Buira 2021

Energy Strategy Reviews 33 (2021) 100578
Contents lists available at ScienceDirect
Energy Strategy Reviews

journal homepage: http://www.elsevier.com/locate/esr
A whole-economy Deep Decarbonization Pathway for Mexico

Daniel Buira a, *, Jordi Tovilla a, Jamil Farbes b, Ryan Jones b, Ben Haley b, Dennis Gastelum a
a
Tempus Analítica A.C, Mexico
b
Evolved Energy Research, USA
A R T I C L E I N F O A B S T R A C T
Keywords: Mexico’s current climate change policy sets the country on a development pathway which is inconsistent with
Deep decarbonization pathways the goals of the Paris Agreement. The Deep Decarbonization methodology has been used to develop an alter
DDP native whole-economy pathway to 2050 consistent with limiting warming to between 1.5 and 2◦ C above pre-
Latin America climate policy
industrial times, covering energy and non-energy sectors and achieving comparable population and GDP
Mexico Climate policy
Mexico Climate change
growth to those expected from current policies. In this pathway, renewable electricity substitutes fossil fuels as
Mexico Energy transition the main energy source before 2040, urban regulation and infrastructure favor public transport while electric
Mexico Decarbonization vehicles are rapidly rolled out to both public and private fleets, and improved agricultural and forest manage
Mexico ment practices reduce emissions and increase absorptions. Rapid uptake of renewable electricity and electric
Long term climate strategies vehicles will require decisive policy action, and the resulting reductions in oil and gas demand will require
Climate change mitigation changes to fiscal policy and industrial strategy. This work is part of the “Deep Decarbonization Pathways for
Latin America” project.
1. Introduction that existing NDC commitments from 2020 through to 2030 (or 2025 in
some cases) fall so short of the required transformation that their
1.1. Mexico and the Paris agreement implementation will make the 1.5◦ C target impossible to achieve, since
they will delay many urgent deeper changes until 2030 at the earliest.
The Paris Agreement and the need for DDP planning. In 2015, the The IPCC urges countries to plan decarbonization pathways so that the
Paris Agreement established a collective aim to limit the global tem NDC updates expected by 2020 can be made compatible with such
perature increase to between 1.5 and 2◦ C above that of pre-industrial pathways.
times. Parties agreed to communicate and implement Nationally All countries should thus be called upon to consider the best avail
Determined Contributions (NDCs) which describe their planned actions able science and policy planning techniques as guides to their work,
to achieve their part of the deal. The Agreement also laid out an even if this implies a significant departure from accepted policy-making
“ambition mechanism” that is expected to achieve a “ratcheting up” of approaches, aiming to achieve economic and social development goals
climate action within a five-year cycle, with a view to aligning country while reducing emissions within a shorter timeframe than previously
commitments to the long-term global goal over time. The Agreement planned.
further urges Parties to formulate Long Term Strategies (LTS) to struc The DDP-LAC project fits neatly into this context. By enabling
ture their own low-emissions development pathway and provide a pol research teams from six countries of the Latin America and Caribbean
icy instrument laying out the planned steps to achieve carbon neutrality (LAC) region to generate decarbonization pathways for their countries
by mid-century. aligned with the IPCC recommendations in a manner which engages
The 2018 publication of the IPCC Special Report on Global Warming with policymakers, this technical work can provide timely inputs to
of 1.5◦ C presents updated information regarding the time available to national NDC updates and LTS formulation processes.
achieve the Paris Agreement goals. Concretely, it states that global 2030 Mexico’s NDC and LTS in the context of Paris. Mexico’s response
emissions must be 45% lower than those of 2010, for which unprece to the Paris Agreement, as presented within its NDC (March 2015) and
dented transformational change must begin immediately. It also states its Mid-Century Strategy (November 2016), sets out a number of
* Corresponding author.
E-mail addresses: daniel.buira@tempus-analitica.org, daniel.buira@gmail.com (D. Buira), jordi.tovilla@tempus-analitica.org (J. Tovilla), jamil.farbes@evolved.
energy (J. Farbes), ryan.jones@evolved.energy (R. Jones), ben.haley@evolved.energy (B. Haley), dennisgastelum@gmail.com (D. Gastelum).
https://doi.org/10.1016/j.esr.2020.100578
Received 31 March 2020; Received in revised form 29 July 2020; Accepted 22 October 2020
Available online 9 January 2021
2211-467X/© 2020 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
D. Buira et al. Energy Strategy Reviews 33 (2021) 100578
measures and technology rollout plans across productive sectors to from confirming the technical feasibility of a decarbonized electrical
reduce emissions as compared to a baseline scenario of emissions system in Mexico by 2050 in a manner consistent with previous studies,
growth. The NDC emissions target for 2030 is expressed as percentage renewable technologies emerged as the cost-optimal approach – an
reductions vs those expected in a baseline [1], while the Mid-Century important new result. Furthermore, by comparing an early-action
Strategy extends the NDC trajectory through to 2050 for the power decarbonization scenario with one in which current policies are main
sector, while maintaining fossil fuels as the country’s predominant en tained until 2030 to be later followed by a rapid turn towards net-zero,
ergy source throughout [2] in line with Mexico’s Energy Transition the risk of locking in emissions through this delay is highlighted,
Strategy of 2016 [3]. Neither of these documents aim for absolute emphasizing the inconsistency between Mexico’s current NDC and
emissions reductions, making current GoM climate policy inconsistent stated long-term goals.
with the Paris Agreement goals, as well as with the aim of Mexico’s 2012 These studies all find that emissions pathways for Mexico that are
General Law for Climate Change (GLCC) [4] which states that 2050 consistent with the aims of the GLCC and a 50% chance of limiting
emissions should be half those of 2000. This inconsistency is not unique global warming to 2 ◦ C are technologically feasible, requiring decisive
to Mexico – which presented an NDC of average ambition [5] – but changes in policy direction, as well as significant investment in new
rather a reflection on the limitations of the policy-making processes technologies across all productive sectors. They also agree on the need to
followed by many countries when formulationg their NDCs in the run-up decarbonize the electric grid, with a 2050 emissions intensity ranging
to COP21. from about 10% of current values through to zero or negative intensities
in some scenarios. Three of the studies ([6,11,13]) emphasize the need
1.2. Prior research on decarbonization pathways for Mexico for rapid policy change to boost the uptake of renewables, and two ([6,
13]) further highlight the risk of any future investments in gas-powered
General studies A number of studies have analyzed decarbonization electricity assets potentially becoming stranded if targets are met. None
scenarios for Mexico in light of its national commitment to reduce 2050 of these papers considers whole-economy decarbonization scenarios
emissions to 50% of 2000 values – equal to 320 MtCO2eq – as stated in consistent with a 1.5 ◦ C target.
the GLCC. The Deep Decarbonization Pathways Project for Mexico of Sectoral studies In addition to these general studies, specific sec
2015 [6] reports on a multi-sector analysis of CO2 emissions from energy toral analyses have been published by researchers from the Institute for
sources, carried out within the context of the Deep Decarbonization Renewable Energies of the Universidad Nacional Autónoma de México
Pathways Project [7–9]. By integrating estimations of a technological (UNAM) regarding the decarbonization of the Electricity, Trans
rollout generated through different sectoral analyses, this study builds portation, and Industry sectors. Each of these papers considers detailed
up an energy economy-wide picture of pathways to the target, with representations of their sectors, creates a baseline scenario from a 2010
assumptions on the likely rates of technology replacement and inter base year in a manner consistent with official projections, and uses the
sectoral dependencies (such as the nexus between clean electricity and LEAP tool [15] to model the implementation of a broad portfolio of
electrification of transport) driving recommendations for short and emissions reduction measures through to 2035, thereby estimating the
medium-term actions to achieve the goal and avoid emissions lock-in. decarbonization impact with respect to the baseline.
Veysey et al [10] performs a multi-model analysis of six models for Grande-Acosta et al [16] compares an Electricity baseline with a
Mexico within the context of the CLIMACAP and LAMP collaborations, decarbonization scenario built upon the pillars of energy efficiency and
also targeting the 2050 GLCC emissions goal. A broad range of modeling distributed generation to reduce demand on the grid, together with
approaches and decarbonization strategies were considered, presenting higher uptake of renewable sources for on-grid generation. A set of 36
diverse technological pathways based on different sets of assumptions. mitigation measures are considered: demand measures, of which 24
This diversity can be seen in the electricity sector results: 2050 decar involve efficient energy use and 3 distributed generation, would reduce
bonization scenario electricity demand is lower than that of the refer 2035 emissions by over 30% vs BAU, and while 9 measures increasing
ence scenario in three of the models (EPPA, IMAGE, POLES), while it is renewable energy supply reduce them by an additional 35%. This far
higher in the other three (GCAM, Phoenix, TIAM-ECN). Correspond exceeds government emissions reduction and renewable penetration
ingly, some decarbonization approaches rely more on broad electrifi targets, while achieving significant economic benefits thanks to avoided
cation, while others make greater requirements of efficiencies and energy use and fuel savings.
biofuels among other measures. However, the need to decarbonize Islas-Samperio et al [17] takes a similar approach to generate the
electricity is consistently shown across all six models. baseline scenario for Transportation, comparing it with the imple
Elizondo et al [11] uses the Mexico 2050 Calculator tool based on the mentation of 21 mitigation measures to model the decarbonization
UK 2050 Calculator [12] to develop and compare four whole-economy scenario. The measures involve traffic optimization, vehicle energy ef
scenarios, each broadly consistent with the GLCC target but pursuing ficiency, modal shifts away from private ICE vehicles (largely to bus
different mitigation and development strategies (High-Tech Pathway, rapid transport, light urban trains, and non-motorized transport), as well
Distributed Effort, Full Renewables, Nuclear + Renewables). The 2050 as vehicle technology shifts from fossil fuels to biofuels or to electric
calculator works as an engineering model, based on “system dynamics” vehicles (fuel cells, battery, and hybrid EVs). While the decarbonization
i.e. on stock-and-flow, as opposed to an econometric model. Similarly to scenario reduces 2035 CO2 emissions by 56% vs the baseline, it is
the multi-model analysis of [10], this comparative approach uses interesting to note that its absolute emissions fall until 2024 but grow
different sets of assumptions in terms of population, GDP, and behaviors thereafter – albeit at a slower rate than the BAU scenario. This shows
as well as technological pathways, presenting policymakers with alter that significant mitigation is within reach but may also suggest that a
native visions on how the target may be achieved. A key message continuation until 2050 of strategies applied through to 2035 may not
emerging from all the scenarios is the feasibility of achieving full be able to approach net zero without some changes.
decarbonization of the electricity sector. Key policy recommendations Islas-Samperio et al [18] addresses Industry in a similar manner, with
include the requirement of a substantial ramp-up in renewable energies, a focus on emissions from energy use rather than from the chemical
energy efficiency, and further legal enforcement. reactions involved in industrial processes. The 15 mitigation measures
Solano-Rodríguez et al [13] studies the implications on the electricity modeled cover energy efficiency (both electrical and thermal), materials
sector of one reference and two decarbonization scenarios – one of recycling, CHP and renewable energy, resulting in a 47% emissions
which targets net zero by 2050 – by first modeling the corresponding reduction vs the BAU scenario in 2035.
energy pathways for Mexico in the Times Mexico Regional model and These sectoral studies all include cost-benefit analyses which show
later soft-linking the resulting regionalized electricity demand into the decarbonization scenarios can achieve emissions reductions of signifi
Balmorel [14] model to find cost-optimal technology pathways. Apart cantly greater ambition than Mexico’s NDC through pathways which are
2
economically favorable compared to the BAU thanks to avoided costs 2. Methodology

