Mexico and emerging carbon markets : investment opportunities for small and medium-size companies and the global climate agenda

This report provides information to the financial services sector on major environmental issues in North America in an effort to identify potential financial opportunities in Mexico regarding the climate change agenda and those coming from possible carbon offset projects. As a non-Annex 1 country, Mexico is not obliged to meet domestic GHG emission reduction targets, but given the strong economic links between Mexico, Canada and the United States it is suggested that investment transfer links to climate change should follow existing international investment and trade patterns. This report examined three sectors in Mexico, including electric power generation, steel production and land-use change and forestry, in an effort to evaluate their potential for carbon reduction. The report identifies carbon-related opportunities involving small and medium-size enterprises (SMEs) in particular because large companies are already better positioned to examine opportunities associated with the international climate agenda. SMEs, however, face many challenges in taking advantage of climate-related projects and associated investment opportunities, including higher entry and transaction costs, difficulty in accessing capital markets, and difficulty in estimating individual baselines and inventories. The report showed that the main carbon-related opportunity in Mexico's electricity sector are closely related to the planned expansion of natural gas use. This study also suggests that the climate agenda can contribute to changing Mexican forests from their current state of being a net source of greenhouse gas emissions, to becoming a significant carbon sink. tabs., figs