North American Clean Economy 2050

1. North American Clean Economy 2050
B L A S L . P É R E Z H E N R Í Q U E Z
F O U N D I N G D I R E C T O R , C A L I F O R N I A - G L O B A L E N E R G Y, WAT E R &
I N F R A S T R U C T U R E I N N O VAT I O N I N I T I AT I V E
June 22, 2016 @

2. Agenda
- R E S E A R C H A G E N D A
- P R O J E C T @ S T A N F O R D
- “ S T A T E O F P L A Y ” O F C L I M A T E A N D C A R B O N P R I C I N G P O L I C Y I N M E X I C O
- O P P O R T U N I T I E S F O R P A N - N O R T H A M E R I C A N C L I M A T E A N D C L E A N T E C H
C O O P E R A T I O N
- P O L I C Y I M P L E M E N T A T I O N C H A L L E N G E S

3. Towards a Prosperous and Clean North American
Economy: My Research Agenda

4. North America as a Global Powerhouse
THE NORTH AMERICAN GLOBAL POWERHOUSE
BY GEORGE P. SHULTZ
WALL STREET JOURNAL
THURSDAY, JULY 11, 2013

5. Genesis of Silicon Valley: Collaboration in Competition
5
William Hewlett & David Packard

6. CA – Global Energy, Water & Infrastructure
Innovation Initiative @ Stanford
North America Clean Economy 2050
- Clean Energy Transition, Smart Urban and
Transport Solutions for a Low Carbon Future
- Regional Competiveness

7. California Climate Leadership: Clean Economy Model
• REDUCE TO 1990 LEVELS BY 2020
• REDUCE 80% BELOW 1990 LEVELS BY 2050
• 20% RENEWABLES BY 2010

8. The Global Warming Solutions Act 2006 (AB32)

9. California Doubles Down on Climate Action & Clean Energy

10. Clean Energy and Pollution Reduction Act 2015 (SB350)

11. Western Climate Initiative
STATE OF CALIFORNIA
PROVINCE OF BRITISH COLUMBIA,
PROVINCE OF QUÉBEC

12. North American Energy & Climate
Collaborative Efforts
National GHG Emissions
Management
Source: UN Climate Change Secretariat
 British
Columbia
 Washingt
on
 Oregon
 California
 Alaska

13. Mexico Leadership: Climate Legislation 2012

14. Mexico’s Climate Leadership & Historical
Structural Reforms

15. Robust Institutional Framework
• GENERAL CLIMATE CHANGE LAW. 2012
• NATIONAL STRATEGY ON CLIMATE CHANGE, 10-20-40 YEARS. 2013
• CARBON TAX 2014
• NATIONAL EMISSIONS AND EMISSIONS REDUCTIONS REGISTRY. 2014
• ENERGY REFORM (LAWS AND REGULATIONS) 2014
• ENERGY TRANSITION LAW 2015
• ONGOING PROCESS FOR ISSUING A NEW SET OF RULE, STANDARDS
AND REGULATIONS (INCLUDING CARBON TAX & EMISSIONS TRADING)