over the modeling period. Decarbonization requires a higher up-front
investment than the BAU alternative, pointing to a consistent need to 2.1. DDP methodology
develop financing strategies, targeting both national and international
sources, to accelerate ambition. However, because they only extend to The Deep Decarbonization Pathways method [9] articulates a pro
2035 and explore the mitigation potential of an indicative portfolio of cess for designing country-driven visions of transformation to achieve
measures and assumptions, they shed less light on Paris-compatible climate goals and sustainable development. The method uses backcasting
scenarios which seek to approach the higher ambition target of net- from the net-zero emissions target to the present while recognizing the
zero emissions by 2050. inextricable relationship between development and emissions goals, the
need to describe at least one or more detailed physical transformations
1.3. Research questions and approach for each sector, depending on uncertainties and the articulation of short,
medium and long-term actions and policies to drive these
No studies have been found of a decarbonization pathway analysis transformations.
for Mexico performed across both Energy and Non-energy sectors in a A whole-economy perspective is necessary to estimate the scale of
manner aligned with the Paris Agreement aims and the milestones to the transition across all systems (energy, urban, productive, land, etc.),
wards 1.5◦ C warming contained in the Special Report on Global to ensure the final goal is achieved, and to reveal the main sectoral in
Warming of 1.5◦ C [19]. Extending the DDP methodology to the AFOLU terdependencies, tradeoffs, challenges and milestones. This perspective
sector – which is critical for the LAC region – can reveal crucial infor also helps provide a self-consistent trajectory of macroeconomic vari
mation on the nature of net-zero scenarios, including the potential of ables like GDP, population growth, economic structure or level of social
negative emissions from the sector and tradeoffs with bioenergy options development, on which sectoral narratives can be built.
and food security considerations [20]. Furthermore, while sectoral Projecting pathways into the long-term future – at least until 2050 –
studies have explored a comprehensive range of potential measures, not only outlines a deep transition towards zero-carbon while consid
identifying a far greater mitigation potential than that currently pursued ering the natural life cycle and turnover of infrastructure, modifications
by government policy, a target-driven analysis of transformation path in behaviors of people, and aspirational socioeconomic goals, but it is
ways over a longer timeframe may offer a complementary perspective. fundamental to identify and avoid solutions that may appear to offer
In particular, more detailed technological analysis on full decarbon benefits in the short-term but are sub-optimal in a longer timeframe.
ization of the power sector with very high renewable penetration, Pathways can identify risks of future stranded or under-utilized assets,
including its link to urban transportation and future zero-carbon fuels, which is crucial when planning capital intensive infrastructure.
may help increase confidence in such an alternative, as may the latest Backcasting – the process of tracing a trajectory backwards parting
assumptions on renewable generation prices. Finally, incorporating from a vision of the future where targets are met, towards the present
analyses based on urban structure and constrained and unconstrained day with present conditions – assures compatibility of pathways with the
travel [21,22] into passenger transport pathways can further inform targets set in the Paris Agreement. Pathways designed in this manner use
overall decarbonization options. a combination of sectoral strategies across three main pillars (increased
This work follows the DDP research methodology described in Sec energy efficiency, rolling out zero-carbon electricity, and electrification
tion 2 and in Waisman et al [9] to develop two analytical scenarios of and other fuel switches of energy uses) across sectors to reach a low-
economic development, service demand, technology rollout, and GHG carbon economy by mid-century. Each combination of measures over
emissions for Mexico through to 2050. It continues the work developed time – a pathway – can then be communicated to and challenged by
during the Deep Decarbonization Pathways Project of 2013–15 [6] by stakeholders, to be further refined, following the necessary iterations to
extending coverage into non-energy sectors and additional greenhouse this cycle.
gasses. It also increases decarbonization ambition seeking consistency Two complementary tools are used to described any given pathway:
with a 1.5◦ C global goal, which may impact the range of technology a narrative describing in words how the transformation occurs, thereby
options considered in previous studies such as [10,11]. The following communicating a story of the change that is being sought, and a dash
questions have guided this research: board spreadsheet containing the minimum set of numeric indicators
needed to capture the evolution and accompany the narrative.
• How can a multi-sectoral pathway for Mexico over the 2020–2050
period increase decarbonization ambition towards the 1.5◦ C target 2.2. Scenario development and assumptions
while including AFOLU as well as energy-related activity, and
extending GHG coverage to include CH4 and N2Oas well as CO2? Two scenarios were developed for this study. A Current Policy Sce
• How can a change of paradigm in urban development help to nario (CPS) estimates a set of seven sectoral emissions trajectories
decarbonize the transport sector by reducing future mobility de consistent with the delivery of current climate policies to 2030, and a
mand, while also addressing social development concerns such as comparable level of ambition going forward to 2050. The second is a
quality of life and equity? Deep Decarbonization Pathway (DDP) Scenario that identifies a set of
• What high-level, strategic changes will be required of the Industry sectoral trajectories potentially consistent with meeting the Paris
and Oil and Gas sectors to comply with these goals? These sectors – Agreement.
previously considered “hard to decarbonize” – accounted for the bulk For both scenarios 2015 is used as base year for estimations. It has
of remaining 2050 emissions in the DDPP work of 2015. been characterized using the latest available data from public official
• What sectoral linkages, e.g. electrification of transport and increased sources [23–27]. The same macroeconomic assumptions were used for
demand for power, identified as crucial in the DDPP work, will be both, including a slow population growth, which is expected to increase
needed for the 1.5◦ C target to be viable? How can these connections from the current 124m people to 150m in 2050, in line with CONAPO
be captured in the development narrative? forecasts, and a yearly GDP growth of 3%, to ensure all results obtained
• How do current Government of Mexico (GoM) plans compare with a were consistent with a growth higher than historical trends and aligned
whole-economy analysis of the 1.5◦ C global target, and what rec with national aspirations. The structure of the economy is assumed to
ommendations can be drawn from this? continue its relative growth in services with respect to primary and
secondary activities. Both scenarios follow the same (CPS) trajectory
between 2015 and 2020, hence we only report on the 2020–2050
period.
3
The Current Policies Scenario was developed to achieve the aims of 2.3. Modeling tools
Mexico’s NDC, although the specific rollout pathway was modeled,
leading to some different technology choices than those stated by official We employed a multi-tiered approach to pathway analysis (see
policy. Beyond 2030, the modeling sought to stay in line with stated Fig. 1). Energy systems modeling has been carried out to characterize
policy where sufficient information was available (namely the electricity the energy flows from production to final consumption, and to estimate
sector), and by assuming comparable levels of ambition in other sectors. the corresponding CO2 emissions. Within this, the most detailed analysis
The aim of the CPS exercise was to give full consideration to Mexico’s has been carried out in the power and transport sectors, as under
existing climate plans, thereby identifying any resulting gaps with standing the future interaction between them – and its role in their
respect to a Paris-compatible trajectory with the need to increase policy decarbonization – is one of the main motivations of the research.
ambition beyond current commitments. Therefore, this approach pre The transformation of all other energy sectors is described at the
sents an optimistic view of Mexico’s expected emissions – assuming dashboard level, specifically by modification of Kaya identity drivers
there is no implementation risk for stated policy – should there be no (activity, energy and carbon intensities) in each sector, and then it is
increase in mitigation ambition. soft-linked to energy-systems modeling. Non-combustion emissions
The DDP scenario energy system modeling was constrained by a CO2 from industrial processes are also tracked at this level.
emissions trajectory from 2020 values on a slope that would reach zero Non-energy sectors and emissions have been included at a pre
emissions from the sector after 2050. The intent was to explore how a liminary dashboard level, as this tool is still under development for the
dedicated transformation can evolve while assuming Mexico will retain sectors of AFOLU and waste.
or improve current AFOLU absorptions and recognizing that developing Energy systems modeling used two tools. Demand side and energy
countries may face barriers to achieve zero emissions by 2050. final use per sector and type of infrastructure has been accounted in
The existing electricity generation capacity along with fuel price Energy PATHWAYS [31]. This is a bottom-up energy accounting tool
forecasts were taken from official documentation [26,33] and renewable that models the evolution of all the energy economy with detailed
resource availability was taken from AZEL [28]. New electrical gener granularity and allows a backcasting approach – starting first with a goal
ation resource costs were taken from the National Renewable Energy and then working to demonstrate what physical infrastructure changes
Laboratory’s Annual Technology Baseline 2018 [29], and energy con are required to reach that goal and when those changes must happen.
version performance and cost data were taken from a technology This scenario approach allows the model to easily perform exploratory
meta-analysis and survey performed by the Advanced System Studies for pathway analysis and to reflect the underlying physics of the energy
Energy Transition [30]. system with sufficient granularity for effective communication with
Modeling results confirm Mexico’s extensive renewable opportunity: different stakeholder groups, including energy system planners.
not only does the DDP result in a rapid uptake of renewable electricity The evolution of electricity generation technologies and tighter
and a very high renewable mix, but modeled CPS uptake of renewables coupling of energy sectors with the electricity sector were modeled with
is also significantly higher than that planned by Mexico within its NDC the Regional Investment and Operations (RIO) platform [31]. RIO is
and energy sector plans. a tool to optimize the cost of expansion of capacity for electricity gen
Beside these macroeconomic and energy-system wide assumptions, eration, fuel production, and the transmission infrastructure required.
specific sectoral inputs are described in the corresponding sections. Including detailed sequential hourly system operations – which can
Sectors covered in pathway development of both scenarios are Elec determine system reliability with very high levels of variable renewable
tricity, Transport, Buildings (Commercial and Residential), Industry, Oil energy – allows the development of least-cost portfolios of electricity
& Gas, AFOLU and Waste. Emissions have been estimated for three GHG and fuel supply. This platform enables the analysis of the energy system
gases: CO2 in the energy sectors, industrial processes and land use as a whole, considering combinations of electrification and decarbon
changes; CH4 also being considered for Oil & Gas; and CH4 and N2O for ized fuels adoption, to identify those investments which optimize the
AFOLU. In the waste sector emissions of CO2 and CH4 are jointly entire energy system transition, not only the endpoint, and hence ach
accounted in terms of CO2e. ieve future policy goals reliably and at the lowest cost.
A description of the methodology of both tools, as well as their
interlinkages, is included in the supplementary material (Appendix A).
3. Whole economy decarbonization overview
3.1. Whole-economy narratives of change
A multi-sectoral narrative of change was developed, based on

