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Drivers of Electricity GHG Emissions and the Role of Natural Gas in Mexican Energy Transition

Monica Santillan Vera, Lilia Garcia Manrique (), Isabel Rodriguez Pena and Angel de la Vega Navarro
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Monica Santillan Vera: Facultad de Economía y Negocios, Universidad Anáhuac México
Lilia Garcia Manrique: Department of Economics, University of Sussex, Falmer, United Kingdom
Isabel Rodriguez Pena: Facultad de Economía y Negocios, Universidad Anáhuac México
Angel de la Vega Navarro: Facultad de Economía, UNAM

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: In the last three decades, the high growth of natural gas as an energy source of Mexican electricity production was the most significant change in the sector. Natural gas went from being the source for 7% of electricity in 1990 to 62.3% in 2020. A co-dependence of electricity and natural gas systems has been established. Is this fact consistent with the objective of decarbonizing the electricity sector? We study this question through a decomposition analysis of electricity GHG emissions in Mexico between 1990 and 2015. We use a Logarithmic Mean Divisia Index (LMDI) to quantify the changes of electricity GHG emissions related to activity, carbon coefficient, structure, and energy intensity effects. Activity effect was the most significant driver of GHG emissions growth, while structure and energy intensity effects contributed to limiting that growth. Although natural gas is the cleanest fossil fuel and its share in the electricity mix increased significantly, the effect of the carbon coefficient effect has shown a limited contribution to mitigating GHG emissions. From these results, we raise concerns about the role of natural gas, which could lead to carbon lock-in and stranded assets in the long term. To avoid this, an energy policy aiming towards a low-carbon energy system should consider the composition “natural gas + renewable energies + energy efficiency†.

Date: 2021-11
New Economics Papers: this item is included in nep-ene and nep-env
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