The approval of the GLCC gives certainty and continuity to climate policy in Mexico and sets the country on a path to a low carbon economy. It establishes the basis for the creation of institutions, legal frameworks and financing to move towards a low carbon economy. As a General Law, it specifies the different responsibilities of the Federation, Mexico's pledge under the Copenhagen Accord, in terms of committing the country to an emissions reduction target of 30% below Business As Usual (BAU) by 2020, subject to the availability of financial resources and technology transfer, as well as 50% GHG emissions reduction by 2050 compared to 2000. The Law transforms the National Institute of Ecology into the National Institute of Ecology and Climate Change (INECC). The INECC will be responsible for compiling the National Emissions Inventory, will collaborate in the development of strategies, plans, programmes, instruments and actions related to sustainable development, the environment and climate change, and will help in the evaluation of national climate change policy. Through the Law, the Inter-ministerial Commission on Climate Change (IMCC), initially created by presidential agreement in 2005, is now formally the institution in charge of co-ordinating climate change government actions and formulating and implementing national adaptation and mitigation policies. The GLCC also establishes the National Climate Change System, formed by the IMCC, the INECC, state and municipal governments and representatives of Congress. Its main responsibility will be to co-ordinate the efforts of the Federal Government, states and municipalities. Taking into account Mexico's vulnerability to climate impacts, the Law puts a strong emphasis on adaptation measures. The objective is to reduce social and ecosystem vulnerability by strengthening the resilience of natural and human systems to reduce damage and risk. One of the tools to achieve this is the 'Risk Atlas' which includes information about current and future vulnerability scenarios. The GLCC states that the national mitigation policy should include diagnosis, planning, measurement, reporting, verification and assessment of national GHG emissions. The national mitigation strategy will be implemented gradually; initially promoting the strengthening of national capacities and subsequently beginning mitigation activities in the most cost-effective sectors - energy production, transport, agriculture, forests and other land use, waste and industrial processes. The GLCC also creates a climate change fund, which will channel public, private, national and international funding projects that simultaneously contribute to adaptation and mitigation actions, such as supporting state-level actions, research and innovation projects, technological development and transfer, and the purchase of Certified Emissions Reductions (CERs). The Law establishes a voluntary market for emissions trading to promote GHG reductions in a cost-effective, verifiable, measurable and reportable manner. The National Climate Change Policy, the Special Programme on Climate Change, and the Special Programme on the Use of Renewable Energy lay down details for the implementation of the Law. The law was amended in 2014 to establish a tax on fossil fuels, and in 2016 at article 94 to frame a carbon market. Attached regulation sets the framework for the accounting of carbon emissions. The law was further amended in 2018 by Decree 13/07/2018, notably to initiate a national market of greenhouse gases emissions and to precise the contribution of Mexico within the scope of the Paris Agreement.
This laws the framework document for environmental protection in Mexico. It was amended in 2016, 2017 and 2018 to include climate change issues, along side the establishment of new rules and fines. Art. 2.V) states that the formulation and execution of mitigation actions and adaptation to climate change is of public interest. Art. 15.IV) states that whoever carries out works or activities that affect or may affect the environment, is obliged to prevent, minimise or repair the damage caused, as well as to assume the costs that said affectation implies. Likewise, those who protect the environment should be encouraged, promote or carry out mitigation and adaptation actions to the effects of climate change and make sustainable use of natural resources. Art. 23.X) statess that local authorities, in the sphere of their competence, shall avoid human settlements in areas where the populations are exposed to the risk of disasters due to adverse impacts of the climate change. Art. 39 states that the competent authorities will promote the incorporation of ecological contents, sustainable development, mitigation, adaptation and reduction of vulnerability to climate change, protection of the environment, knowledge, values and competences, in the various educational cycles, especially at the basic level, as well as in the cultural formation of children and youth. Art. 41 charges the government to take adaptation actions.
This law replaces the 2003 general law for sustainable forest development. Specific objectives of this law (stated at art. 3) include: 1) the promotion of sustainable forest management in order to help maintain and increase carbon stocks, reduce emissions from deforestation and forest degradation, as well as reduce vulnerability and strengthen resilience and adaptation to climate change, and 2) the design of strategies, policies, measures and actions to transit at a zero percent carbon loss rate in the original ecosystems, in terms of the General Law on Climate Change and the National Climate Change Strategy, for incorporation into the instruments of forest policy planning, taking into consideration the sustainable economic development of forest regions and community forest management. Art. 10 states that the federal state has the prerogative of designing strategies, policies, measures and actions to avoid loss and increase carbon stocks in forest ecosystems, taking into account sustainable rural development. Art. 32 states that the contribution to carbon fixation is one of the mandatory criteria for forestry policy of an environmental and forestry nature. The 2018 texts also modifies the definition of forestry land into federal law, narrowed down to land covered in forest vegetation on which forestry services are undertaken. This has implications on licensing procedures, fines and land use planning.