existing literature as well as stakeholder and expert discussions, in order
help direct the quantitative analyses of the sectoral transformations, and
to summarize the evolution and explain the linkages between sectors.
• Electricity will be crucial to the transformation, since for all other

energy sectors, decarbonization will rely on the availability of clean
electrical power. This will significantly increase demand for elec
tricity – mirroring the rapid fall in fossil energy demand – which in
turn must be provided by zero-carbon technologies. From 2020, an
accelerated, large-scale rollout of decarbonized power generation,
together with the necessary transmission, distribution, and storage
capacities, must become the main pillar of national energy policy.
Mexico’s extensive renewable resource, industrial capacity, and
skilled workforce mean the country can capture significant value-add
from the large investments required, while fiscal and industrial
policy must realign in order to both incentivize and benefit from this
Fig. 1. Tiered approach to modeling detail across sectors. transition. Our detailed technical analysis of this rollout gives
4
confidence to other sectors that they can depend on abundant, reli fossil generation fleet, so tariff and fiscal policy to enable rapid take-
able renewable electricity to be available for their own rapid up of distributed generation should reduce emissions, grid demand,
transitions. and government spending.
• Passenger transportation is currently the sector with largest and • AFOLU is the most significant non-energy sector considered. It forms
fastest-growing emissions [27]. Further rapid growth is expected, an important part of the whole-economy perspective, and can enable
predicated on increasing vehicle sales as the population becomes key decarbonization strategies through negative emissions (absorp
wealthier, and aggravated by uncontrolled urban growth continuing tion). The decarbonization scenario assumes international best
as that of recent decades. Hence, a core narrative element of this practice is followed in protecting and managing forestlands, stopping
work is that urban development should happen in a different manner, not deforestation and maintaining absorptions from forestlands which
only to reduce emissions growth, but to increase public health and remain forestlands. Given the significant role played by forestlands
wellbeing. Changing urban structure will distribute services and in absorbing CO2, failure to achieve this will make decarbonization
opportunities more fairly within the citizenry, while favoring public unachievable in a manner consistent with the Paris aims. While
transport infrastructure and operations can improve passenger op achieving zero deforestation is part of Mexico’s NDC, and hence built
tions, safety, and travel times. In this manner, increasing access to into the current policies scenario, successful implementation cannot
services and activities for the whole population will not represent an be taken for granted and adequate prioritization and policy efforts
equally large increase in transportation demand. At the same time, must actively pursue this objective. In addition, agricultural practice
rapid rollout of decarbonized fleet technologies will be required, will improve across the board to prevent growth in crop and livestock
powered by renewable electricity instead of fossil fuels. This will emissions from eroding the absorption obtained from forestlands.
need important investment across the value chain, and will signifi The decarbonization scenario sees gradual improvements in pro
cantly increase overall demand for electrical power. ductivity per hectare (both t/ha for crops and heads/ha for live
• Freight transportation and industry, considered “hard to decar stock), reduced fertilizer use, and reduced unit emissions from
bonize” in the 2015 DDPP work, will see both incremental efficiency enteric fermentation and manure management, largely decoupling
improvements and direct electrification proceed rapidly where agriculture growth from emissions growth. The analysis is not
practical, while step-change modal shifts in transport, and process detailed enough to describe the transformation but presents a po
innovation for industry, will further reduce emissions. Significant tential AFOLU scenario based on high-level drivers.
energy needs will remain, however, for which over time, additional
zero-carbon liquid or gaseous fuels will be generated through a range Within the context of the significant gap between Mexico’s current
of technological pathways, powered either by biomass, waste, or climate change commitments and the deep structural change required to
renewable energy. These will gradually phase out fossil fuels, with deliver on the Paris Agreement aims, the DDP-LAC Mexico project seeks
the substitution well underway – but not completed – by 2050. This to address the necessary high-level policy and planning changes with a
industrial transformation to deliver zero-carbon fuels presents view to highlighting the significant shift in development narratives
additional opportunities for post-oil investment, Fossil gas will pro required.
vide the bulk of the remainder, on the way to full phase-out ca. 2060.
• Oil and gas demand reduction is a necessary element of the deep 3.2. Whole economy emissions
decarbonization scenario. This is both because personal mobility in
Mexico will decouple from fossil fuels, and because as other coun Whole-economy emissions. The resulting GHG emissions (CO2,
tries undertake similar efforts to decarbonize, global demand will CH4 and N2O) for the CPS and DDP pathways can be seen in Fig. 2. The
decline.1 This is in stark contrast with stated GoM policy to invest in DDP scenario reaches gross emissions of 244 MtCO2e in 2050, on the
increased oil production and refining capacity. While demand for way to zero emissions by 2060. As a comparison, the CPS presents gross
natural gas, which currently comes from both power generation and emissions of 987 MtCO2e in 2050. If carbon sinks are considered, which
thermal use by industry and buildings, will phase out more slowly, by 2050 are − 193 MtCO2 in DDP and − 143 MtCO2 in CPS, net DDP
this gas is largely imported from US low-cost shale production. emissions become 51 MtCO2e, a 94% reduction of the equivalent figure
Therefore, substitution of fossil gas by renewables would increase in CPS (844 MtCO2). Per capita emissions will have fallen from 4.2tCO2e
national economic activity and energy sovereignty. Displacing en in 2015 to 0.3tCO2e in 2050.
ergy investments away from oil and into renewables should therefore In this DDP scenario all sectors reach GHG emissions close to zero by
be a driver of economic growth. 2050, with the exception of industry and agriculture. Further analyses
• Buildings emissions, which will gradually grow in the current pol could explore a more comprehensive portfolio of decarbonization stra
icies scenario as increasing prosperity outpaces continuous efficiency tegies in these two sectors, including a better understanding of demand
improvements, can be rapidly reduced through a combination of side alternatives, and potentially greater potential for emissions
solar heating (which is a widespread solution across similar latitudes reductions.
around the world) and electrification, coupled with rigorous stan End-use energy demand in the DDP scenario largely remains flat,
dards for construction, fittings, and appliances. Distributed power while the CPS scenario it shows a 1.5% annual growth (see Fig. 3).
generation presents another important economic opportunity, Electrification of end uses together with efficiency improvements across
particularly in the residential sector for which electricity – largely sectors drive a continuous divergence, leading to DDP demand in 2050
generated from fossil fuels – is currently subsidized. Solar PV tech to be 50% lower than in CPS.
nology currently provides electricity at lower cost than the existing By 2050, decarbonized electricity will be main energy source,
providing more than 55% of final energy. Although some natural gas
remains in use for industrial applications, its role is reduced notably in
[1]
comparison with expectations of current policy.
Consistent global efforts to achieve the Paris Agreement are an underlying
assumption of this analysis. Without these, the potential trade and fiscal im
4. Decarbonization of electricity
plications of seeking to implement unilateral deep decarbonization while
neighboring countries and trading partners do not commit to similar efforts
would affect Mexico’s competitiveness. Mexico does not have the clout to 4.1. Electricity demand outlook and drivers
change international prices singlehandedly, nor the ability to pay higher
(above-market) rates for provision of basic goods and services compared to that Electricity plays a central role of in deep decarbonization strategies
of trading partner or competitor countries. because it is one of the lowest-cost means of supplying low-carbon
5
Fig. 2. GHG emissions pathways by sector, including absorptions, for CPS and DDP scenarios (MtCO2e).
Fig. 3. Whole-economy energy final demand per fuel type (EJ).
energy across many different sectors and applications, and it can be

