Chapter 7: A Low-Carbon Scenario for Mexico
Among the interventions with the greatest total emissions abatement potential are geothermal electricity (393 Mt CO2e), cogeneration in Pemex (387 Mt), biomass electricity (376 Mt), bus system optimization (360 Mt), wind power (240 Mt), improved cookstoves (222 Mt), and higher fuel economy standards (195 Mt). Together these seven interventions account for about 40 percent of the overall emissions-reduction potential of all MEDEC interventions. The interventions with the highest benefit per ton of CO2e abated are on the lefthand side of the marginal abatement cost curve. They include bus system optimization, road and railway freight logistics optimization, fuel economy standards, border vehicle inspection, urban densification, improved residential lighting, cogeneration in Pemex, and electric utility efficiency improvements. Twenty-six interventions have negative net costs (that is, net benefits); together they account for about 65 percent of the overall emissions reduction potential of the interventions analyzed. Thirty-five interventions (including the 26 no-regrets interventions) could be achieved at a cost at or below $10/t CO2e. Together they account for 82 percent of the total emissions reduction potential of MEDEC interventions. Putting the reduction potential and net incremental cost criteria together allows a first-order prioritization of low-carbon interventions (figure 7.4). All other things equal, the objective of a low-carbon program would be to promote projects with high emissions reduction potential and a net economic benefit.
Figure 7.4 Criteria for Selecting Low-Carbon Interventions net benefit net benefit low potential
net cost low potential
net benefit high potential
net cost high potential
net cost /low potential
potential
Source: Authors.
Macroeconomic Impact of MEDEC Interventions The macroeconomic model developed by Boyd and Ibarrarán (2008) was used to assess the potential impacts of implementing MEDEC interventions on the Mexican economy. The outputs from MEDEC interventions (investment, operating and other costs, benefits) were scaled and integrated into a
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