Mexico

Window: Implementation

Mexico has made important strides in establishing a multi-layered carbon pricing framework at both national and subnational levels. At the federal level, the General Law on Climate Change, which was amended in 2018, legally mandates the implementation of an Emissions Trading System (ETS). The system completed a pilot phase (2020–2021) and a transition phase (2022) with the launch of the operational phase targeted for 2026.

In parallel, Mexico has been implementing a carbon tax since 2014, particularly applicable to fossil fuels, excluding natural gas. Additionally, several states—including Queretaro, Yucatán, Guanajuato, Durango, and the State of Mexico—have introduced their own subnational carbon taxes, signaling growing national engagement in carbon pricing.

Objectives & Activities

The updated PMI Program in Mexico is pending final approval and is envisioned to support the country in transitioning from ETS design and piloting to full operationalization, while strengthening the supporting carbon pricing ecosystem. The program focuses on five integrated components:

• Modelling and Assessment for Carbon Market Planning: Delivering analytical and economic modeling to inform ETS policy decisions, allowance allocation strategies, and integration with other instruments such as the carbon tax and offset mechanisms
• ETS Design and Implementation Support: Providing technical assistance to prepare for the launch of the operational phase of the national ETS in 2026, including finalizing design elements, institutional roles, and legal adjustments if needed
• Compensation Mechanism and Domestic Offsets: Supporting the development and implementation of a domestic offsetting mechanism to complement the ETS and carbon tax frameworks, aligned with Mexico’s mitigation goals
• Carbon Market Infrastructure Development: Assisting in the development and strengthening of core infrastructure—including Measurement, Reporting, and Verification (MRV) systems, registries, and data platforms—to ensure robust tracking, transparency, and compliance in the carbon market
• Communications, Capacity Building, and Stakeholder Engagement: Designing and implementing a national outreach and engagement strategy, including capacity-building efforts for public and private sector actors to support ETS readiness and carbon pricing literacy

Additional Resources

• General Law on Climate Change – ETS Legal Basis (Spanish)