Half of the companies have not implemented climate scenario testing or climate change management incentives, and none share expertise with the board or executive management about topics relevant to climate change and the low-carbon transition.
- Only one company disclosed a clear strategy and associated activities for influencing its suppliers and clients in such a way as to reduce their GHG emissions.
Performance modules scores
(%)
Quantitative indicators scores
(%)
Mexico, Cement companies : Average Performance modules and quantitative indicators scores.
Note: Average calculated for a sample of four Mexican companies from the sector, including the sector’s leading company.
Companies are not reducing their emissions at the speed necessary to achieve the level of decarbonisation expected for the sector and the country. Although these companies have identified initiatives for helping to reduce emissions resulting from cement production – such as replacing the clinker, using alternative fuels and investing in energy-efficient equipment – it is necessary to implement these solutions on a large scale and put more effort into addressing the structural barriers to the penetration of low-carbon cement into the market and optimising its use in construction. In that sense, public infrastructure construction offers an opportunity to boost demand for low-carbon cement.
Passenger transport
A deep decarbonization pathway for transportation
Decarbonising passenger transport, historically one of the largest sources of emissions in the country, is crucial to achieving net zero emissions by mid-century. But to fully decouple personal mobility from emissions, several changes are needed encompassing many areas, from spatially reorganising our cities, to developing new technologies and changing people’s behaviour By combining all these systemic changes, passenger transport can reduce its annual emissions by 89%, bringing them down to under 20 MtCO2e by 2050.
Emission drivers
index=1 in 2015
Modal share
pkm/cap
Car stock shares
Mio vehicles
(1) Internal Combustion Engine
(2) Internal Combustion Engine
(3) Battery Electric Vehicle
(4) Plug-and-Hybrid Electric Vehicle
(5) Fuel-Cell Electric Vehicle
CO2 emissions
MtCO2
(1) indirect emissions
Climate transition performance and scenario alignment of public transport companies
The three companies assessed under the ACT Transport methodology obtained scores of between 3 and 9, for an average performance score of 6/20, between D to A, for an average narrative of C, and an average trend score of “-. “Companies obtained a wide variety of scores, indicating that the panel is rather heterogeneous in terms of its level of maturity, while still underperforming in its low-carbon transition (it has a performance score of under 50%).
| 6 | C | – |
| Performance | Narrative | Trend |
- None of the companies assessed have set GHG emissions reduction targets for the mid- or long-term, and most of the companies could not offer historical data for the analysis of their passenger emissions intensity in recent years, making it impossible to determine their alignment with the sector’s decarbonisation trajectory.
- Companies are investing directly or indirectly in low-carbon technologies, in putting low-carbon vehicles on the road, and in planning to introduce electric transport.
- Public companies demonstrate a high capability to monitor climate change issues; still, none have established consistent transition plans to a low-carbon economy, nor have they carried out long-term climate change scenario testing.
- All companies have developed inter-modality programmes for their users, promoting and facilitating the use of various integrated low-carbon mobility systems.
- Companies are not sufficiently engaging with supplier vehicles manufacturers, operators, and subcontractors) to influence the reduction of their GHG emissions.
Performance modules scores
(%)
Quantitative indicators scores
(%)
Mexico, Urban Public Transport companies : Average Performance modules and quantitative indicators scores.
Note: Average calculated for a sample of three Mexican companies from the sector, including the sector’s leading companies. Average scores for the Material investments, Sold product performance and Supplier engagement modules do not apply to all companies assessed.
Regarding public companies, these entities are only responsible for operational tasks. Decision-making on emission reductions targets and climate strategy does not happen at company level. However, it is part of a broader political process involving various government departments, which made it harder to connect data and hampered the company’s ability to integrate the resulting feedback about its strategy. It is essential to engage with all the relevant government stakeholders overseeing strategies, goals, and specific targets for the companies to obtain a broader perspective on the operations and strategies of public transport companies.
On the other hand, all companies have activities and infrastructure that promote intermodality with other low-carbon transport systems. Some are investing in low-carbon vehicles to reduce their impact and infrastructure in order to electrify their fleets. However, companies in the sector must still set their individual GHG reduction targets, as well as their decarbonisation strategies and transition plans with time horizons, in addition to developing long-term analyses to determine the impacts of climate-related risks.