progressively decarbonized through the roll-out of competitive zero- Table 1
Electrification rate of total energy use per sector.
carbon generation technologies including wind, solar, nuclear, and
geothermal. Decarbonization is thus a driver for increased electricity Sector 2015 2050 CPS 2050 DDP
demand over time – provided the demand is met by zero emissions Residential 25% 34% 64%
generation (see Fig. 4). Commercial 48% 59% 67%
Starting from current generation capacity as per official documen Industry 22% 33% 50%
Passenger transport 1% 2% 66%
tation [32], and developing electricity demand scenarios based on CPS Freight transport 1% 0% 48%
and a DDP assumptions, the higher DDP reliance on electricity is clear
from the start, and is 40% greater by 2050. Although very significant,
this difference in electricity demand understates the difference in de DDP scenarios is in transportation, in which ambitious modal change
mand for zero-carbon electricity as required by decarbonization: addi and a rapid fleet technology shift transform the sector’s energy use,
tional renewable build in the DDP scenario not only has to provide the leading to an additional 136 TWh of demand in 2050, an increase of 18%
incremental electricity required, but also needs to replace much of fossil with respect to the CPS. This transformation is described in detail in
capacity remaining in the CPS, if Mexico is to meet the Paris targets. Section 5.
The sectoral uptake behind this electrification is illustrated in The residential sector accounts for another large increase. Current
Table 1. The most noticeable increase in demand between the CPS and residential energy use is based on fossil gas (largely LPG) which accounts
Fig. 4. Electricity demand per sector (TWh).
6
for 36% of residential energy needs, followed by traditional biomass strategies to guarantee grid reliability.
(34%) - particularly outside large cities. Electricity only accounts for The main difference between the final sectoral electricity demand in
25%, and solar thermal heating is a minor contributor (0.5%). However, Fig. 4 and electricity generation in Fig. 5 is the amount of electricity
with current levels of electricity distribution (98.5% of households) and transformed into other energy carriers like hydrogen, while losses from
readily available electric technologies for all household energy uses, transmission, storage and distribution also contribute to this difference.
market regulation and pricing policies can rapidly switch purchases of In both scenarios generic system losses are reduced from 15% in 2018 to
water heating, cooking, and other residential technologies to electrical 10% in 2050. Transmission losses are treated separately and represent
options. The large opportunity of distributed solar photovoltaic (PV) 4% of total electricity generated.
generation within the residential sector should provide further incentive Capacity installation (Fig. 6) shows even greater contrast between
for this switch. CPS and DDP scenarios, largely because the capacity factor of renewable
Commercial energy use is already more electrified that residential, assets is 18%–22%, for PV; 15%–55% for onshore wind; and 45% for
showing the greater use of appliances such as refrigeration, HVAC and offshore wind, requiring the increase of installed capacity to grow at
light machinery. The prevalence of electrical alternatives, the more over double the rate of the generation. DDP grid reliability requires
regulated nature of the sector, and the faster response of businesses to storage, starting in 2030 as solar PV exceeds 20% of annual generation.
price signals than that of private citizens (who may prefer fossil tech Offshore wind deployment begins by 2040 under current cost assump
nologies for cultural reasons) makes it credible to achieve the switch to tions, although faster cost improvements would allow earlier take-up.
67% of energy coming from electricity by 2050, in line with the DDP Including offshore wind or other emergent technologies earlier would
scenario. slow down the rate needed for storage roll-out, since their own inter
Industrial activity in Mexico includes a broad range of subsectors and mittency would be different to and help balance that of a large solar PV
processes, with varying energy demand profiles. Although Mexico’s capacity.
NDC is particularly lax on industry, many subsectors which currently Expansion of the transmission grid – estimated at 30 GW by 2050,
burn coal, gas or oil on site can shift to electric technologies if prices of incremental to the CPS scenario – will be required in many cases to
energy and/or emissions favor the switch. In the DDP scenario elec access these new resources and connect them to current transmission
tricity more than doubles as a share of industry energy requirements, infrastructure and with final users.
from 22% in 2015 to 50% in 2050. However, due to increased overall
energy efficiency in this scenario, the final demand of electricity for 4.3. Grid balancing and regional integration
industrial purposes (548 TWh) is slightly less than in the less electrified
CPS scenario (561 TWh). The remaining 50% that has not been elec Mexican policymakers have expressed concerns about achieving
trified by 2050 acknowledges that some processes require services cost-effective grid reliability with a high share of renewable generation
which may not be practical with current electrical technologies (e.g. [34]. The DDP scenario combines the strategies of technology diversi
very high temperature processes), although other options, including fication, geographic integration, demand management, and storage to
zero-emissions fuels and demand side measures, are expected to play a match generation to load. The specific power generation mix – and
role. hence the dispatch balancing techniques – are driven by the geographic
availability of renewable resources. Fig. 7 illustrates, for each of the five
4.2. Electricity generation technology rollout regions in Mexico, how the proposed 2050 generation mix can reliably
meet Mexico’s energy requirements.
Mexico’s plans for electrical power generation [1–3] include a These hourly generation profiles of a representative day (based on
gradual year-on-year increase in output, while expanding the overall the average of the month of July in 2050) show the DDP scenario peak of
fraction of “clean” generation from current values (19%) to a target of solar generation during daylight hours in all regions, rapidly falling off
50% by 2034, maintaining this proportion until mid-century. While this before dawn and after dusk. As the solar production ramps up/falls,
mix will reduce unit emissions in comparison to today, 206 g/kWh vs energy storage provides a rapid response to keep supplying power in
527 g/kWh, it will not decarbonize the grid to the level required to early mornings and evenings. Wind – either off or onshore – provides an
achieve the Paris Agreement, e.g. <20 g/kWh. important contribution which does not depend on the hour of the day,
The CPS and DDP scenarios explore the differences between the but which displays greater fluctuations than seen in Fig. 7. Finally, at the
current expected pathway and that required to deeply decarbonize the bottom of the chart, gas and gas with CCS provide the flexibility to
grid. The generation mix used to satisfy the demand of the two scenarios balance the system. This shows how gas will play a role in providing
is shown in Fig. 5. The partial replacement of gas by renewables from flexible capacity for reliability but will contribute a small share of the
2020 to 2035 in the CPS scenario aligns with the implementation of the overall generation. Further detail on the hourly-resolution modeling
NDC target to reach 50% renewables by 2034, which is followed by methodology can be found in the supplementary material.
steady overall growth maintaining that split. The rapid uptake of wind The load chart shows how, when the solar generation peak exceeds
generation shows its current cost advantage, although by 2035 much of system load, the additional solar power charges the energy storage, and
the lower-cost resource has been used and solar PV fills in further re is used in fuel synthesis (hydrogen electrolysis). Much of the charged
newables’ growth. It is worth emphasizing that this trajectory was storage will be used to supply power only hours later, during night time,
modeled in order to hit NDC targets, but Mexico’s current NDC imple as described above. The hydrogen and other fuels are used within
mentation plans include a slower uptake of renewables than that transport or industry, with the corresponding energy being accounted
modeled in the CPS scenario. for in those sectors.
Despite having to reach a much higher power generation by 2050, As solar generation picks up after 2030, the carbon-free electricity
the DDP scenario includes an even more accelerated uptake of renew produced in excess of system load requirements during the diurnal
able energies and reduces investment in fossil fuel options, particularly generation peak also grows, making energy available for different uses.
natural gas pipelines and NGCC plants, more rapidly to reduce NG In this study we consider the use of lithium ion batteries for electricity
participation to 17% of generation by 2035 and only 5% by the end of storage but there are numerous technologies that complement each
the period. This remainder is used for dispatch continuity. Both wind other, and some of them provide interesting co-benefits besides good
and solar expand rapidly, with wind reaching full utilization of the low- storage capacity at competitive prices (for example, pumped hydro can
cost resource by 2030, five years earlier than in the CPS case. The improve local water security). This storage accounts for 220 TWh in
continuous increase of solar PV is possible given the very large resource 2050.
available in Mexico, and will require transmission, storage, and demand Another segment of this production which would otherwise be
7
Fig. 5. Electricity generation per source (TWh).
Fig. 6. Installed electric generation capacity (GW).
Fig. 7. DDP hourly electricity dispatch in 2050 by region (GW).
curtailed – estimated at 153 TWh in 2050 – can be used to produce zero- diesel, gasoline and jet fuel [35], that can help to meet the demand in
emissions hydrogen by means of water electrolysis. Hydrogen can then other sectors where liquid fuels remain necessary, for example in in
be stored for later use, or combined with CO2 to produce synthetic hy dustry or air transport. Methanol is also a valuable raw material in other
drocarbons such as methane, or synthetic liquid fuels such as methanol, industrial processes. Fig. 8 shows how these different technologies
8
Fig. 8. Destination of electricity (TWh).
which make use of the diurnal peak come online after 2030. where infrastructure will be developed.
The DDP 2050 energy system balances electricity output and demand Understanding how the power sector can help optimize the whole
across different regions in the country as a function of resources, de energy system while driving deep decarbonization in all sectors of the
mand and seasonality. Fig. 9 shows the evolution of electricity genera economy is important to guide investment decisions across the spectrum
tion in each geographic region by energy source (green and grey lines) of stakeholders – government, financial institutions, project developers,
and the resulting electricity flows (in blue) to meet demand, illustrating local communities, final energy users – to reach a low-carbon low-cost
the relative regional contribution of resources. power sector system by mid-century.
These flows also account for electricity that is directed towards
hydrogen production in zones where legacy infrastructure of O&G 5. Decarbonization of transportation
would enable electricity to be transformed into other energy carriers
(particularly in the region South-Southeast). The resulting energy sys 5.1. Urban development as a driver of transport demand and emissions
tem capitalizes on local resources across the country while making the growth
whole national grid more robust and efficient.
Transportation is the largest and fastest growing sector in Mexico’s
4.4. Investment and rollout requirements for implementation GHG emissions inventory, with passenger transportation accounting for
the bulk of both emissions and growth. In 2015, an estimated 23% of the
Fig. 10 portrays the difference of installed electrical capacity in the total energy-related CO2 emissions came from passenger transport, of
DDP scenario in comparison to the CPS case. Rollout of renewable which most of the demand comes from urban environments.
generation capacity increasingly surpasses the current policies trend – Urban structure is an important driver of citizen energy demand and
which already considers a modest share of renewables – by 70 GW quality of life. Mexico’s population is 74% urban (by 2015 accounts), of
(100% more than CPS) in 2030, 215 GW (200%) in 2040, and by 422 which more than half (39%) live in metropolitan areas greater than 1
GW (312%) in 2050. Storage capacity installation in DDP is also much million inhabitants, another 35% live in smaller cities of under 1 m, and
higher than CPS, reaching 93 GW by 2050. Expanding the transmission the remaining 26% live in settlements of 11,500 inhabitants or less.
and distribution capacities will also be needed, both to access all The historical absence of policies to promote efficient urban devel
renewable resources, and to strengthen the power-grid for increased opment, facilitate access to affordable housing in well-located areas, or
energy security in Mexico. to provide equal access to services and opportunities for different citi
On the other hand, currently operating fossil-powered plants which zens groups, has led to the current highly segregated layout present in
end their lifetime service are assumed to be decommissioned. Therefore, most Mexican cities [37]. Jobs and services are typically concentrated in
the DDP scenario has 29 GW less of thermal capacity by 2050 than CPS. dense central areas where living costs are high. Many poorer people
The DDP scenario described for the power sector requires an addi living in peripheral regions undertake very long journeys on a daily basis
tional capital investment of around 200 billion USD from 2020 to 2050 to reach these jobs, relying on inadequate and insufficient public
in generation capacity, about a 2.5-fold increase over the CPS case pri transport. The middle classes populate a band between the center and
marily for new renewables which have very low variable costs and will the outer peripheries, relying on private vehicles for their mobility,
provide fuel savings. As a comparison, the business plan for PEMEX (the hence aggravating congestion and air quality issues, and also depriving
state-owned O&G company) considers a similar amount of cumulative potential investment and customer revenue to higher quality public
required investment: 195 and 23 billion USD2 for upstream and down transport routes, infrastructure, and fleets.
stream activities, respectively, from 2018 to 2030 [36]. Reaching these A noticeable effect of this urban growth model is the steady increase
investment targets in power, though, will not only require funds but a in passenger travel time (see Fig. 11 [38]) which is directly detrimental
very dynamic sector overall, including a diversity of investment sources to citizens’ quality of life.
and schemes, strong and clear electricity market operating rules, new
business models to capture diverse markets and integrate attractive 5.2. Passenger demand outlook and reduction through urban structure
portfolios (virtual power plants, for example), and committed and and public transport
co-creative work with the communities where resources are located and
If current growth and structural trends continue, the constrained (or
non-discretionary) transport demand, which typically relates to citizens
[2]
The PEMEX Business Plan uses Mexican pesos (MXN), which have been getting to work, education, or other necessary activities, is set to in
converted to USD using the average rate at the month of publication (July 2019; crease markedly (57%) between present day (estimated at 652 giga
19.05 MXN/USD). passenger-kilometers, Gpkm, in 2015) and 2050. Moreover, travel by car
9
Fig. 9. DDP electrical energy provision by source and net transmission flow, per region (TWh).
insufficient to reduce overall emissions and will not deliver decarbon

