Ricardo Samaniego-Breach, Director of the Center for Applied Economics and Public Policy in Mexico, spoke about energy and green economic growth at the CEC Joint Public Advisory Committee's public forum in Calgary on April 24, 2013. More at http://cec.org/JPACenergy

1. Greening North America’s
Energy Economy:
A Perspective from Mexico
Ricardo Samaniego-Breach
Instituto Tecnológico Autónomo de México
Prepared for the public meeting of the
Commission for Environmental Cooperation’s
Joint Public Advisory Committee
Session on Energy Economics:
“Balancing economic prosperity with the environmental
sustainability of the energy sector”
Calgary, Canada
April 24, 2013

2. Contents
A. North America and Mexico in the World Energy Outlook
B. Energy subsidies in Mexico
C. Opportunities for green growth
D. Recommendations

3. A.1 World energy indicators 2012
Source: International Energy Agency, 2012 Key World Energy Statistics
Region/Country Population GDP Energy Prd Net-M TPES Elec.Cons. CO2-Emiss.
(PPP) (fuel comb)
(million) (billion2000) (Mtoe) (Mtoe) (Mtoe) (TWh) (Mt-CO2)
World 6,825 50,942 12,789 - 19,738 12,717 30,326
OECD 1,232 37,494 3,879 1,672 5,406 10,246 12,440
Middle-East 205 1,196 1,635 -1,024 606 715 1,547
Non-OECD-Euope&Eurasia 338 1,533 1,769 -629 1,132 1,492 2,606
China 1,345 4,053 2,209 367 2,431 3,980 7,311
Asia 2,229 3,217 1,360 231 1,524 1,796 3,331
Latin-America 455 2,197 769 -172 583 907 1,065
Africa 1,022 1,252 1,168 -468 682 603 930
Canada 34 1,204 398 -150 252 517 537
Mexico 108 920 226 -44 178 226 417
United States 310 13,017 1,725 534 2,216 4,143 5,369

4. A.2 Emissions indicators 2012
Source: International Energy Agency, 2012 Key World Energy Statistics
Region/Country TPES/POP TPES/GDP(P) Elec/POP CO2/TPES CO2/POP CO2/GDP(P)
World 1.86 0.25 2,892 2.38 4.44 0.44
OECD 4.39 0.14 8,315 2.30 10.10 0.34
Middle-East 2.96 0.51 3,493 2.55 7.56 0.66
Non-OECD-
Euope&Eurasia
3.35 0.74 4,414 2.30 7.71 0.74
China 1.81 0.60 2,958 3.01 5.43 0.78
Asia 0.68 0.47 806 2.19 1.49 0.37
Latin-America 1.28 0.27 1,992 1.83 2.34 0.25
Africa 0.67 0.54 591 1.36 0.91 0.34
Canada 7.38 0.21 15,145 2.13 15.73 0.45
Mexico 1.64 0.19 2,085 2.34 3.85 0.30
United States 7.15 0.17 13,361 2.42 17.31 0.41

5. A.3 The United States is the major
consumer of energy per capita
Source EIA and SENER 2010
Energy consumption
Per capita
energy
consumption
Per capita GDP

6. B. Energy subsidies in Mexico

7. B.1 Energy subsidies represent an
important share of GDP in Mexico
Subsidies to gasoline and diesel, LPG and residential electricity
(percent of GDP in selected years)
Source: Own calculations with information from the Finance Ministry, the Federal Electricity
Commission, Pemex and INEGI
Note: preliminary data for 2012
Year/
Product
Gasoline
&diesel
LPG Resid Elect Total
2005 -0.17 0.05 1.22 1.10
2008 1.77 0.21 1.21 3.20
2012 1.40 0.24 0.50 2.14

8. B.2 Gasoline and diesel prices
are low in Mexico
Source: International Energy Agency, Key World Energy Statistics, 2012
Prices of premium gasoline and diesel
(US dollars per litre)

