This report Mexico’s efforts to phase out and rationalise its fossilfuel subsidies is an outcome of this peer-review process, providing a succinct account of the discussions that took place between Mexican officials and the review team, but also within the review team itself. After summarising the key aspects of Mexico’s energy landscape, the report discusses the ongoing reforms of transport fuel pricing. It also describes the subsidies (and other measures) that Mexico and the review team have identified in the course of the review process, as per the terms of reference agreed between Germany and Mexico, and on the basis of the report that Mexico produced on its own subsidies (i.e. its self-report, or MSR).
The report also notes the recent introduction of the carbon tax, which is now the only tax, apart from value-added tax (VAT), applied to fuel use outside of road transport. However, its rates are substantially below those originally proposed in 2013, and the weight-averaged enacted rates remain well below the lower-end estimates of the social cost of carbon. The rates also do not reflect the different fuels’ respective carbon contents, as coal has been taxed at much lower rates than other fuels, and natural gas has been fully exempted from the carbon tax.
The report suggests that public health and environmental externalities, such as particulate pollution, arising from fossil fuel consumption and production should be considered when determining the coverage and extent of tax reductions and exemptions. Similarly, the report also encourages the Mexican authorities to include in its ongoing domestic considerations on the reform of electricity subsidies the effects that such reforms have on the use of fossil fuels for electricity generation.
Please refer here to learn more about Mexico's Climate Change Law, and Amendments on a National Emissions Registry and Emissions Trading System.