16. Mexico’s Carbon Tax 2014
A CARBON TAX WAS INTRODUCED IN MEXICO IN 2014 (OPPORTUNISTIC MOVE)
 APPLIED ONLY FOR THE USE OF FOSSIL FUELS
 PRICE TO CARBON AND TO PROMOTE THE USE OF CLEANER FUELS (INITIAL
PRICE SET AT $5 US$/TCO2E)
 ALLOWING FOR THE USE OF OFFSETS IN THE TAX PAYMENT (ONLY CDM)
HOWEVER, CONGRESS MODIFIED THE INITIAL PROPOSAL:
 PRICE OF CARBON WAS SET AT ~ $US 3.5 / TCO2E
 NATURAL GAS WAS EXEMPTED
 ESTIMATED REVENUE: APPROX. $US 1BN
 TRANSFERRED TO THE MINISTRY OF FINANCE DEPT. BY FIRST
PRODUCERS/IMPORTERS
CURRENT DEBATE: RULES FOR POSSIBLE USE OF OFFSETS, TRADING AND
INTEROPERABILITY WITH OTHER MARKET-BASED MECHANISMS
(I.E., CLEAN ENERGY CERTIFICATES). TECHNICAL ASSISTANCE NEEDED!
CONTROVERSIES:
- MEXICO STILL SPENDS MORE TO SUBSIDIZE CAR DRIVERS AND POWER CONSUMERS THAN THE NEW
LEVY WILL RAISE (SUBSIDIES ARE BEING PHASED OUT).
- SHCP (MINISTRY OF FINANCE) VS. MINISTRY OF THE ENVIRONMENT (SEMARNAT)
Considering to introduce a carbon intensity system vs. NDC implicit Cap & ETS
16

17. Carbon Market: Cap-and-Trade

18. North American Energy & Climate Policy:
Scaling Up Action
Mexico
$1.3 trillion
GDP
641 Mt GHG
Quebec
$319 billion
GDP
83 Mt GHG
MEXICO’S CLIMATE & ENERGY GOALS
 30% reduction in GHG by 2020
› Baseline year 2000
50% REDUCTION IN GHG BY 2050
35% OF ELECTRICITY FROM RENEWABLE SOURCES BY 2024
California
$2.2 trillion
GDP
459 Mt GHG

19. 2015 UNFCCC Paris Accord – Art. 6
19

20. Formal International Commitment

21. NDC – Unconditional Reduction
• MEXICO IS COMMITTED TO REDUCE UNCONDITIONALLY 25% OF ITS
GREENHOUSE GASES AND SHORT LIVED CLIMATE POLLUTANTS EMISSIONS
(BELOW BAU) FOR THE YEAR 2030. THIS COMMITMENT IMPLIES A
REDUCTION OF 22% OF GHG EMISSIONS AND A REDUCTION OF 51% OF
BLACK CARBON.
• THIS COMMITMENT IMPLIES A NET EMISSIONS PEAK STARTING FROM 2026,
DECOUPLING GHG EMISSIONS FROM ECONOMIC GROWTH: EMISSIONS
INTENSITY PER UNIT OF GDP WILL REDUCE BY AROUND 40% FROM 2013
TO 2030.

22. Conditional Reduction
• THE 25% REDUCTION COMMITMENT EXPRESSED ABOVE COULD INCREASE
UP TO A 40% IN A CONDITIONAL MANNER, SUBJECT TO A GLOBAL
AGREEMENT ADDRESSING IMPORTANT TOPICS INCLUDING INTERNATIONAL
CARBON PRICE, CARBON BORDER ADJUSTMENTS, TECHNICAL COOPERATION,
ACCESS TO LOW- COST FINANCIAL RESOURCES AND TECHNOLOGY
TRANSFER, ALL AT A SCALE COMMENSURATE TO THE CHALLENGE OF GLOBAL
CLIMATE CHANGE.
• WITHIN THE SAME CONDITIONS, GHG REDUCTIONS COULD INCREASE UP TO
36%, AND BLACK CARBON REDUCTIONS TO 70% IN 2030.

