On 25 April 2018, the first chamber of the Mexican Congress (Cámara de Senadores) approved the reforms to the General Law on Climate Change (GLCC) to establish a mandatory emissions trading system (ETS) (the original GLCC had also provided the basis for establishing a voluntary ETS in Mexico, which so far had not been operationalized, see ICAP factsheet on Mexico). With 84 votes in favor, no votes against, and one abstention, the amended GLCC directs the Mexican Ministry of Environment and Natural Resources (SEMARNAT) to design and implement an ETS in a gradual process and in a manner that does not negatively affect the competitiveness of covered sectors, particularly those exposed to international trade. SEMARNAT now has ten months to set up the preliminary regulation for a 36-month ETS pilot (GLCC, Art 2 transitory).

In December 2017, following the approval of the GLCC in the second chamber of Congress (Cámara de Diputados), SEMARNAT announced that the market rules for an ETS and updated rules for the National Emissions Register will be published in the first half of 2018. The market will then officially start operating in two phases, beginning in August 2018. The first phase (pilot phase) will last for three years until August 2021. Subsequently, the rules will be updated for the start of the second phase (formal phase), which will also be in line with the start of the first accounting period under the Paris Agreement in 2021.

The reform also harmonizes the GLCC, originally approved in 2012, with Mexico’s international commitments in the context of the United Nations Framework Convention on Climate Change and the Paris Agreement. In its Nationally Determined Contribution (NDC), Mexico pledged to reduce its greenhouse gas emissions by 22% below baseline emissions by 2030.