Ricardo Samaniego: Greening North America's Energy Economy, A Perspective from Mexico


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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

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Ricardo Samaniego: Greening North America's Energy Economy, A Perspective from Mexico

  1. 1. Greening North America’sEnergy Economy:A Perspective from MexicoRicardo Samaniego-BreachInstituto Tecnológico Autónomo de MéxicoPrepared for the public meeting of theCommission for Environmental Cooperation’sJoint Public Advisory CommitteeSession on Energy Economics:“Balancing economic prosperity with the environmentalsustainability of the energy sector”Calgary, CanadaApril 24, 2013
  2. 2. ContentsA. North America and Mexico in the World Energy OutlookB. Energy subsidies in MexicoC. Opportunities for green growthD. Recommendations
  3. 3. A.1 World energy indicators 2012Source: International Energy Agency, 2012 Key World Energy StatisticsRegion/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 30,326OECD 1,232 37,494 3,879 1,672 5,406 10,246 12,440Middle-East 205 1,196 1,635 -1,024 606 715 1,547Non-OECD-Euope&Eurasia 338 1,533 1,769 -629 1,132 1,492 2,606China 1,345 4,053 2,209 367 2,431 3,980 7,311Asia 2,229 3,217 1,360 231 1,524 1,796 3,331Latin-America 455 2,197 769 -172 583 907 1,065Africa 1,022 1,252 1,168 -468 682 603 930Canada 34 1,204 398 -150 252 517 537Mexico 108 920 226 -44 178 226 417United States 310 13,017 1,725 534 2,216 4,143 5,369
  4. 4. A.2 Emissions indicators 2012Source: International Energy Agency, 2012 Key World Energy StatisticsRegion/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 0.44OECD 4.39 0.14 8,315 2.30 10.10 0.34Middle-East 2.96 0.51 3,493 2.55 7.56 0.66Non-OECD-Euope&Eurasia3.35 0.74 4,414 2.30 7.71 0.74China 1.81 0.60 2,958 3.01 5.43 0.78Asia 0.68 0.47 806 2.19 1.49 0.37Latin-America 1.28 0.27 1,992 1.83 2.34 0.25Africa 0.67 0.54 591 1.36 0.91 0.34Canada 7.38 0.21 15,145 2.13 15.73 0.45Mexico 1.64 0.19 2,085 2.34 3.85 0.30United States 7.15 0.17 13,361 2.42 17.31 0.41
  5. 5. A.3 The United States is the majorconsumer of energy per capitaSource EIA and SENER 2010Energy consumptionPer capitaenergyconsumptionPer capita GDP
  6. 6. B. Energy subsidies in Mexico
  7. 7. B.1 Energy subsidies represent animportant share of GDP in MexicoSubsidies 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 ElectricityCommission, Pemex and INEGINote: preliminary data for 2012Year/ProductGasoline&dieselLPG Resid Elect Total2005 -0.17 0.05 1.22 1.102008 1.77 0.21 1.21 3.202012 1.40 0.24 0.50 2.14
  8. 8. B.2 Gasoline and diesel pricesare low in MexicoSource: International Energy Agency, Key World Energy Statistics, 2012Prices of premium gasoline and diesel(US dollars per litre)
  9. 9. B.3 Residential electricity prices are low onaverage, industrial electricity’s not so muchSource: International Energy Agency, Key World Energy Statistics, 2012Residential and industrial prices(US dollars per MWh)050100150200250300350400GermanySpainBelgiumIrelandSwedanPortugalSlovaquiaNehterlandsHungarySwissLuxembourgFinlandNewZelandChileChecRepGreatBritainSloveniaPolandFranceGreeceNorwayTurkeyUnitedStatesMexicoAverageIndustrialResidential
  10. 10. INCOMEGROUPPORCENTAJE DELTOTAL DEL SUBSIDIOQUE RECIBE CADADECILI<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%X53.7%(409 thousand pesos peruser)CURVA DE LORENZ DEL SUBSIDIO TOTAL0%10%20%30%40%50%60%70%80%90%100%0% 20% 40% 60% 80% 100%Average subsidy per user: 67 thousand pesos/yearB.4 Subsidies to electricity for water pumpinggo to the richest agricultural producersSource: INE, 2010PERCENTAGE OFTHE TOTALSUBSIDY RECEIVEDBY INCOME GROUPLorenz curve water subsidy
  11. 11. C. Opportunities for green growth
  12. 12. C.1 Energy economics and climate changeCost-effectiveness analysis- Measures the benefits of mitigating climate change in termsof reducing the impacts of climate change, by comparingcosts of different interventions to reduce GHG emissions.- Produces a "carbon cost" as a result.- The analysis calculates the "net cost" of reducing carbonemissions- The cost-effectiveness of GHG emission reduction is thus thenet present value cost to reduce (avoid) a ton of CO2equivalent emissions
  13. 13. C.2 Opportunities: Energy and Green GrowthSummarySource: World Bank, Mexico: Estudio sobre la Disminución de Emisiones Contaminantes, 2009CostsBenefits Cumulative mitigation 2009-2030 (MtCO2e)
  14. 14. D. Recommendations for North AmericaD.1 Establish an appropriate price on carbon• “Renewable energy is one important component in theportfolio of GHG mitigation action that must be taken inorder to halt and eventually reverse high atmosphericconcentrations of CO2.”• “… most important, we need to have in place the regulatoryand policy mix necessary to establish an appropriate priceon carbon…”• “…if environmental impacts such as emissions of pollutantsand greenhouse gases were monetized and included inenergy prices, more renewable energy technologies mightbecome economically attractive.”Source: JPAC Public Forum—North America’s Energy Future: Powering a Low-carbon Economy for 2030 and Beyond, Toronto, April 2012.
  15. 15. D. Recommendations for MexicoD.2 Gradually eliminate energy subsidies to highincome consumers• Energy subsidies are highly regressive (they favor mostthe affluent groups).• Gasoline and diesel subsidies have represented, forexample, three times the budget of all social programs inMexico.• It would be good public policy to gradually eliminate thesubsidies, but targeting direct support for the poor.• For the benefit of the growing middle income groups, itwould be convenient to invest those resources not usedto subsidize the richest, for investments in infrastructureand modern transportation systems, specially in largecities.
  16. 16. D. Recommendations for MexicoD.3 Implement policies and support programs toovercome regulatory, institutional and marketdevelopment barriers• Reduce the cost of developing, adopting and enforcingnew regulations, such as efficiency standards oroperational standards for new and existing equipment.• While all suppliers may be subject to new rules,manufacturers may oppose them, for fear that such ruleswill drive up production costs, reducing sales.• Disseminate information on the benefits of the program-between producers and consumers would have toovercome such opposition.
  17. 17. D. Recommendations for MexicoD.4 Create mechanisms to finance initial costs of lowcarbon projects• These costs are often offset by lower operating costs toproduce a net economic benefit (in present value terms)• However, even in cases where the costs of the life cycle arelower, initial investment costs often inhibit the realization ofthese investments• For some interventions, particularly in making efficient useof energy, the initial investment is offset by correspondingsavings in new capacity