23. Carbon Pricing Leadership Coalition
23

24. China Announces a National Carbon Market by 2017

25. Lack of Legislative Action: Canada & US

26. US – Canada: Climate, Energy & Artic Leadership
MARCH 16, 2016
• A COMMON VISION OF A PROSPEROUS AND SUSTAINABLE NORTH AMERICAN ECONOMY, AND THE
OPPORTUNITIES AFFORDED BY ADVANCING CLEAN GROWTH.
• THE PARIS AGREEMENT AS A TURNING POINT IN GLOBAL EFFORTS TO COMBAT CLIMATE CHANGE
AND ANCHOR ECONOMIC GROWTH IN CLEAN DEVELOPMENT.
• THEY RESOLVE THAT THE UNITED STATES AND CANADA MUST AND WILL PLAY A LEADERSHIP
ROLE INTERNATIONALLY IN THE LOW CARBON GLOBAL ECONOMY OVER THE COMING DECADES,
INCLUDING THROUGH SCIENCE-BASED STEPS TO PROTECT THE ARCTIC AND ITS PEOPLES.
• THE IMPORTANCE OF THE U.S. AND CANADA CONTINUING TO COOPERATE CLOSELY WITH
MEXICO ON CLIMATE AND ENERGY ACTION AND COMMIT TO STRENGTHEN A COMPREHENSIVE AND
ENDURING NORTH AMERICAN CLIMATE AND ENERGY PARTNERSHIP.

27. US – Mexico Bilateral Task Force on Energy & Climate
MARCH 27, 2015
TWO COUNTRIES LAUNCHED A NEW HIGH-LEVEL BILATERAL CLEAN ENERGY AND CLIMATE
POLICY TASK FORCE TO FURTHER DEEPEN POLICY AND REGULATORY COORDINATION.
AREAS INCLUDE:
• CLEAN ELECTRICITY, GRID MODERNIZATION, APPLIANCE STANDARDS, AND ENERGY EFFICIENCY
• FUEL EFFICIENT AUTOMOBILE FLEETS IN BOTH COUNTRIES
• GLOBAL AND REGIONAL CLIMATE MODELING, WEATHER FORECASTING AND EARLY ALERTS SYSTEM

28. Regional Cooperation: CA - Mexico
"CALIFORNIA CANNOT DO IT ALONE AND WITH THIS NEW
PARTNERSHIP WITH MEXICO WE CAN MAKE REAL PROGRESS ON
REDUCING DANGEROUS GREENHOUSE GASES.”
Edmund G. Brown, Governor of California
Mexico City, July 29, 2014

29. Climate and Energy Transition: Cities and Regions
- Baja California
- Chiapas
- Jalisco
- State of Mexico
- Mexico City
- Quintana Roo
- Yucatan
All signatories agree to reduce their greenhouse gas
emissions 80 to 95%, or limit to 2 metric tons CO2-
equivalent per capita, by 2050.
135 subnational jurisdictions representing 32 countries
Represent 783 million people
$21 trillion in GDP = more than a quarter of the global
economy

30. The Emerging Economy of North America
YOUNGEST POPULATION IN THE NAFTA
REGION
$1.3 TRILLION ECONOMY (2013 EST.)
GDP PER CAPITA $9000 CONSTANT USD
GDP PER CAPITA $15,600 (2013 EST.) /PURCHASING POWER PARITY (PPP)
GDP PER CAPITA IN MEXICO CITY $26,000 (2013 EST.)/PPP
SOURCE: WORLD BANK
Age
 112,336,538 habitants
 Women: 57,481,307
 Men: 54,855,231
Source: INEGI 2014

31. Clean Tech, Innovation & Economic Development

32. Engineering, Scientific & Research Capacity
Collaboration: Towards Regional Co-innovation
- 20% increase in the
budget of the National
Council for Science and
Technology (CONACYT)
in Mexico City.
- Increased the overall
science budget by 12%,
to 82 billion pesos
(US$6.3 billion).
- Goal is 1% of GDP by
2018.

