World Bank2014-09-102014-09-102014-04https://hdl.handle.net/10986/20061Mexico has started a number of efforts to develop adequate policy frameworks in several areas including the energy sector, transportation and industrial policies, and forestry and natural resources management. Its Climate Change Law and the National Strategy on Climate Change envision is changing the upward trend of its carbon dioxide emissions towards a total decline of emission of thirty percent by 2020, and fifty percent by 2050. Achieving these ambitious policy goals is challenging for the country and will require many distinct efforts to mainstream climate change in policy design. Careful economic analysis will be critical to effectively reduce emissions while allowing for sustainable development. The policy evaluated in the study is part of Mexico's policy framework to promote renewable energy. The Ministry of Energy in Mexico, SENER, has issued a Methodology to incorporate external costs of electricity generation. While external costs are not privative of fossil energy, the Mexican government has started this process by focusing on the external costs on health and climate change, two of the main impacts of energy use. The study analyzes the potential of this new policy to help Mexico in its energy and environmental goals. It is organized into five chapters: (i) Introduction; (ii) Mexico s Policy Context for Incorporating Externalities; (iii) Valuation of Externalities; (iv) Internalizing Externalities; and (v) Conclusion. Included are four annexes: Method to Value Externalities for Mexico's Electricity Generation; Investment Plan in the Power Sector in Mexico; Modeling Framework and Methodology; and Project Valuation with Environmental Externalities.enCC BY 3.0 IGOABATEMENTACIDACID RAINACIDIFICATIONAGRICULTURAL CROPSAIRAIR POLLUTIONALLOWANCE TRADINGAMBIENT AIRAMMONIAANNUAL EMISSIONSAPPROACHATMOSPHEREAVAILABILITYBALANCEBENEFIT COST ANALYSISBIOMASSBIRD SPECIESBLACK CARBONCALCULATIONCARBON CAPTURECARBON CREDITSCARBON DIOXIDECARBON MARKETCARBON MONOXIDECARBON PRICECARBON PRICESCARBON TAXESCLEAN COALCLEAN DEVELOPMENT MECHANISMCLEAN ENERGYCLEAN TECHNOLOGIESCLIMATECLIMATE CHANGECLIMATOLOGYCLOUD COVERCOCO2COALCOAL CONSUMPTIONCOAL GENERATIONCOAL RESERVESCOMBUSTIONCOMPENSATING WAGE DIFFERENTIALSCONTINGENT VALUATIONCOOLING SYSTEMSCOST BENEFIT ANALYSISCOST OF ELECTRICITYCOST-BENEFIT ANALYSESCOSTS OF ELECTRICITYCOSTS OF EMISSIONSCOSTS OF EXTERNALITIESCRUDE OILCYCLE TECHNOLOGIESCYCLE TECHNOLOGYDEBTDEMAND FOR ELECTRICITYDEVELOPED COUNTRIESDIESELDISCOUNT RATESDISPERSION ANALYSISDISPERSION MODELINGDISPERSION MODELSDISTRIBUTION NETWORKDIVERGENCEECOLOGYECONOMIC ACTIVITYECONOMIC ANALYSISECONOMIC COSTSECONOMIC DEVELOPMENTECONOMIC INSTRUMENTSECONOMICSECONOMISTSECOSYSTEMELECTRIC POWERELECTRIC SYSTEMELECTRIC UTILITYELECTRICITYELECTRICITY CAPACITYELECTRICITY DEMANDELECTRICITY GENERATIONELECTRICITY PRICESELECTRICITY PRODUCTIONELECTRICITY SYSTEMELECTRICITY TARIFFSELECTRIFICATIONEMISSIONEMISSION REDUCTIONSEMISSIONSEMISSIONS DATAEMISSIONS FACTORSEMISSIONS INVENTORIESEMISSIONS LIMITSEMISSIONS REDUCTIONSEMISSIONS STANDARDSEMISSIONS TARGETSEMISSIONS TAXESENERGY CONSERVATIONENERGY EFFICIENCYENERGY PLANNINGENERGY POLICIESENERGY PRODUCTIONENERGY REQUIREMENTSENERGY SOURCESENERGY STRATEGYENERGY USEENVIRONMENTALENVIRONMENTAL COSTSENVIRONMENTAL PERFORMANCEENVIRONMENTAL POLICYENVIRONMENTAL PROTECTIONEXTERNAL COSTSFISHERIESFORESTRYFOSSILFOSSIL ENERGYFOSSIL FUELFOSSIL FUEL POWERFOSSIL FUEL POWER PLANTSFOSSIL FUELSFRAMEWORK CONVENTION ON CLIMATE CHANGEFUEL OILFUEL PRICESGAS TURBINESGASOLINEGEOTHERMAL CAPACITYGEOTHERMAL ENERGYGEOTHERMAL POWERGEOTHERMAL POWER PLANTGEOTHERMAL PROJECTGHGGLOBAL EMISSIONSGLOBAL PRECIPITATIONGREENHOUSEGREENHOUSE EFFECTGREENHOUSE GASHEAVY FUEL OILHYDRO PLANTHYDRO POWERHYDROCARBONSHYDROELECTRIC PLANTSHYDROPOWERHYDROXYLHYDROXYL RADICALSINTERNAL COMBUSTIONINTERNATIONAL CARBON MARKETSIPCCKILOWATT HOURKILOWATT-HOURLAND USELIQUEFIED NATURAL GASLNGLOW-CARBONMARKET PRICESMETEOROLOGICAL DATAMETEOROLOGYNATURAL GASNATURAL GAS USENATURAL RESOURCESNEGATIVE IMPACTNEGATIVE IMPACTSNH3NITRATESNITROGENNITROGEN OXIDESNOXNUCLEAR ENERGYO3OZONEPARTICULATEPARTICULATE MATTERPARTICULATESPEAK DEMANDPIPELINEPM10POLICY DECISIONSPOLICY INSTRUMENTSPOLICY MAKERSPOLLUTANTSPOLLUTION CONCENTRATIONPOWERPOWER CAPACITYPOWER GENERATIONPOWER PLANTSPOWER PRODUCERPOWER PRODUCERSPOWER SECTORPOWER SYSTEMPOWER SYSTEMSPRECIPITATIONPRESENT VALUEPRIMARY ENERGYPRIMARY ENERGY PRODUCTIONPRIMARY ENERGY SUPPLYPRODUCTION COSTSPROMOTING ENERGY EFFICIENCYPURCHASING POWERRENEWABLE ENERGYRENEWABLE ENERGY PROJECTSRENEWABLE PORTFOLIO STANDARDRENEWABLE PORTFOLIO STANDARDSRENEWABLE SOURCESSO2SOCIAL COST OF CARBONSOCIAL COSTSSOLAR RADIATIONSTEAM TURBINESULFATESULFATESSULFURSULFUR CONTENTSULFUR DIOXIDESUSTAINABLE DEVELOPMENTTAX POLICIESTECHNOLOGICAL CHANGETEMPERATURETONS OF CARBONTONS OF NITROGEN OXIDESTONS OF SULFUR DIOXIDETOTAL EMISSIONSTRANSMISSION INTERCONNECTIONUNIT OPERATIONSUTILITIESVARIABLE COSTSVOCVOLATILE ORGANIC COMPOUNDSWAGESWILLINGNESS TO PAYWINDWIND DIRECTIONWIND FARMWIND FARMSWIND PROJECTWTP10.1596/20061