Mexico took a significant step forward in January 2020 by initiating the pilot phase of its emissions trading system (ETS), making it the first country in Latin America to adopt such a system. The launch was a key milestone – eight years after the legal basis was established to develop the ETS. In this period the Mexican Secretariat of Environment and Natural Resources (SEMARNAT) has been developing the rules for the system, with the objective of reducing emissions efficiently, without affecting the competitiveness of national industries in the international market. To support this endeavour, a consortium of international and local experts came together to provide technical advisory services and capacity building for the successful implementation of the pilot phase and the design of the operational phase for the Mexican ETS.

The consortium consisted of a diverse pool of international and local experts that combine conceptual understanding with practical experiences of issues relevant to ETS design and implementation. By having this resource at their disposal, SEMARNAT could tap into a wealth of ETS knowledge as needed, enabling them to identify and compare ETS design options, facilitate stakeholder dialogues, and build their capacities for effective participation in the ETS design and implementation process.

Key contributions by the Ecologic Institute:

• Assessment of the elements that impact the ETS price signal: The Ecologic Institute prepared a policy brief for SEMARNAT, which analysed and described the elements that influence the price signal within an ETS. This assessment covered topics such as auction design, price transparency, and mechanisms for price containment. Drawing on international examples from existing ETSs, this analysis provided valuable insights and recommendations for the Mexican ETS design.
• Workshop on ETS price signal study results: The Ecologic Institute organised a two-hour workshop in collaboration with SEMARNAT and the European Energy Exchange (EEX) to present the results of the allowance price study. This online event, held on 24 October 2022, allowed participants to discuss and understand the implications of the study's findings.