Mexico kicked off 2017 with a 20 percent spike in gasoline prices, driven in part by the phasing out of subsidies. Some consumers set fires at gas stations—a response that highlights the backlash countries can face as they stop subsidizing carbon-based fuels and start encouraging climate-friendly alternatives. Now the Mexican government and stock market are experimenting with a gentler tool for discouraging carbon emissions: cap-and-trade. Mexico, which in 2012 passed the developing world’s first climate law, is well placed to set an example for other developing economies looking to shrink their carbon footprints.
A few years ago almost two thousand bold households on the Danish island of Bornholm joined a surge pricing experiment run by their electricity utility. It was supposed to empower the utility and consumers with a simple, direct market (“The Smartest, Greenest Grid,” IEEE Spectrum, April 2013).
The EU-funded project, called EcoGrid, won widespread buy-in from residents, who could also earn small payoffs when they reduced demand. Yet researchers reported last year that they could reduce demand by only 1.2 percent of peak load, despite early predictions of up to 20-percent reductions for so-called virtual power plants. The market model was missing something. Continue reading
Men died in gun battles over the installation of windmills in the state of Oaxaca, Mexico, three years ago. Opponents argued that energy companies misled them and that community leaders rented out collective lands without consulting everyone they should have. Today, protests continue, but the growth of wind farms and other renewables seems assured: Mexico boasts almost 2 gigawatts of installed wind power capacity and plans to install perhaps another 12 GW by 2022. All that clean energy is a big change for this country, which is the world’s ninth-biggest oil producer and perhaps the 11th-biggest emitter of carbon dioxide. Continue reading
Over the last twenty years, Mexico’s electricity sector has shifted from being almost 100 percent state-owned and centralized to about one quarter privately generated. This summer, the Mexican government signed into law energy and electricity grid reforms that will accelerate the decentralization of its electricity production (See “Mexico Opens Its Grid to Competition.”). By the end of this year, a new agency should have a regulatory map available for power producers large and small, said Edgar López, renewable energies director at Mexico’s Energy Regulatory Commission (CRE) at a conference in Mexico City last month. Continue reading