ization of the sector.
A more inclusive urban structure which distributes centers of ac
tivity among residential areas will require development and roll-out of
zoning rules to attain walking-friendly neighborhoods equipped with
good quality residential, commercial and public services, and with
transport corridors providing functional links between them. Increased
economic development of all sectors will allow citizens to move closer to
their source of income, further reducing commuting distances and travel
times. Social acceptance of these changes will be key: measures must be
transparent, fair, responsive and aligned with the local characteristics
and challenges of each city.
Concrete actions could include the development of guidelines for
cities to inform their plans and protocols for infrastructure development
based on long-term economic, social and environmental impacts. Local
Fig. 10. Difference in between electrical capacity installed in DDP and CPS financing capacity must be strengthened to enable projects to source
scenarios (GW). national and international investment. Differential land tax schemes and
mixed-use zoning could be applied around strategic transport hubs to
match population density to mass transit capacity, increasing public
transportation profitability. Global best practices must rapidly be
brought to the fore, setting aside traditional transportation planning
approaches which would otherwise continue to promote high costs and a
chronic dependence on fossil fuels.
Implementation of such measures will present important challenges.
We have assumed a modest adoption of this new urbanization paradigm
by 2050, and estimate that the combined impact of a more inclusive
urban structure, increased social mobility, and partial adoption of online
activities will reduce expected constrained transportation demand in
2050 by 16% with respect to the CPS scenario.
The provision of quality public transport is core to the agenda of
urban improvement and will require dedicated investment as well as
urban planning and policy frameworks. Urban and suburban trains,
Fig. 11. Increase in average travel time in Mexico City according to reason for BRTs, cycling networks, and other options should be implemented to
travel 2007 vs 2017 (minutes).
create fully integrated transport systems with expanded coverage.
Upgrading regulation and access to finance will have to be accelerated to
is expected to make up the largest share (439 Gpkm in 2050, a growth of enable projects to be scoped, approved, and implemented across
71% from 2015). Mexican cities within this decade.
Emissions estimations for this evolution of demand are strongly The estimated impact of the public transport rollout considered in
dependent on fleet efficiency and other technological assumptions. Our this DDP scenario is considerable, see Fig. 12. From a 2020 modal dis
CPS scenario models a future under current policies. It includes our own tribution dominated by cars and buses (42% and 34% of total con
estimations of the car fleet size evolution (from 20.3 million in 2015 to strained demand, respectively, and not considering air travel), with an
56.5 million in 2050) based on the official historic car registry [24], and important share of non-motorized travel (19%, most of which is
applying survival rates based on literature values [39]. It also assumes walking) and marginal participation of other modes (motorcycles 1%,
that fuel efficiency of new vehicles in Mexico improves from an average train 4%), the decarbonization scenario reduces car participation to only
of 12 km/L in 2015, to 19.6 km/L by 2050, maintaining the trends 18% of constrained demand, while keeping high (41%) share of buses
currently observed. Finally, a marginal penetration of electric vehicles (which can reach urban outskirts to link passengers to the rest of the
reaching only 6.3% by 2050 is in the ballpark of what has been esti transportation network) and increasing rail usage greatly (31%). This
mated for an NDC scenario in Mexico [40]. As a result, while they may scenario also projects a reduction of walking, as access to public trans
be effective in slowing emissions growth, current policies are port infrastructure is widen to cover more people. In contrast, the CPS
10
reaching 47% by 2040 and 90% by 2050, even as changes in urban

