Low-CarbonDevelopment: Case Study for Mexico
Todd M. JohnsonThe World Bank
Stockholm – February 23, 2010
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Why “Low-Carbon” Development?
DOMESTIC BENEFITS•Distributed generation, diversification, energy security•Sustainability of renewable energy•Reduce losses associated with deforestation
INTERNATIONAL COLLECTIVE ACTION•Reduction commitments (e.g., NAMAs)•Carbon revenues, technology transfer•Overlap with forestry, biodiversity goals
THE FUTURE OF ENERGY•Major investment in renewables by many countries•Technologies developing, costs falling
“Low-carbon development means having the same level of social and economic development with lower GHG emissions.”
Global Emissions Reduction Pathways
1-
Source: IEA WEO 2007
Global CO2 Emissions by Country
14th largest emitter worldwide (1.5% of the global emissions)
61% of Mexico’s CO2 emissions from energy consumption
Source: 3ra. Comunicación Nacional, Mexico
Mexico – GHG emissions
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Low-Carbon Methodology
MITIGATION OPTIONS -- SELECTION CRITERIA. (1) large-scale reduction potential (5 mt CO2e); (2) low cost (US$25/tCO2e), and (3) options should be “feasible” -- already undertaken on a commercial scale in Mexico or internationally.
CARBON BENEFITS. Cost per ton of carbon estimated for each intervention.
NEAR-TERM FOCUS. Only existing technologies and current costs of those technologies considered.
Key-word Year
Positive investment
costs
Negative investment and
salvage Energy costs Other costs Externalities EmissionsMitCost without
MitCost with
Maximum annual
mitigationUS$ US$ US$ US$ US$ Ton CO2 US$/Ton US$/Ton Ton CO2
2009 $0 $0 $0 $0 $0 02010 $0 $0 $0 $0 $0 02011 $0 $0 $0 $0 $0 02012 $0 $0 $0 $0 $0 02013 $868,589,103 -$233,531,491 -$27,371,768 $6,147,171 -$2,320,887 -1,258,0412014 $881,965,581 -$320,255,139 -$55,425,149 $12,389,010 -$4,677,517 -2,535,4572015 $881,965,581 -$376,379,350 -$83,742,441 $18,630,849 -$7,034,146 -3,812,8722016 $881,965,581 -$915,670,651 -$112,325,509 $24,872,688 -$9,390,776 -5,090,2882017 $881,965,581 -$831,526,979 -$141,176,231 $31,114,527 -$11,747,405 -6,367,7032018 $881,965,581 -$594,164,184 -$209,865,651 $39,929,585 -$12,738,557 -7,212,0072019 $881,965,581 -$569,569,984 -$276,204,704 $48,571,484 -$13,821,596 -8,085,4552020 $881,965,581 -$544,164,059 -$340,150,480 $57,037,628 -$14,997,899 -8,988,4862021 $881,965,581 -$525,926,813 -$402,845,747 $65,402,405 -$16,227,992 -9,908,5792022 $881,965,581 -$512,199,253 -$464,868,834 $73,703,414 -$17,491,924 -10,839,4042023 $881,965,581 -$501,492,711 -$526,544,171 $81,961,705 -$18,778,524 -11,777,4202024 $881,965,581 -$492,908,790 -$588,068,139 $90,189,982 -$20,081,051 -12,720,4872025 $881,965,581 -$485,873,191 -$649,566,812 $98,396,366 -$21,395,196 -13,667,2402026 $881,965,581 -$480,001,652 -$711,125,043 $106,586,289 -$22,718,076 -14,616,7632027 $881,965,581 -$475,027,351 -$772,802,213 $114,763,525 -$24,047,688 -15,568,4212028 $881,965,581 -$470,759,223 -$834,641,276 $122,930,776 -$25,382,598 -16,521,7602029 $881,965,581 -$467,056,859 -$896,674,204 $131,090,027 -$26,721,754 -17,476,4462030 $881,965,581 -$463,814,758 -$958,925,402 $139,242,769 -$28,064,364 -18,432,2272031 -$2,037,851,910
NPV/TOTAL $4,932,178,644 -$3,093,158,527 -$1,728,573,737 $283,859,280 -$72,843,344 -184,879,057 $2.13 $1.74 -18,432,227
Win
d
ECONOMIC AND EMISSIONS MODEL. Baseline and low-carbon scenarios constructed to 2030.
LOW-CARBON INTERVENTIONS. Assessed 40 interventions (economic cost-benefit analysis) for energy, transport, end-use energy, and agriculture and forestry.
