CHAPTER 7
A Low-Carbon Scenario for Mexico
T
his chapter presents the aggregate results of the sectoral interventions evaluated under MEDEC, which are used as inputs to an alternative emissions modeling scenario for 2030. This chapter also compares the net costs (benefits) of the low-carbon interventions across sectors in the form of a marginal abatement cost curve. The chapter concludes by presenting the results from a dynamic computable general equilibrium model used to examine the potential impact of the MEDEC interventions on the Mexican economy.
The Carbon Path under the Baseline Scenario To generate a low-carbon scenario for Mexico, it is necessary to first assess what would happen under the baseline case with no consideration for climate change and assuming an effective carbon price of zero. For this scenario, the study used the LEAP (Long-range Energy Alternatives Planning) model to account for emissions from energy production and consumption activities.1 Emissions from activities not associated with energy, such as industrial processes and land-use, were modeled separately. The baseline scenario is based on macroeconomic assumptions that are consistent with those of the government of Mexico, including average annual GDP growth of 3.6 percent,2 average annual population growth of 0.6 percent, and a set of fuel prices that correspond to a West Texas Intermediate oil price of about $53 per barrel in 2009, which increases slightly in real terms over the period of analysis to 2030. The baseline scenario takes into account both historical trends and the impact of sector policies and programs that are already under implementation (table 7.1). Based on these assumptions, the baseline scenario estimates that total greenhouse gas emissions in Mexico will grow from 659 Mt CO2e in 2008 83