structure and modal shifting reduce the overall demand for light vehicle
service. The overall energy reductions for LDVs between the CPS and
DDP scenarios result from the decreased distance demand together with
the much lower energy demand per km travelled of EV vs ICEs: Thus
2050 gasoline use by the LDV fleet in the DDP scenario is 93% less than
in the CPS scenario, falling from 1.13 to 0.076 Exajoules.
The need for two urgent transformations emerges from this analysis.
The steep increase in EV sales will require a rapid reconfiguration of the
automotive industry, with matching rollout of charging infrastructure.
At the same time, gasoline demand virtually disappears in DDP, contrary
to current policy trends which would contemplate a 40% increase of
Fig. 12. Modal shift in constrained transport demand (Gpkm).
gasoline sales by 2050.
trajectory maintains the current split by 2050 with cars and buses 5.4. Decarbonization of other transport sectors
satisfying most of the mobility demand in the future.
Shifting from road to other modes can bring about efficiencies and
5.3. Decarbonization of passenger transportation through fleet help electrification in urban contexts, but for intercity travel a modal
electrification shift for long-distance routes might find profitability barriers in the
future, especially in scarcely populated areas. The DDP trajectory sim
The DDP scenario sees renewable sources provide the bulk of energy ulates a modal shift to high-speed rail in a limited number of high-
for the transport fleet, largely through the rapid roll-out of electric ve demand intercity corridors that are currently served by short-haul
hicles. This brings about an important energy demand reduction thanks flights and frequent inter-city buses. To reach deep decarbonization,
to the greater thermodynamic efficiency of electrical vs ICE drive-trains. the remaining fleet of passenger buses and airplanes use a mix of fuels
Fig. 13 presents the modeling results for the roll-out of LDEVs including biofuels as well as synthetic liquid fuels derived from low-
required to achieve the overall climate goals. EV sales follow a rapid S- carbon electricity to reduce the use of fossil jet-fuel and diesel.
curve in which they make up 19% of new LDV sales by 2030, and 85% by For freight, the main decarbonization strategies have similarities to
2040, as opposed to the expected gradual increase from virtually zero to those of intercity passenger travel above, given the large national ter
8% over the same time period implicit in current policy scenarios. ritory, extensive existing road network, and scope for dedicated electric
As EVs make up the newer segment of the fleet, they will cover a rail lines for high-demand corridors. The DDP scenario simulates
disproportionately high fraction of overall vehicle-kilometers travelled, implementation of these rail lines by shifting 15% of total freight
Fig. 13. LDV transition to EVs: Top: sales (%); Middle: annual service provided (billion vehicle-km); Bottom: energy demand (EJ).
11
demand from diesel trucks to electric trains by 2050, slowing future emitting sectors (74, 64, 62, and 57 tCO2/GJ, respectively) as they
growth in diesel demand. mostly use fossil fuels to meet energy needs. Chemical industry and
Although there is promising scope for battery, fuel-cell and other other manufacturing include more natural gas in their energy mix, and
electric technologies for long-haul road freight, at this stage we they have a lower CO2 intensity (48 and 62 tCO2/GJ, respectively).
conservatively project that the rate of electrification reaches 48% of Mining operations in Mexico keep a low carbon footprint due to their
total demand (assuming electrification of road freight occurs mostly in high use of electricity (60%) and natural gas (16%). In all cases, carbon
an urban context, focused on light and medium sized vehicles), and the intensity of industrial subsectors is expected to decrease marginally to
same zero carbon fuel technologies and biofuels introduced in jet fuel wards 2050. Process/fugitive emissions estimated based on the latest
blends are used in diesel blends from 2030 to fully decarbonize the official information [27] are 150% of combustion emissions for cement,
remnant non-electric freight fleet by 2050 (see Fig. 14). 94% for iron and steel, and 50% for mining. These emissions are
assumed to double by 2050 in the CPS.
Complying with the Paris Agreement will require emissions re
5.5. Transportation decarbonization summary
ductions based on four pillars: improving efficiencies, electrification and
fuel switching, process innovation and improvement, and zero-carbon
The overall energy demand by fuel from the transport sector is shown
fuels. This will require rapid engagement with all stakeholders in the
in Fig. 15. The 44% reduction in energy demand is a result of multiple
industrial sector, as well as measures which incentivize overall decar
factors including passenger demand change from urban structure, modal
bonization in the way that best fits in with the county’s transformational
shift away from private vehicles, broad electrification of public and
vision of low emissions development.
private fleets, and inclusion of electric rail corridors for both freight and
Mexico’s oil sector has historically been an important contributor to
passengers.
the national economy and is still a mainstay of public finances. Current
The final fuel mix for the whole transportation sector shows over
GoM policy aims to reverse recent declines in production through
90% reductions of gasoline and diesel. This striking difference in the
additional investment. This will not only lock in significant emissions,
gasoline and diesel outlook between the CPS and DDP scenarios in
but further bet future fiscal stability on a robust international oil price,
dicates that if Mexico is to comply with the Paris Agreement there will be
both of which are inconsistent with the Paris aims.
virtually no demand for the current mainstay fuels of the transportation
Natural gas use is widespread and growing, largely in the form of
sector. This should give pause to policymakers as they review the NDCs,
imports of low-cost shale gas from the USA. Current trends suggest
not only from a transportation perspective, but also in terms of what
further demand growth from power generation and industry, leading to
such a reduction would imply for investments in future oil production
pipeline infrastructure investment to distribute additional imports [41].
and refining capacity.
In projecting the CPS, the future energy intensity of O&G activities is
a large unknown, as it depends on the type and location of oil and gas
6. Decarbonization of other energy sectors
extracted. We assume that the currently observed trends of increasing
energy intensity continue towards the future, reaching +25% for up
6.1. Trends and decarbonization levers for industry, oil & gas, and
stream and +50% for downstream by 2050 in comparison to 2015
buildings
levels.
The oil and gas DDP scenario reflects the rapid reduction in demand
Mexico’s industrial sector accounted for 29% of GDP in 2018.
from decarbonized transportation, power and other sectors of the
Cement, construction, iron & steel, and agriculture are the highest
Fig. 14. Reducing transport emissions through reduced use or blending with zero-carbon fuels (synthetic "P2X" and biofuels) (EJ).
12
Fig. 15. Transportation final energy demand (EJ, left) and GHG emissions (MtCO2, right).
Mexican economy. Global demand for oil is also assumed to fall as other refining operations (which today consume significant volumes of gas
countries pursue decarbonization, reducing the scope for exports to produced in Mexico). Therefore, the DDP scenario for overall industrial
absorb any surplus production once national demand is met. (This is an activity, including oil and gas, shows a significant (36%) reduction in
important difference from the DDPP study of 2015 where oil and gas energy demand vs the CPS scenario, (see Fig. 17). Industry also un
production was assumed to continue despite dropping national de dergoes some fuel shifting, including electrification and partial substi
mand.) The decline in demand for gasoline and diesel obtained from tution of coal, coke and diesel, by natural gas and hydrogen. Emissions
modeling transportation DDP was used as a proxy for the rate of abatement in DDP result from the double effect of fossil fuel reduction
reduction for oil demand, since this is much simpler than attempting to and the decarbonization of the power grid.
model global commodity markets over decades, and reflects the current Carbon capture is also present in the DDP scenario, where half of the
importance of national demand in relation to production. DDP gas de CO2 captured from bio-refining (24.6 MtCO2), electricity generation
mand was driven by scenarios of the industry and power sectors which (6.46 MtCO2), and hydrogen production from SMR (7.9 MtCO2) in 2050
are expected to remain the predominant purchasers, while DDP Resi gets geologically stored, while the other half is used to produce synthetic
dential and Commercial scenarios substitute gas with solar thermal and fuels. Potential areas for investment in these strategies are stronger in
electrification where possible. the south and southeast regions, where oil fields and oil processing
Efficiency in building fabric must be enshrined in building codes infrastructure have historically been developed.
with corresponding enforcement. Suitable efficiency standards for ap The DDP uptake of zero-emissions liquid fuels within industry and
pliances and equipment must be adopted. Residential thermal demand transportation through blending can be seen in Fig. 14. This accounts for
can be rapidly switched away from gas through a combination of solar the decarbonization of aviation as well as of the reduced diesel emis
thermal and electric technologies: solar thermal provides 434 PJ in the sions, both through sustainable biofuels (whose volumes are constrained
2050 DDP scenario, 15 times more than in the CPS case, largely by available agricultural resource and the need to preserve forest cover)
replacing gas in water heating where practical. and “Power-to-Liquid” (P2X) fuels which are synthesized from the
The contribution of buildings to the rollout of solar PV distributed hydrogen generated with the solar PV generation peak seen in Fig. 7.
generation across the country can be significant if appropriate business Buildings undergo changes in both efficiency and electrification, as