9. B.3 Residential electricity prices are low on
average, industrial electricity’s not so much
Source: International Energy Agency, Key World Energy Statistics, 2012
Residential and industrial prices
(US dollars per MWh)
0
50
100
150
200
250
300
350
400
Germany
Spain
Belgium
Ireland
Swedan
Portugal
Slovaquia
Nehterlands
Hungary
Swiss
Luxembourg
Finland
NewZeland
Chile
ChecRep
GreatBritain
Slovenia
Poland
France
Greece
Norway
Turkey
UnitedStates
Mexico
Average
Industrial
Residential

10. INCOME
GROUP
PORCENTAJE DEL
TOTAL DEL SUBSIDIO
QUE RECIBE CADA
DECIL
I
<0.01%
(113 pesos per user )
II 0.02%
III 0.15%
IV 0.47%
V 1.28%
VI 3.27%
VII 6.8%
VIII 12.5%
IX 21.8%
X
53.7%
(409 thousand pesos per
user)
CURVA DE LORENZ DEL SUBSIDIO TOTAL
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 20% 40% 60% 80% 100%
Average subsidy per user: 67 thousand pesos/year
B.4 Subsidies to electricity for water pumping
go to the richest agricultural producers
Source: INE, 2010
PERCENTAGE OF
THE TOTAL
SUBSIDY RECEIVED
BY INCOME GROUP
Lorenz curve water subsidy

11. C. Opportunities for green growth

12. C.1 Energy economics and climate change
Cost-effectiveness analysis
- Measures the benefits of mitigating climate change in terms
of reducing the impacts of climate change, by comparing
costs of different interventions to reduce GHG emissions.
- Produces a "carbon cost" as a result.
- The analysis calculates the "net cost" of reducing carbon
emissions
- The cost-effectiveness of GHG emission reduction is thus the
net present value cost to reduce (avoid) a ton of CO2
equivalent emissions

13. C.2 Opportunities: Energy and Green Growth
Summary
Source: World Bank, Mexico: Estudio sobre la Disminución de Emisiones Contaminantes, 2009
C
o
s
t
s
B
e
n
e
f
i
t
s Cumulative mitigation 2009-2030 (MtCO2e)

14. D. Recommendations for North America
D.1 Establish an appropriate price on carbon
• “Renewable energy is one important component in the
portfolio of GHG mitigation action that must be taken in
order to halt and eventually reverse high atmospheric
concentrations of CO2.”
• “… most important, we need to have in place the regulatory
and policy mix necessary to establish an appropriate price
on carbon…”
• “…if environmental impacts such as emissions of pollutants
and greenhouse gases were monetized and included in
energy prices, more renewable energy technologies might
become economically attractive.”
Source: JPAC Public Forum—North America’s Energy Future: Powering a Low-
carbon Economy for 2030 and Beyond, Toronto, April 2012.

15. D. Recommendations for Mexico
D.2 Gradually eliminate energy subsidies to high
income consumers
• Energy subsidies are highly regressive (they favor most
the affluent groups).
• Gasoline and diesel subsidies have represented, for
example, three times the budget of all social programs in
Mexico.
• It would be good public policy to gradually eliminate the
subsidies, but targeting direct support for the poor.
• For the benefit of the growing middle income groups, it
would be convenient to invest those resources not used
to subsidize the richest, for investments in infrastructure
and modern transportation systems, specially in large
cities.

16. D. Recommendations for Mexico
D.3 Implement policies and support programs to
overcome regulatory, institutional and market
development barriers
• Reduce the cost of developing, adopting and enforcing
new regulations, such as efficiency standards or
operational standards for new and existing equipment.
• While all suppliers may be subject to new rules,
manufacturers may oppose them, for fear that such rules
will drive up production costs, reducing sales.
• Disseminate information on the benefits of the program-
between producers and consumers would have to
overcome such opposition.

17. D. Recommendations for Mexico
D.4 Create mechanisms to finance initial costs of low
carbon projects
• These costs are often offset by lower operating costs to
produce a net economic benefit (in present value terms)
• However, even in cases where the costs of the life cycle are
lower, initial investment costs often inhibit the realization of
these investments
• For some interventions, particularly in making efficient use
of energy, the initial investment is offset by corresponding
savings in new capacity