The 2014 amendment of the 1976 Organic Law of the Federal Public Administration deals with energy policy in article 33 (p.26). The article states that the Secretary for Energy is responsible for establishing, conducting and coordinating the country's energy policy. The Secretary must give priority to energy security and diversification, as well as to energy conservation and environmental protection. Title V specifies the Secretary's mission to carry out medium and long-term energy planning, an activity that should consider the criteria of sovereignty and energy security, progressive reduction of environmental impacts of production and consumption of energy, greater participation of renewable energies, the saving of energy and the greater efficiency of its production and use.
The Energy Transition Act's purpose is to promote sustainable and efficient use of energy, regulate the obligations of power companies related to the mandatory share of clean energies (including natural gas, and CCS with emissions not exceeding 100 kg/MWh), and push for the reduction of the polluting emissions of the electric power industry while ensuring competitiveness of the clean power sector within the new wholesale electricity market.
According to the law, the Secretariat of Energy (SENER) should promote generation of clean power to reach the levels set forth in the Climate Change Act for the electric power industry, including: a minimum share of clean energies in power generation of 25 % by 2018, 30 % by 2021, 35 % by 2024.
SENER is also responsible for establishing obligations for mandatory acquisition of clean energy certificates that the suppliers and qualified users participating in the wholesale power market and the holders of interconnection agreements must comply with on an annual basis. The issuance of clean energy certificates (CECs) is expected to begin from 2018 and will serve both as a green incentive and a regulatory mechanism to meet the country's clean energy goals. A transitory provision, valid for four years, allows companies to defer 50 % of their CEC acquisition obligation for two years under specific conditions.
The law also establishes the National Commission for Efficient Use of Energy (CONUEE), tasked with promoting energy efficiency, providing scientific advice in matters of clean energy, and drafting the Energy Strategy that sets medium and long term goals (15 and 30 years horizon respectively) as well as the National Programme for Sustainable Use of Energy (PRONASE - Chapter V of the Energy Transition Act), the two main implementation tools of the law.
The law further establishes a Smart Grid Programme to promote grid modernization to maintain a reliable and secure infrastructure to meet electricity demand in an economically efficient and sustainable manner.
The Act also stipulates that costs previously externalised (including health and environmental impacts) are now to be included in evaluation of costs associated with operation and expansion of the Electricity Industry.
The Act abrogates the Law for the Use of Renewable Energies and the Financing of the Energy Transition (LAERFTE 2008), the Law for the Sustainable Use of Energy (LASE 2008) and any related legal provisions opposing this new Act. The funds from the Energy Transition Fund established by LAERFTE are to be transferred to the Federal Budget and redirected as new funds for energy transition and sustainable energy use.
The 2017 Regulations under the Energy Transition Act were passed to regulate the mechanisms and procedures for the implementation of the law in the areas of sustainable use of energy, clean energy and reduction of emissions from the electricity sector.
The National Commission for the Efficient Use of Energy published an updated catalog listing equipment and devices on which manufacturers, importers, distributors, and sellers must provide energy consumption information, as well as the forms in which such information must be presented.
Decree issuing the Electricity Industry Law, the Geothermal Energy Law and amending the Law on National WatersThe present decree approves the Electricity Industry Law (LIE) and the Geothermal Energy Law. The LIE regulates part of the changes arising from the Constitutional Reform in energy matters of 2013. It modifies the regime of the electricity sector to move to a new model based on the free competition in the activities of generation and commercialisation. The State retains the functions of planning, regulation, control, transmission and distribution. Article 6 establishes the Energy Regulatory Commission (CRE) as the entity in charge of regulation and surveillance, and article 107 establishes the National Center for Energy Control (CENACE) as the operational control of the National Electric System (SEN). Clean Energy Certificates (CEL) are set as an instrument to promote new investments in clean energies as well as the national goals of clean generation of electricity. Art 121 and 126 are related to the CELs. The Law of Geothermal Energy regulates the exploration and exploitation of geothermal resources for the use of the thermal energy of the subsoil. Rules are established for the registration and recognition of exploration permits, as well as exploitation concessions. This Decree is implemented by the Regulation of the Electricity Industry Law, the Guidelines establishing the criteria for the granting of Clean Energy Certificates and the requirements for their acquisition, and the Regulation of the Geothermal Energy Law
The Constitutional Reform on Energy (Energy Reform Decree and related 9 newly created laws and 12 modified laws) aims to modernise the energy system by introducing greater competitiveness and efficiency to the hydrocarbons sector, supporting shift towards low-carbon electricity generation and introducing the concept of sustainability' into the Constitution.