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Ele
ctric
pow
er
Electric power
2008
2030
Bas
elin
e
2030
Med
ec0
100
200
300
400
500
600
700
800
Energy Efficiency
Renewable Energy
Nuclear
Fossil Fuels
Pow
er
genera
tion (
TW
h)
Baseline and Low-Carbon Scenarios
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Tra
nspo
rt
Source: Dargay, Gately, and Sommer 2007.
Motor vehicle ownershipHistorical and Projected Growth for Selected Countries
Transport
2008
2011
2014
2017
2020
2023
2026
2029
0
50
100
150
200
250
300
350
400
Fuel con-sumption per vehicle
Urban transporta-tion
Other
MEDEC emissions
yearem
issio
ns (
Mt
CO
2e/y
ear)
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Agriculture & Forestry
Source: Ghilardi and Guerrero 2009, based on REMBIO 2008; INEGI 1995, 2000, 2002.
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Energy Efficiency
InterventionsMaximum Annual
Mitigation (Mt/year)
Benefits of mitigation
(US$/t CO2e)
Residential air conditioning 1.0 0
Residential lighting 5.0 42
Solar hot water heaters5.0
9
Street lighting 0.8 55
Industrial motors 0.9 31
Non-residential lighting 4.2 51
Non-residential air conditioning 1.9 30
Residential refrigerators 4.7 27
Industrial cogeneration 12.6 2.0
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
MEDEC low carbon scenario
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
200
400
600
800
1000
1200
Em
issi
ons
[MtC
O2e
/yea
r]
baseline scenario
+ 1137 Mt
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
200
400
600
800
1000
1200
Em
issi
ons
[MtC
O2e
/yea
r]
baseline scenario
Agriculture and forestry
+ 1137 Mt
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
200
400
600
800
1000
1200
Em
issi
ons
[MtC
O2e
/yea
r]
baseline scenario
Agriculture and forestry
+ 1137 Mt
Oil and gas
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
200
400
600
800
1000
1200
Em
issi
ons
[MtC
O2e
/yea
r]
baseline scenario
Agriculture and forestry
+ 1137 Mt
Oil and gasStationary energy end-use
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
200
400
600
800
1000
1200
Em
issi
ons
[MtC
O2e
/yea
r]
baseline scenario
Agriculture and forestry
+ 1137 Mt
Oil and gasStationary energy end-use
Transport
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
200
400
600
800
1000
1200
Em
issi
ons
[MtC
O2e
/yea
r]
baseline scenario
Agriculture and forestry
+ 1137 Mt
Oil and gasStationary energy end-use
Transport
Electricity
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
200
400
600
800
1000
1200
Em
issi
ons
[MtC
O2e
/yea
r]
baseline scenario
MEDEC emissions
Agriculture and forestry
+ 1137 Mt
+ 660 Mt
Oil and gasStationary energy end-use
Transport
Electricity
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
200
400
600
800
1000
1200
Em
issi
ons
[MtC
O2e
/yea
r]
baseline scenario
MEDEC emissions
Agriculture and forestry
+ 1137 Mt
+ 660 Mt
PECC
Oil and gasStationary energy end-use
Transport
Electricity
+ 493 Mt
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
0 1,000 2,000 3,000 4,000 5,000150
100
50
0
50
100
Cumulative mitigation 2009-2030 [MtCO2e]
Net
ben
efits
←
→
Net
cos
ts [U
S$/t
CO2e
]
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Investment and Financing. Higher up-front costs, lack of credit markets.
Regulations. Regulations for renewables and energy efficiency (cogeneration). Energy price distortions.
Institutions. Governance and management by state energy companies (LFC). Coordination of federal, state and municipal policies (ex: transport).
Information. Lack of knowledge by consumers (EE). New systems required by producers (intermittent RE).
Barriers to Large-scale Implementation
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Mexico has significant GHG reduction potential that could be tapped in the near term.
Mexico could keep emissions relatively constant over the next twenty years and without affecting economic growth by undertaking a number of low-carbon interventions.
Two-thirds of MEDEC interventions have positive financial and economic benefits regardless of climate change considerations.
Conclusions for Mexico
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Global Lessons
What does a low-carbon development path look like and what tools are needed?(Economic and emissions model, cost-benefit methodology, geographical
(GPS) tools)
How much might it cost to reduce global emissions?(Mexico: ~$64 billion to 2030 ($3b/year) or less than 0.4% of GDP)
Which Interventions can be done in the near term? (Energy efficiency, transport, low-cost renewables, and forestry)
Why aren’t low-carbon measures happening faster? And why are further incentives needed?
MEDECMéxico: Estudio sobre la Disminución de Emisiones de Carbono
Low-Carbon Development for
MEDEC – México: Estudio sobre la Disminución de Emisiones de Carbono
Full report can be found at:
www.worldbank.org/mx Todd M JohnsonClaudio Alatorre
Zayra RomoFeng Liu
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