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Mexico is targeting the launch of the operational phase of its emissions trading system (ETS) in 2027, according to Diana Guzmán, director of climate change mitigation policies at Mexico’s Environment Ministry (Semarnat).
Speaking during a panel on Mexico’s carbon market at the IETA Latin America Climate Summit (LACS) on June 4, attended by Fastmarkets, Guzmán said the government expects to release the regulatory instrument governing the system by the end of this year, allowing the country to move into its first operational phase from 2027 to 2030.
“We expect the instrument to be released for review so that at the beginning of next year we can start the operational phase,” Guzmán said.
She pushed back against suggestions that work on the Mexico ETS had stalled. The government continues to hold extensive discussions with industry behind closed doors, covering allocation methodologies, emissions caps, growth factors, monitoring systems and other elements needed for the operational phase. “From the outside it may seem like it has stopped. It has not stopped,” she said.
Authorities are using lessons from the pilot phase to shape the operational market, and they intend to keep adapting the system as it evolves. “It is a living instrument. It is not written in stone,” she said.
European-style carbon prices are unlikely in the early years of the Mexican market. The future value of allowances is one of the most closely watched issues for participants. The government has yet to set a price floor, and Guzmán suggested those expectations would be misplaced. “We have not yet defined the price,” she said.
Guzmán pointed to a recent study with the UN Economic Commission for Latin America and the Caribbean (ECLAC). It estimated a social cost of carbon of $3-4 per tonne. She described that figure as unexpectedly low and said authorities are now reassessing it.
She indicated that prices are likely to begin at lower levels and increase gradually as the market matures. The discussion also highlighted the importance of offsets within Mexico’s emerging compliance market.
Offsets are expected to carry much of the early abatement burden. Guzmán acknowledged that several industrial sectors have already made many of the emissions reductions available to them and may have limited room for further cuts in the near term.
As a result, offsets are expected to play an important role during the early years of the Mexico ETS. “Many of them are already at the limit of what they can reduce,” she said, referring to emissions-intensive sectors such as cement.
Offsets would matter most at the start, she added, while the system matures and companies keep investing in decarbonization technologies.
Mexico is also developing a National Compensation Program and strengthening its emissions registry to support the future market. Authorities are building a dedicated registry for emissions reduction projects. It would let market participants identify available offset supply and complete transactions between project developers and compliance buyers.
The government’s broader aim is to ensure the ETS supports Mexico’s climate commitments while maintaining industrial competitiveness. Officials emphasized aligning the system with the country’s emissions-reduction targets and refining the market through operational experience.
Fastmarkets has learned that Mexico’s immediate focus remains its domestic climate architecture. That includes the operational ETS, the National Compensation Program and a strengthened national registry. Authorities are prioritizing the country’s nationally determined contribution (NDC) commitments.
The Mexico carbon market team is also facing growing pressure from project developers seeking access to international carbon markets, particularly CORSIA, the aviation sector’s global carbon offsetting mechanism.
Existing credit holders are among the stakeholders most closely engaged with the government as Mexico develops its framework, according to a source from Semarnat. Developers want certainty on how authorization procedures will work and how existing credits could be recognized under future market mechanisms.
“The projects that already have credits are asking us to issue authorization letters,” the source said.
Interest is already emerging among developers. Carbon Plus, for example, recently told Fastmarkets it was seeking authorization from Mexico’s environment ministry to make its forest carbon project eligible for mechanisms including CORSIA and future Article 6 transactions.
Authorities are still designing the framework and have yet to define how authorizations would be granted. The source said a more concrete regulatory proposal could emerge by the end of the year.
The source also suggested that some assumptions about the appeal of international markets deserve a closer look. Developers frequently point to higher prices under CORSIA, but recent market data shows a fall in CORSIA-eligible credit prices. “The market is saying something different,” the source said.
Fastmarkets assessed the price of CORSIA Phase 1 spot credits at $10.05 per tonne of CO2 equivalent (tCO2e) on Wednesday June 3, down by $0.50 per tCO2e from $10.55 per tCO2e the previous week.
Separately, the source said policymakers are increasingly focused on the multiple carbon price signals now operating in the Mexico carbon market, including the federal carbon tax, state-level carbon taxes, the future emissions trading system and the voluntary carbon market. “We have many price signals,” the source said.
The government is exploring ways to harmonize those mechanisms to avoid distortions and give participants more certainty. Officials are using Mexico’s federal carbon tax as a reference point, which currently equates to roughly $4 per tCO2e. “That is the reference price we are considering,” the source said.
As Mexico moves from ETS design toward an operational market, the cost of carbon will start to shape compliance buyer and offset developer economics. Fastmarkets tracks carbon credit prices, compliance market design and the CORSIA assessments that sit behind cross-border eligibility decisions. Understand what Mexico ETS phasing and early offset reliance mean for your sourcing and pricing with our carbon team.
Mexican developers are already chasing Article 6 and CORSIA authorization. Our Country Profiles module shows where Mexico sits, with ETS phasing, credit eligibility and NDC commitments, against peers