Cap and trade scheme for the Mexican auto industry


Improving transport sector fuel efficiency  is high on the Mexican government’s agenda, as private transport currently represents around 16 percent of Mexico’s total greenhouse gas emissions. 
An emissions cap and trade scheme forms the cornerstone of a regulation that the Mexican National Institute of Ecology (INE) is currently developing to promote energy efficiency in the private market for petrol and diesel light vehicles.
The proposal is unique in that it would allow trading of sales-weighted corporate efficiency averages or sales-weighted grams of carbon.  This system can be made compatible with all other proposed efficiency regulations, and places no restriction on compliance strategies such as motor weight, footprint, or specific technology.
The INE has requested the Center for Sustainable Transport (CTS-Mexico) to carry out an economic analysis of this proposed cap and trade scheme to help polish its final details and provide supporting arguments to other federal actors such as the Ministry for Environment and Natural Resources (SEMARNAT), which has the legislative authority for regulation.


To provide Mexico's National Institute of Ecology (INE) with a comprehensive economic analysis of its proposed cap and trade scheme for the Mexican automobile industry.

Main Activities

  • Develop an economic model to analyse the impact of the  proposed cap and trade scheme, examining private and social costs and benefits
  • Meet regularly with INE to ensure that the analysis complements and helps develop the regulatory initiative 
  • Organise periodic workshops to present progress and get feedback Provide INE with technical support in presenting results to federal actors and in forming a coalition to promote the regulation's adoption.

Expected Impact

  • Provision of critical arguments to support the cap-and-trade proposal at the heart of the efficiency regulation
  • Formation of a federal coalition that will refine and lobby for the proposal  
  • Facilitation of the passage of an energy efficiency norm for the private vehicle sector in 2010
  • CTS-Mexico has calculated that by 2030 such a regulation could reduce national carbon emissions by 220 MtCO2, thereby reducing particulate emissions <2.5 micrometers by 8,300 tons and saving 2,150 million Euros.
  • Auto sector carbon emissions reduction achieved at lowest marginal cost
Programme sector: 

Energy Efficiency (EE) (Policy&Regulation)

Stage of project: 



MX/Mexico (None)


2009 - 2010


€ 96,951

Implementing agency: 

Centro de Transporte Sustentable de Mexico

REEEP grant funded by:

United Kingdom