The new laws adopted within the Reform package include:
-Law on Hydrocarbons (seeks to attract foreign investment to Mexico's hydrocarbon sector, but also eliminates gasoline subsidies and promotes substitution of oil energy sources by natural gas by establishing lower tax rates for shale gas exploitation; in addition it provides for creation of â€˜safeguarded areas' where hydrocarbon extraction is prohibited)
-Law on the Electricity industry (increase share of renewable electricity, clean energy certification, planning for a smart grid)
-Law on Coordinated Regulatory Organs for the energy matters
-Law on PetrÃ³leos Mexicanos (reforms the structure and obligations of the state oil company PEMEX)
-Law on the Federal Electricity Commission
-Law on the Agency for National Industry Securityand Environment Protection in the Hydrocarbon Sector (industry operations security and control of hazardous emissions)
-Law on Geothermal Energy (regulates the exploration and exploitation of geothermal energy production for electricity generation and other uses)
-Law on Revenues from Hydrocarbons
-Law on the Mexican Petrol Fund for Stability and Development (revenues from petrol extraction in Mexico, of which at least 40% annually are reserved for long-term savings 'for the future generations', while the rest can be used for investment projects not limited to clean technologies - e.g. oil development projects included)
The 2012 amendments to the Special Tax Law introduced Mexico's carbon tax. It covers fossil fuel sales and imports by manufacturers, producers, and importers and is capped at 3% of the sales price of the fuel. Rather than imposing a levy on the full carbon content of fuels, it taxes the additional amount of emissions that are generated compared to if natural gas (not currently subject to tax) was used instead. Companies may also choose to pay the tax with credits from local CDM projects, which support the development of carbon trading schemes within Mexico. The carbon tax is updated yearly and announced in December to be implemented on January 1st each year.
The 2013 amendments also introduced carbon credits. These credits are a translation into Mexican Law of the Kyoto Protocol and the subsequent UNFCCC texts. They are meant to allow for projects being undertaken in Mexico under the scope of the UNFCCC to pay taxes via the credits, based on market carbon price. The allocation and price mechanisms of carbon credits will be determined in accordance to the rules edited by the Ministry of Finance and Public Credit.
The bill establishes that investments in environmentally friendly technologies, including renewable energy, could profit from accelerated depreciation. The information of the bill involves the Secretariat of Natural Resources and Environment as well as the Secretariat of Finance.
The bill allows investors to deduct up to 100% of the investment in renewable energy projects from tax liability during the first year, in accordance with General Law for Ecological Equilibrium and Environmental Protection. Once the tax deduction is granted, the plant must remain active for at least 5 years.
This law seeks to reduce GHG emissions as per the international instruments to which Mexico is a signatory. The Secretariat of Agriculture is charged with developing the Programme of Sustainable Input Production for Bioenergy and Scientific and Technological Development.
The Inter-sectoral Commission for Bioenergy Development, in the context of the Development Plan, will promote the production and commercialisation of bioenergy inputs from activities in rural areas related to agriculture and animal husbandry, forests, seaweed, biotechnology and enzymatic processes.
The Secretariat of Agriculture and the Secretariat of Energy shall support scientific and technological research for sustainable bioenergy production and use as well as capacity building in this area. The Commission for Bioenergy shall implement measures including the creation of a National Network of Information and Research on Inputs.
The Secretariat of Energy is responsible for defining co-ordination mechanisms between different sectors of the Public Administration, federal entities and municipalities as well as different productive sectors in the country.
The Secretariat of Energy is also responsible for reviewing the annual budget and evaluating established programmes and their respective support instruments. It is also charged with monitoring the observance of environmental laws and measures, and of sanctioning infractions derived from the application of the bill.