33. Energy Transition Funds: Hydrocarbons & Sustainability
33
Source: SENER- Mexico

34. Results: Energy Transition Research Centers
34
- Ocean Energy Innovation
- Center Bioenergy Innovation
- Center Energy Sustainability Innovation Labs
- Non-Fossil Fuel Technology Demands Mexican
- Postdoctoral Projects in Sustainable Energy Science and
Technology Projects for Border Issues
- Institutional Strengthening for Energy Sustainability
- Wind Energy
- Innovation Center Solar Energy Innovation Center
- Geothermal Energy Innovation Center

35. Replicating Silicon Valley?

36. Energy Innovation Cycle: Policy & Business Opportunities

37. MUSEIC 4th Council Meeting @ Stanford University

38. Obama – Peña Nieto: High Level Economic Dialogue

39. MUSEIC Subcommittees

40. US - Mexico Border: Cooperation & Market Opportunities
• 22% of Mexico’s GDP
• 33% of electricity demand
• 38% of electricity generation
But 95% of power generation
installed capacity consumes
fossil fuels
THE SIX MEXICAN BORDER STATES ARE AN
ECONOMIC POWERHOUSE:
The border region, defined as the ten
U.S. and Mexican border states,
represents a combined population of
nearly 100 million people and the
world’s fourth largest economy.
Source: US State Dept.

41. Enhancing Regional Competitiveness: Transnational
Energy and IT Value Chain & Innovation Cycle
Sources: Gobierno Baja California &
ProMexico

42. IT & Environmental Commodities Markets
42

43. Carbon Sinks: Forest Laser Monitoring
43

44. Innovation & The Future of Cities: Smarter Communities

45. Facilitate US-Mexico Clean Tech Cooperation

46. Mexico – California Clean Energies MOU Follow Up

47. Clean Tech Mission 2015
This image cannot currently be displayed. This image cannot currently be displayed.

48. Co-Innovation & Entrepreneurship Project: Solar

49. Nuevo Leon - Innovation and Technology Research Park

50. Stanford @ Baja California & Tijuana

51. Wind Power Innovation by Prof. John Dabiri @ Stanford

52. Baja: Testbed for Clean Tech Innovation
Vertical-axis wind turbines – John O. Dabiri (Stanford Engineering)

53. Academic Workshop: US – Mexico Research Collaboration
WATER-ENERGY NEXUS IN THE CONTEXT OF CLIMATE CHANGE:
THE U.S.-MEXICO BORDER REGION AND THE CASE OF CALIFORNIA-BAJA CALIFORNIA
STANFORD UNIVERSITY
OCTOBER 1-2, 2015

54. Global Development Alliance – Stanford & USAID
MEXICO CLEAN ECONOMY 2050
1) CARBON PRICING, MARKETS & INNOVATION COOPERATION IN NORTH AMERICA
2) INNOVATION, ENTREPRENEURSHIP & CLEAN GROWTH AT THE LOCAL LEVEL:
- SMARTER COMMUNITIES, ENERGY TRANSITION & INFRASTRUCTURE INNOVATION

55. Governance & Institutional Strengthening for Smart
Clean Economy Policy Action in NA: Future Research
 Political
 Signaling (e.g., credible commitment,
global action, COP21 Paris)
 “not going alone” (e.g., EU ETS, emerging
carbon market system PRC and 50+ other
systems)
 Economic
 Carbon market expansion = increase
compliance cost minimization opportunities
for industry, offset market, and transition
investment through carbon pricing.
 Trade & investment = regional
competitiveness (e.g., renewables/electric
power sector)
 Institutional
 “Learning by doing”
 Share best/smart practices
 Leapfrog and “Getting it right” faster
 Policy alignment/harmonization: energy
and carbon policy
Carbon Pricing & Investment
Cap and Trade Revenue
Carbon Taxes
Grants/subsidies
Technology
PV and Wind Power
Biodigesters
Biofuels
Governance
Rule of Law/Security
Monitoring and Measuring
Policy Implementation
Transparency/Corruption
Carbon Pricing & Investment
Cap and Trade Revenue
Carbon Taxes
Grants/subsidies
Technology
PV and Wind Power
Biodigesters
Biofuels
Governance
Rule of Law/Security
Monitoring and Measuring
Policy Implementation
Transparency/Corruption

56. Thanks/Merci/Gracias!
CONTACT:
blph@stanford.edu