models and regulations are set in place to capture this fragmented well as the uptake of solar thermal energy primarily for hot water. The
market, fairly distribute a rapid payback for all parties, and ensure energy savings and emissions reductions can be seen in Fig. 18.
reliability of the grid. The fiscal implications of residential distributed
PV should be attractive to the government, since the residential elec
6.3. Oil & gas and industry strategic shift within the energy sector
tricity tariff applied to most homes is subsidized.
decarbonization
6.2. Decarbonization results for industry, oil & gas, and buildings Mexico’s current program of continued investment in oil and gas is
inconsistent with achieving the Paris aims, and should be urgently
The decline in demand for oil-based fuels is a key feature of the DDP redirected towards the expansion of renewable electricity generation,
scenario as shown in Fig. 16. Gasoline and diesel in particular undergo transmission, distribution and storage infrastructure required, so dec
rapid reductions as transportation modal shifts and electrification take arbonized power can substitute oil and gas as the leading source of
hold. energy.
This decline in national demand drives reductions in upstream and DDP analysis highlights the role of zero-carbon fuels in
Fig. 16. Demand for petroleum-derived fuels (EJ).
13
Fig. 17. Industry (including Oil and Gas) energy demand (EJ, left) and resulting emissions (MtCO2, right).
Fig. 18. Buildings (residential and commercial) final energy demand (EJ, left) and emissions (MtCO2, right).
decarbonizing industry and freight transportation. These fuels have the cattle, cattle density per hectare to determine land-use impacts, and
advantage that they can be stored for long periods and deliver energy emissions per head to reflect gastroenterological and manure manage
densities comparable to current fossil fuels through the supply of liquids ment impacts. Conservative extrapolations of historical trends informed
or gasses, maintaining many similarities with existing processes. the CPS crop and livestock emissions. CPS forest absorptions were kept
Furthermore, the industrial activity needed for their supply presents an constant, assuming the NDC commitment to reach zero deforestation is
opportunity towards which some existing oil and gas facilities may be reached by 2030 and maintained throughout, although achieving this
retooled as their traditional business enters terminal decline. will require strong governance and supervision.
For oil and gas assets overall, a strategic, long-term asset optimiza The preliminary DDP AFOLU pathway changes a very limited set of
tion program should be established to manage operations and in parameters with respect to the CPS, seeking to establish the overall
vestments in the context of declining activity. Scheduling timely activity conditions to achieve climate goals, rather than detailing a trans
reduction for those assets which will be phased out can free up invest formational approach based on technical potentials and their imple
ment for those which can be re-directed towards new opportunities. mentation. DDP scenario livestock numbers are kept constant, assuming
These may include carbon capture and enhanced oil recovery for up gradual decline in per capita meat demand, while cattle density (heads
stream (on a pathway of reduced emissions production towards reduced per hectare) is assumed to gradually increase in DDP (1.5% per year),
global demand) and zero-carbon fuel production for downstream assets, releasing land for afforestation. Gradual improvements have been
which could range from biofuels, hydrogen/hydrogen-based fuels, or assumed for emissions from manure (0.1% yearly reduction) and enteric
synthetic hydrocarbons depending on availability of feedstocks and fermentation (0.5% yearly reduction), assuming a consistent uptake of
supply chain elements, as well as expected demand and prices for each. global best practices. The yearly rate of increase of synthetic fertilizer
Concrete opportunities may also be found for natural gas and fuel use has been reduced down to only 1%, which is below the expected
storage, for example as part of a provision of generation capacity within increase in productivity, and far below historical trends, reflecting the
the decarbonization pathway for the electricity sector. implementation of a concerted effort to rationalize fertilizer. While all of
these measures go against current trends, none of them require extreme
7. Decarbonization of non-energy sectors change. Further research around crops, livestock, and forest manage
ment in Mexico will yield more detailed analysis, potentially identifying
7.1. AFOLU more ambitious reduction opportunities.
The scenarios generated using this high-level dashboard driver
Nearly half of Mexico’s national territory is covered by forestland approach are shown in Fig. 19. In a CPS case slow but constant increase
which remained forestland in the latest GHG emissions inventory (97.4 of livestock and fertilizer emissions reach a comparable scale by 2050 to
million ha) [27]. CO2 absorptions from this forestland were 139 MtCO2e the absorption from forests that remain forests, making the overall
in 2015 and make up one of the largest single items of the inventory. AFOLU contribution close to zero. The DDP scenario avoids these in
Emissions from agricultural and livestock activity were 70 and 23 creases from crops and livestock emissions, while densification of live
MtCO2e respectively, with both sectors showing moderate growth in stock activity increases forest cover, resulting in a greater absorption
recent years, which can be expected to continue. than that seen today. This analysis demonstrates the need to address the
A simplified dashboard-based approach was adopted to estimate drivers of agricultural emissions growth is as important as preserving
potential AFOLU trends as a function of a small number of key drivers. and increasing Mexico’s forest cover if the net absorptions of the sector
Emissions from crops are driven by hectares of cultivated land and fer are to be maintained.
tilizer use per hectare, while livestock emissions depend on heads of
14
Fig. 19. AFOLU GHG emissions (MtCO2e).
7.2. Waste • Suspending investment and build of oil and gas projects, including
expansion of upstream and downstream activities, and any pro
Waste emissions are reduced in the DDP scenario to 8 MtCO2e in grammed expansions of natural gas pipelines.
2050, 87% less than in the current policies case (78 MtCO2e). This re • Developing an asset optimization strategy of the existing oil and gas
sults from simulating interventions to reduce the footprint at each step asset portfolio, assessing scope for zero-carbon fuels and CCS activity
of the solid waste and waste water management chains, from their for which re-tooling may benefit.
generation to their final disposal. • Re-directing funds from suspended oil and gas works into trans
While the CPS assumes that solid waste production per capita will be mission, distribution and storage infrastructure to enable high vol
maintained at around present levels (0.87 kg/person-day), under DDP a umes of renewable generation to be included into the grid.
20% reduction is achieved by 2050. Additionally, recycling of all inor • Setting out programs to identify agricultural best practice applicable
ganic materials (40% of all waste) reduces the fraction that gets land to Mexico, reversing the growth of emissions from crops and live
filled to organics only (53%). Finally, 85% of emissions from landfills stock by reducing fertilizer use and increasing herd density among
are captured leaving residual emission of 3 MtCO2e in 2050. other measures.
Reduction of wastewater emissions in the DDP trajectory is the result
of several assumptions. In the first place, both municipal and industrial These measures should be given due consideration by decision
wastewater generation revert from increasing current trends to levels makers with a view to aligning climate action with the country’s in
observed two decades ago by 2050, a reduction of 22% with respect to a ternational obligations, particularly as the GoM undertakes the updating
current policies pathway. Capture of 85% of the biogas from water of Mexico’s NDC.
treatment plants is also required to reduce emissions from this source to Contributions to the literature include a re-enforcement of the cost
5 MtCO2e. optimal nature of a very high renewable electric system, in line with
[13]. The significant grid expansion needed to provide energy for
8. Conclusion: insights from a 1.5◦ C whole-economy DDP transportation, buildings and industry suggests that the increase of
analysis ambition from 2 to 1.5◦ C reduces the range of technological pathways
available to 2050 presented in [10,11] (in which some decarbonization
We present an economy-wide pathway for decarbonization for the scenarios have lower electricity demand than the reference) as con
main emitting sectors of the Mexican economy, covering the most straints on bioenergy and efficiency potentials leave gaps which can only
important GHGs, and compatible with the aims of the Paris Agreement. be overcome by clean electricity. We further find that the risk of emis
This is achieved through in-depth structural transformations of the main sions lock-in through any delay in action within the electricity system is
economic sectors, starting from 2020. Delays in implementation will mirrored by the need for correspondingly urgent measures in the
likely make the Paris goals unachievable. transportation, urban structure, and the oil and gas sectors.
Each sectoral pathway includes a narrative of change and a tech In addition, the decisive role played by AFOLU in bringing national
nological and emissions trajectory for development. The overall national emissions in line with the Paris Agreement emphasizes the need for
goal can only be reached if all of these are achieved. Any reduction in further research on decarbonization options available to that sector,
ambition for the transformation in a particular sector must therefore be including potential trade-offs between forest management, agricultural
compensated by a corresponding increase in other sectors. productivity, social inclusion, and consumer behaviors, as well as sus
Short-term policy measures to kick off the transformation could tained integration of AFOLU within future work analyzing Paris-
include: compatible development pathways for Mexico.
• Incentivizing energy markets to invest in a rapid expansion of CrediT

