The Climate Bonds Initiatives (CBI) recently published a report as part of the project “Building a foundation for a sustainable and scalable low carbon future in Mexico: from green Bonds to a greener ecosystem” supported by British Government’s UK PACT Program, with the purpose of providing guidance of the opportunities in Mexico, to leverage green and sustainable bonds to finance low-carbon transportation.

It is estimated that around 48% of Mexico’s energy demand is used in the transport sector, which accounts for 3.34% of GDP. It is the second largest source of greenhouse gas emissions in the country, and approximately 90% of these emissions are generated by road transport. The country’s vehicle fleet almost tripled in a 10-year period between 1996 and 2006, increasing from 8 to 21 million vehicles.

Mexico aims to reduce black carbon emissions by 51% by 2030. In order to reach this target, significant investment in low-carbon transport (LCT) or sustainable transport options will be needed.

Solutions to reduce emissions from the sector include, in the short term, efficiency improvements and regulations to encourage immediate emissions reductions. But in the longer term, the shift to a low-carbon economy will require investment in new technology vehicles and public transport systems. The government has already implemented measures to standardise environmental norms and regulations for existing and new vehicles (as set out in the 2015 NDC). Other objectives focus on promoting multimodal freight and passenger transport and modernising the vehicle fleet, while at the same time decreasing imports of used vehicles.

The green and sustainable bond market in Mexico exceeded USD 3 billion in issuance by the end of December 2020. There are numerous opportunities for investment in sustainable transport in Mexico as the country has great potential, both in terms of skills and technological capabilities, to improve energy efficiency and environmental measures.

Several projects are currently under development. The project “New route for electric buses on Eje 8 in Mexico City” aims to be the first zero emission route in the city. In addition, Mexico City has already delivered the first 10 electric buses for the metrobus line 3. Two other relevant projects include the electric light rail system in Guadalajara, Jalisco (line 3) and the Mexico-Toluca electric and automatic train project.