Energy end-use
Case Study for Mexico
Agriculture and forestry
Electricity
Transport
Oil and gas
Low-Carbon
Development:
Todd M. Johnson
The World Bank
Stockholm – February 23, 2010
Why “Low-Carbon” Development?
“Low-carbon development means having the same level of social and
economic development with lower GHG emissions.”
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
Global Emissions Reduction
Pathways
Global CO2 Emissions by Country
1-
Source: IEA WEO 2007
Mexico – GHG emissions

 14th largest emitter
worldwide (1.5% of the
global emissions)
 61% of Mexico’s CO2
emissions from energy
consumption
Source: 3ra. Comunicación Nacional, Mexico
Low-Carbon Methodology
Key-word
Wind
 ECONOMIC AND EMISSIONS
MODEL. Baseline and low-carbon
scenarios constructed to 2030.
 LOW-CARBON
INTERVENTIONS. Assessed 40
interventions (economic costbenefit analysis) for energy,
transport, end-use energy, and
agriculture and forestry.
Positive
investment
costs
US$
Negative
investment and
salvage
US$
$0
$0
$0
$0
$868,589,103
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$881,965,581
$0
$0
$0
$0
-$233,531,491
-$320,255,139
-$376,379,350
-$915,670,651
-$831,526,979
-$594,164,184
-$569,569,984
-$544,164,059
-$525,926,813
-$512,199,253
-$501,492,711
-$492,908,790
-$485,873,191
-$480,001,652
-$475,027,351
-$470,759,223
-$467,056,859
-$463,814,758
-$2,037,851,910
Energy costs
US$
Other costs
US$
$0
$0
$0
$0
-$27,371,768
-$55,425,149
-$83,742,441
-$112,325,509
-$141,176,231
-$209,865,651
-$276,204,704
-$340,150,480
-$402,845,747
-$464,868,834
-$526,544,171
-$588,068,139
-$649,566,812
-$711,125,043
-$772,802,213
-$834,641,276
-$896,674,204
-$958,925,402
$0
$0
$0
$0
$6,147,171
$12,389,010
$18,630,849
$24,872,688
$31,114,527
$39,929,585
$48,571,484
$57,037,628
$65,402,405
$73,703,414
$81,961,705
$90,189,982
$98,396,366
$106,586,289
$114,763,525
$122,930,776
$131,090,027
$139,242,769
$0
$0
$0
$0
-$2,320,887
-$4,677,517
-$7,034,146
-$9,390,776
-$11,747,405
-$12,738,557
-$13,821,596
-$14,997,899
-$16,227,992
-$17,491,924
-$18,778,524
-$20,081,051
-$21,395,196
-$22,718,076
-$24,047,688
-$25,382,598
-$26,721,754
-$28,064,364
NPV/TOTAL $4,932,178,644 -$3,093,158,527 -$1,728,573,737
$283,859,280
-$72,843,344 -184,879,057
Year
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Externalities
US$
Emissions
Ton CO2
MitCost
without
US$/Ton
MitCost
with
US$/Ton
0
0
0
0
-1,258,041
-2,535,457
-3,812,872
-5,090,288
-6,367,703
-7,212,007
-8,085,455
-8,988,486
-9,908,579
-10,839,404
-11,777,420
-12,720,487
-13,667,240
-14,616,763
-15,568,421
-16,521,760
-17,476,446
-18,432,227
$2.13
 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.
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
Maximum
annual
mitigation
Ton CO2
$1.74 -18,432,227
Electric power
Baseline and Low-Carbon Scenarios
700
Power generation (TWh)
Electric power
800
600
Energy Efficiency
500
Renewable Energy
400
Nuclear
300
Fossil Fuels
200
100
0
2008
2030 Baseline
2030 Medec
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
Motor vehicle ownership
Historical and Projected Growth for Selected Countries
400
350
Fuel
consumption
per vehicle
emissions (Mt CO2e/year)
300
Freight
transportation
250
200
Urban
transportation
150
100
MEDEC
emissions
50
year
Source: Dargay, Gately, and Sommer 2007.
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
2030
2028
2026
2024
2022
2020
2018
2016
2014
2012
2010
0
2008
Transport
Transport
Agriculture & Forestry
Source: Ghilardi and Guerrero 2009, based on REMBIO 2008; INEGI 1995, 2000, 2002.
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
Energy Efficiency
Maximum Annual
Mitigation
(Mt/year)
Benefits of
mitigation
(US$/t CO2e)
Residential air conditioning
1.0
0
Residential lighting
5.0
42
Solar hot water heaters
5.0
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
Interventions
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
MEDEC low carbon scenario
1200
+ 1137 Mt
Agriculture and forestry
1200
1000
+ 1137 Mt Oil and gas
Stationary energy end-use
Agriculture and forestry
600
400
Emissions [MtCO2e/year]
Emissions [MtCO2e/year]
1000
Transport
Oil and gas
Stationary energy end-use
Electricity
Transport
800
200
0
2008
800
+ 660 Mt
600
400
Electricity
+ 660 Mt PECC
+ 493 Mt
MEDEC emissions
MEDEC emissions
200
0
2008
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
2030
2030
50
0
1,000
2,000
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
3,000
Cumulative mitigation 2009-2030 [MtCO2e]
4,000
0
50
100
150
5,000
Environmental services
Wildlife management
Refinery efficiency
Geothermal
Small hydro
Sugarcane ethanol
Reforestation & restoration
Biogas
Windpower
Bagasse cogeneration
Sorghum ethanol
Palm oil biodiesel
Fuelwood co-firing (20%)
Afforestation
Improved cookstoves
Fuel economy standards
Non-residential AC
Residential refrigeration
Gas leakage reduction
Residential AC
Biomass electricity
Industrial motors
Utility efficiency
Zero tillage maize
Cogeneration in industry
I&M in 21 cities
Solar water heating
Forest management
Street lighting
Residential lighting
Non-residential lighting
Charcoal production
Cogeneration in PEMEX
Urban densification
Bus rapid transit
Non-motorized transport
Freight logistics
Border vehicle inspection
Railway freight
Bus system optimization
Net benefits ← →Net costs
[US$/tCO2e]
100
Barriers to Large-scale
Implementation
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).
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
Conclusions for Mexico
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 lowcarbon interventions.
Two-thirds of MEDEC interventions have positive
financial and economic benefits regardless of
climate change considerations.
MEDEC
México: 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?
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
Low-Carbon Development for
Full report can be found
at:
www.worldbank.org/mx
Todd M Johns
Claudio Alato
Zayra Ro
Feng
MEDEC – México: Estudio sobre la Disminución de Emisiones de Carbono
MEDEC
México: Estudio sobre la Disminución de Emisiones de Carbono
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Todd Johnson, Lead Energy Specialist, World Bank (ppt)