Sectoral Offsets in the Mexican Oil and Gas Industry: Developing a Credible Baseline via Econometric Methods

Richard Morgenstern (), Alexander Egorenkov () and Daniel Velez-Lopez
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Richard Morgenstern: Resources for the Future
Alexander Egorenkov: Resources for the Future

RFF Working Paper Series from Resources for the Future

Abstract: Sectoral greenhouse gas offsets can provide the same incentives for emissions reductions as a carbon tax or a cap-and-trade program, with a focus on rewards rather than costs. This paper develops a pilot analysis of such offsets using relatively transparent quantitative methods to estimate a business-asusual (BAU) emissions path for the gas and basic petrochemical subsidiary of Mexico’s national oil company, Pemex. This BAU path, in turn, may be used as a basis for monetizing emissions reductions via bilateral or international offset transactions, with potentially low transaction costs. Overall, the analysis finds that a 10 percent emissions reduction below baseline would yield about US$40 million in additional revenue over a 13-year period for this Pemex subsidiary at a price of US$10 per ton of carbon dioxide (CO2). Larger emissions reductions, higher offset prices, or expansion to other, larger company units could generate correspondingly higher revenues.

Keywords: greenhouse gas emissions; sectoral offsets; baselines (search for similar items in EconPapers)
Date: 2015-08-20
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