renewable generation capacity. This could be achieved enhancing
the regulatory framework to drive an increasing proportion of power Daniel Buira: Conceptualization, Validation, Investigation, Writing
from renewable generation. – Original Draft, Writing – Review & Editing, Supervision, Funding
• Developing urbanization and public transport strategies for all cities, acquisition. Jordi Tovilla: Conceptualization, Validation, Investigation,
supported by significant infrastructure investment in world-class Visualization, Writing – Original Draft, Writing – Review & Editing,
public transportation systems. Formal analysis, Data curation, Project administration, Funding acqui
• Developing an EV rollout timeline, consistent with 50% of LDV sales sition. Jamil Farbes: Writing – Original Draft, Writing – Review &
being reached by 2035, in collaboration with the automotive in Editing, Investigation, Visualization, Formal analysis, Data curation,
dustry, public authorities, and potential installers of the required Validation, Project administration, Resources. Ryan Jones: Conceptu
charging infrastructure. alization, Methodology, Software, Formal analysis, Data curation,
Validation, Supervision, Resources. Ben Haley: Conceptualization,
Methodology, Software, Resources. Dennis Gastelum: Investigation,
15
Data curation. Well below 2 ◦ C: Energy System Modelling and Policy Development (Vol. Lecture Notes
in Energy 64), Springer International Publishing AG, 2018.
[14] F. Wiese, R. Bramstoft, H. Koduvere, A. Pizarro Alonso, O. Balyk, J. Kirkerud,
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26–34.
The authors declare that they have no known competing financial [15] C. Heaps, LEAP: the Low Emissions Analysis Platform, 2020 [Software version:
2020.1.13].
interests or personal relationships that could have appeared to influence [16] G. Grande-Acosta, J. Islas-Samperio, Towards a Low-Carbon Electric Power System
the work reported in this paper. in Mexico, Energy for Sustainable Development, 2017, pp. 99–109.
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sector in Mexico, Energies 13 (84) (2019).
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Industrial Sector in Mexico, Energy Sources, Part B, 2020.
The authors would like to thank Chris Bataille, Henri Waisman, Yann [19] Intergovernmental Panel on Climate Change, Special Report on Global Warming of
1.5◦ C, WMO and UNFCCC, 2018.
Briand, and Johannes Svensson from the Institut du Développement [20] C. Bataille, et al., Net-zero deep decarbonization pathways in Latin America:
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14693062.2020.1804817.
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Energy Strategy Reviews 33 (2021) 100578

Contents lists available at ScienceDirect

Energy Strategy Reviews

A whole-economy Deep Decarbonization Pathway for Mexico

economically favorable compared to the BAU thanks to avoided costs 2. Methodology

3. Whole economy decarbonization overview

3.1. Whole-economy narratives of change

A multi-sectoral narrative of change was developed, based on

• Electricity will be crucial to the transformation, since for all other

Fig. 3. Whole-economy energy final demand per fuel type (EJ).

energy across many different sectors and applications, and it can be

Fig. 4. Electricity demand per sector (TWh).

Fig. 5. Electricity generation per source (TWh).

Fig. 6. Installed electric generation capacity (GW).

Fig. 7. DDP hourly electricity dispatch in 2050 by region (GW).

Fig. 8. Destination of electricity (TWh).

insufficient to reduce overall emissions and will not deliver decarbon­

reaching 47% by 2040 and 90% by 2050, even as changes in urban

Fig. 16. Demand for petroleum-derived fuels (EJ).

Fig. 19. AFOLU GHG emissions (MtCO2e).

• Incentivizing energy markets to invest in a rapid expansion of CrediT

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insufficient to reduce overall emissions and will not deliver decarbon